1998 State Debt Medians Report

Document Sample
1998 State Debt Medians Report Powered By Docstoc
					Comparing wealth distribution across rich
   countries: First results from the
      Luxembourg Wealth Study


                       Eva Sierminska
                   Luxembourg Wealth Study

                        Andrea Brandolini
         Banca d’Italia, Economic Research Department
                and Luxembourg Wealth Study

                    Timothy M. Smeeding
       Syracuse University and Luxembourg Wealth Study




                     The Luxembourg Wealth Study:
          Enhancing Comparative Research on Household Finance
                    Banca d’Italia, Roma, 5-7 July 2007
                Outline
LIS and LWS
Goals and History
Countries and
datasets
Issues in database
construction
Preliminary results
Lessons from LWS
LWS GOALS
WHERE DO WE STAND?
1.   Built up within the Luxembourg Income Study (LIS) –
     www.lisproject.org following the same model.

2.   Establish a network of experts of micro-data on household net
     worth to share accumulated knowledge and best practices

3.   Construct a comparable database containing wealth variables
     based on existing datasets to enable cross-country
     comparisons on household net worth, portfolio composition
     and wealth distribution (including liquid assets, debts and
     other holdings)

4.   Produce guidelines for data producers – similar to what has
     been done for income distribution statistics through LIS with
     the final Report of the Canberra Group
                          LWS HISTORY (1)

   August 2002 – 27th IARIW Conference, Stockholm
     – Wealth inequality trends-wealth comparability lagging income comparability

    July 2003 – LIS headquarters, Luxembourg
     – Meeting of experts on wealth and data collection decided LWS worthwhile
       project

    October 2003 – Levy Economics Institute, New York
     – Further meeting of experts, update of project funding, decision to hire
       coordinator

    March 2004 – LIS headquarters, Luxembourg
     – Official launch of LWS

   January 2005 – Bank of Italy, Perugia
     – Workshop on methodological issues

 July 2005 – LIS headquarters, Luxembourg
   – Biennial meeting of LIS asbl: LWS fully integrated in LIS activities after
      completion of first stage of the project
                     LIS HISTORY (2)

 June 2006 – LWS database, Beta Version
   – Release to project participants

 August 2006 – 29th IARIW Conference, Joensuu, Finland
   – Presentation of LWS data and methodology

 14-15 December 2006 – LIS headquarters, Luxembourg
   – Workshop to discuss first comparative paper plus country
     papers comparing Beta version with original national sources
     in order to prepare final documentation

  5-7 July 2007 – Final conference –Rome, Italy
   – Presentation of the LWS project, papers on methodological
     issues and substantive issues

  2007 – LWS database, Alpha version
   – Release to all LIS users
                  LIS and LWS
LWS Builds on LIS as a microdata
harmonization and research project

  LIS (Luxembourg Income Study)
       23 Years; 31 countries; 160 datasets
       website: www.lisproject.org
  LWS (Luxembourg Wealth Study)
       3 Years; 10 countries; 12 datasets
       website: www.lisproject.org/lws.htm
         LWS COUNTRIES AND DATASETS
 Austria              Survey of Household Financial Wealth                 2004
 Canada               Survey of Financial Security                         1999
 Cyprus               Survey of Consumer Finances                     1999-2002
 Finland              Household Wealth Survey                         1994-1998
 Germany              Socio-Economic Panel Study                           2002
 Italy                Survey of Household Income and Wealth      1995-1998-2002
 Norway               Income and Wealth Survey                   1997-1999-2002
 Sweden               Wealth Survey                              1997-1999-2002
 United Kingdom British Household Panel Study                              2000
 United States        Panel Study of Income Dynamics                  1999-2001
                      Survey of Consumer Finances                     1998-2001

 Varied group of participants                           Underlined dataset are
                                                       included in Beta version
          ISSUES IN LWS CONSTRUCTION


Surveys differ
  Purpose: some designed to collect wealth data (CA, IT, US-SCF),
  some supplemented with special modules (GE, UK, US-PSID)
  Source: mostly sample surveys, but supplemented with
  administrative data in Nordic countries
  Sampling frame: some over-sample the rich
  Unit of analysis: generally household, but individual in GE and
  UK, family in US and CA
  Number of wealth items: from 7 in UK to 30+ in IT, NW, US-SCF


    Perfect comparability cannot be achieved
    Define basic wealth concept
IDEAL LWS VARIABLE STRUCTURE
Demographics
Income and consumption aggregates
Wealth variables -(household-individual-family level)
 • Non-financial assets
 • Financial Assets
 • Liabilities
Behavioral variables
 •   Bequest motivation
 •   Inheritance expectations
 •   Motives for savings
 •   Intervivos transfers
 •   Risk attitude
 •   Income and health uncertainty/risk
 •   Expectations (fertility; income support from the state)
                 LWS Wealth Variables (1)

