Saturday, April 05, 2014

Measuring Wealth Inequality



Recent increases in wealth inequality mainly due to top 0.01%, not top 1%? See this article (The Atlantic) and also here.

The method used to obtain these results is not without uncertainties. From these slides by Saez and Zucman. (Using flows to estimate accumulations.)
We develop a new technique to estimate the distribution of wealth

We capitalize income tax returns

Use IRS data on individual dividends, interest, rents...
Compute rates of return by asset class (Flow of Funds / NIPA)
Combine income and rates of return to obtain wealth

The capitalization method works for foundations
For which we observe both income and wealth
See also Inside the 1 percent:
Net worth distribution within the population of top wealth holders (assets > $2M; about top 1% of adult population): having $10M puts you in the 90th percentile (so, top 0.1% of total population) and $50M puts you in the 99th percentile (top 0.01% of total population).

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