FINANCIAL ASSETS

Deposit Accounts: Transaction, Savings and CDs   DA

Total Bonds: Savings and Other Bonds             TB

Stocks                                           ST

Mutual Funds and other investment funds          TM
Life insurance                                   LI

Other investment./ financial assets(non-pen)     OFA

Pension Assets                                   PA
               LWS Wealth Variables (3)
NON-FINANCIAL ASSETS

Principal residence            PR

Investment real estate         IR

Business Equity                BE

Vehicles                       VH

Durables/Collectibles         DR/CL

Other non-financial assets    ONF
  LWS Wealth Variables (5)
LIABILITIES

                                                     TD
Total Liabilities

Total Home secured debt                              HSD

                    Principal residence mortgage     MG

                        Other property mortgage      OMG

                       Other home secured debt
                                                     OHSD
                        (including line of credit)
Vehicle loans                                         VL

Total Installment debt
                                                      IL
(inc. credit card bal)
Educational loans
                                                      EL

Other loans from financial institutions               OL

Informal debt                                         ID
                     Wealth Summary Variables


Risky assets :         RA =TB+ST+TM
Total assets:          TA=sum of all assets
Home secured debt:     HSD=MG+OMG+OHSD
Non-housing debt:      NHD=TD-HSD

Total financial assets:     TFA1=DA+ST+TB+TM
Total non-financial assets: TNF1=PR+IR
                            TNF2=PR+IR+BA
Total debt:                 TD=HSD+VL+IL+EL+OL+ID

Net worth:             NW1=TFA1+TNF1-TD
                       NW2=TFA1+TNF2-TD
                       NW = (sum of all assets)-(sum of all debts)
          Other Wealth Variables

Miscellaneous net worth:   OWL
Inheritance received:      INH1-INH3
Year of inheritance:       YRINH1-YRINH3
Remaining inheritance:     INH4

Tenure:                    OWN
Type of dwelling:          DWELL
Own business:              BUS

Special variables:         IRnet, Vhnet, Flags
Revision since LWS Technical Conference:

– Imputations for Germany (SOEP)

– Working on inclusion of behavioral variables in LWS

– Minor data reclassification

– Exploring possibility of including pensions in Sweden

- Addition of variables to reflect national wealth
   concepts
Preliminary Results
 Some preliminary results for a subset of countries participating
 in the project
Proportion of missing values in major components of net worth.




                                                                                               United               United
                         Canada Cyprus   Finland   Germany    Italy       Norway    Sweden             United States
                                                                                               Kingdom               States
                                                                                                             SCF     PSID

Net worth                   -       61       -          -             0      -          -            14        -            5
Total Financial Assets      -       21       -          -         -          -          -             9        -        -
                                                        -
Total Non-Financial Assets -        25       -          -             0      -          -             2        -            2
Total Debt                  -       43       -          -         -          -          -             7        -            3

sample size               15,933   895     3,893     63,460     8,011      22,870     17,954       4,867    22,210     7,406
           The cost of cross-national comparability:
            reconciling LWS and national concepts
                    (averages in thousands of national currencies)

Variable                     Canada     Finland     Italy       Sweden      United
                                                                            States
                             1999       1998        2002        2002        2001



LWS net worth                102.5      69.3        154.2       537.8       213.1
+ pension assets              83.0       0.6           –           –         74.4
+ other financial assets       2.5       1.6          0.3        24.5        13.1
+ business equity             26.9       –           23.5        80.0 (1)    74.7
+ other non-fin. assets       28.5       6.5         24.4        17.8        20.6
LWS adjusted net worth       243.4      78.0 (2)    202.4       660.1       395.9
National source net worth    249.3      79.8        204.4       660.0       395.5

Source: LWS database, β-version and country sources. Household weights are used. (1)
Business assets. (2) It does not include other debts.
                      Per capita household net worth:
                     LWS and national balance sheets
        160,000
                            LWS database
        140,000             National balance sheets

        120,000


        100,000
Euros




         80,000


         60,000


         40,000


         20,000


             0
                  Canada   Cyprus   Finland Germany   Italy   Norway   Sweden    United   United   United
                                                                                Kingdom   States   States
                                                                                           PSID     SCF

             Source: LWS database, β-version and national sources.
250,000
                     Mean net worth
                                                                                                                     250,000
                                                                                                                                                  Median net worth
                                                                                                                                                                                                                                                                       Means
200,000                                                                                                              200,000
                                                                                                                                                                                                                                                                          and
150,000                                                                                                              150,000
                                                                                                                                                                                                                                                                      medians
100,000                                                                                                              100,000                                                                                                                               (2002 PPP dollars)
 50,000                                                                                                               50,000

     0                                                                                                                          0
          Sweden




                                                                                                                                         Sweden
                                                                                 Italy




                                                                                                                                                                                                                                          Italy
                   Finland




                                                                                                                                                                                                         Finland
                             Canada



                                                  UK




                                                                                                                                                               Canada




                                                                                                                                                                                                                           UK
                                                           US (PSID)




                                                                                                                                                                            US (PSID)
                                                                                                 US (SCF)




                                                                                                                                                                                          US (SCF)
                                      Germany




                                                                                                                                                  Germany
                                                                                            Mean income                                                                                                                           Median income
                                                40,000                                                                                                                                  40,000


                                                30,000                                                                                                                                  30,000


                                                20,000                                                                                                                                  20,000


                                                10,000                                                                                                                                  10,000

Source:                                                0                                                                                                                                             0
LWS database,
                                                                                                            Sweden




                                                                                                                                                                                                                                                  Sweden
                                                                                         Italy




                                                                                                                                                                                                                   Italy
                                                                       Finland




                                                                                                                                                                                                                                Finland
                                                                                                                                Canada

                                                                                                                                          UK




                                                                                                                                                                                                                                                                      UK

                                                                                                                                                                                                                                                                           Canada
                                                                                                                                                                US (PSID)




                                                                                                                                                                                                                                                                                               US (PSID)
                                                                                                                                                    US (SCF)




                                                                                                                                                                                                                                                                                    US (SCF)
                                                                                                                      Germany




                                                                                                                                                                                                                                                            Germany
β-version
   Household asset participation (per cent)




Wealth components    AustriaCanada Cyprus                   Italy
                                            Finland Germany (1)        Norway Sweden United  United United
                                                                                     Kingdom States P States S
                         2004   1999   2002      1998    2002       2002   2002     2002    2000   2001   2001

Non-financial assets       -     64     76        68       43        72      72      57      70      65     70
Principal residence       56     60     74        64       39        69      64      53      69      64     68
Investment real estate     -     16     17        27       13        22      30      14       8             17

Financial assets          99     90     86        92       50        81      99      79      80      83     91
Deposit accounts          99     88     78        91        -        81      99      59      76      82     91
Bonds                     11     14     44         3        -        14       -      16       -       -     19
Stocks                    16     11     40        33        -        10      22      36       -      30     21
Mutual Funds              11     14      1         3        -        13      38      58       -       -     18

Debt                      39     68     65        52       30        22      80      70      59      68     75
Home secured debt         28     41      -        28                 10       -       -      39       -     46
Sample size and age composition of head of household in LWS surveys


                                                                                                United
                  Canada      Cyprus     Finland    Germany    Italy      Norway     Sweden                US PSID   US SCF
                                                                                                Kingdom
                      1999      2002        1998       2002       2002       2002       2002      2000       2001      2001
Average unit size      2.43      3.35        2.16       2.14       2.65       2.14      1.96        2.35      2.38      2.43
Mean age                47        49          49         52         55         49        51          53        48        49
Age composition (%)
 24 or less             5.9        1.0        7.3        3.7        0.7        7.2        6.6        3.8       5.3       5.6
 25-34                 19.6       21.3       16.7       15.2        9.4       19.3       16.9       14.3      18.6      17.1
 35-44                 24.7       24.7       20.0       20.6       21.5       19.4       17.7       19.3      22.2      22.3
 45-54                 19.6       16.9       21.0       17.5       18.8       18.0       17.5       17.4      22.4      20.6
 55-64                 11.9       15.4       13.8       16.5       16.9       14.1       16.6       14.9      12.5      13.3
 65-74                 10.4       15.0       11.7       14.9       18.2        9.8       10.9       14.0      10.9      10.7
 75 and over            7.9        5.7        9.5       11.6       14.5       12.2       13.8       16.3       8.1      10.4
 Total                100.0      100.0      100.0      100.0      100.0      100.0      100.0      100.0     100.0     100.0
 Fraction of holders, by age of the household’s heads
                       (per cent)
                  Debt-holders                                    Home-owners
100                                               100
90                                                 90

80                                                 80

70                                                 70

60                                                 60
50                                                 50
40                                                 40

30                                                 30

20                                                 20
10                                                 10

 0                                                  0
        24 25-34 35-44 45-54 55-64 65-75 75              24 25-34 35-44 45-54 55-64 65-75 75
       and                               and            and                               and
       less                              over           less                              over

              Canada 1999                Finland 1998               Italy 2002
              Sweden 2002                United States 2001

      Source: LWS database, β-version and national sources.
   Household portfolio composition (percentage share of total assets)


Wealth components       Canada   Finland   Germany   Italy   Sweden     UK     US P   US S
                         1999     1998      2002     2002     2002      2000   2001   2001
Non-financial assets      78       84        87       85       72        83     67     62
 Principal residence      64       64        65       68       61        74     52     45
         Real estates     13       20        22       17       11        9      14     17


Financial assets          22       16        13       15       28        17     33     38
   Deposit accounts       9        10        n.a.     8        11        9      10     10
               Bonds      1        0         n.a.     3        2        n.a.   n.a.    4
               Stocks     7        6         n.a.     1        6        n.a.    23     15
        Mutual funds      5        1         n.a.     3        9        n.a.   n.a.    9
Total assets             100      100        100     100      100       100    100    100


Total debt                26       16        23       4        35        21     22     21
 of which: Home
     secured              22       11        19       2       n.a.       18    n.a.    18


Total net worth           74       84        77       96       65        79     78     79
Distribution of household net worth (per cent)



Statistics        Canada   Finland   Germany   Italy   Sweden    UK    US P   US S
                    1999     1998       2002   2002      2002   2000   2001   2001
Net worth (>0)        77       83         63     89        68     82     77     77
Net worth (=0)         3        2         28      7         5      6      8      4
Net worth (<0)        20       15         88      3        27     11     16     19
Quantile/median


10th                 -17        -6         0      0       -84      0    -11    -15
25th                   0        1          0      8        -1      2      0      0
75th                 350      218       1000    209       447    238    378    368
90th                 708      390       2000    359       972    482    925    980
Wealth share


Top 10%               53       45         55     42        58     45     64     71
Top 5%                37       31         38     29        41     30     49     58
Top 1%                15       13         16     11        18     10     25     33
Gini index            75       68         80     61        89     66     81     84
250,000
                       Mean net worth
                                                                                          250,000
                                                                                                             Median net worth
                                                                                                                                                                                         Means
200,000                                                                                   200,000
                                                                                                                                                                                            and
150,000                                                                                   150,000
                                                                                                                                                                                        medians
100,000                                                                                   100,000                                                                                   (2002 PPP dollars)
 50,000                                                                                    50,000
                                                                                                                                                                                     Source:
     0                                                                                         0                                                                                     LWS database,
          Sweden




                                                                                                    Sweden
                                                                       Italy




                                                                                                                                                                            Italy
                     Finland




                                                                                                                                                             Finland
                                   Canada



                                                      UK




                                                                                                                       Canada




                                                                                                                                                                       UK
                                                           US (PSID)




                                                                                                                                    US (PSID)
                                                                               US (SCF)




                                                                                                                                                US (SCF)
                                            Germany




                                                                                                             Germany
                                                                                                                                                                                     β-version



                                                        Mean net worth                                                                                         Median net worth
                                                  Jantti & Sierminska (2007)                                                                               Jantti & Sierminska (2007)

                   500,000
                                                                                                                       250,000
                   450,000
                   400,000                                                                                             200,000
                   350,000
                   300,000                                                                                             150,000
                   250,000
                   200,000                                                                                             100,000
                   150,000
                   100,000                                                                                              50,000

                    50,000
                                                                                                                                -
                               0
Comparing results with secondary data



                 Inequality      Jantti &
                  Rankings    Sierminska    S&B&S



                                            Sweden

                                 US SCF      US SCF

                                US PSID     US PSID
                                 Canada     Germany
                                    Italy    Canada
                                Germany      Finland
                                 Finland         UK


                                 Sweden         Italy




                                  µ - p50      GINI
  LESSONS FROM LWS PROJECT
A great deal can be learned from comparative analysis:
cross-nationally comparable data on household finance is
a priority
Many differences across countries: taking stock of what is
available paves the way to a much needed process of ex
ante standardisation
Perfect comparability not achievable – BUT large space for
improvement
Need for a flexible approach: comparability across
countries may mean to adapt to country specificities rather
than imposing too stringent common frame
With caution, it is possible to perform many useful
comparisons using the existing data
LWS GOALS
WHERE DO WE STAND?
1.   Built up within the Luxembourg Income Study (LIS) –
     www.lisproject.org following the same model.

2.   Establish a network of experts of micro-data on household net
     worth to share accumulated knowledge and best practices

3.   Construct a comparable database containing wealth variables
     based on existing datasets to enable cross-country
     comparisons on household net worth, portfolio composition
     and wealth distribution (including liquid assets, debts and
     other holdings)

4.   Produce guidelines for data producers – similar to what has
     been done for income distribution statistics through LIS with
     the final Report of the Canberra Group
MANY THANKS FOR YOUR
      ATTENTION

				
DOCUMENT INFO
Shared By:
Categories:
Stats:
views:5
posted:11/30/2010
language:English
pages:30
Description: 1998 State Debt Medians Report document sample