Correcting wealth survey data for the missing rich: The case of Austria

Paul Eckerstorfer, Johannes Halak, Jakob Kapeller, Bernhard Schütz, Florian Springholz and Rafael Wildauer ()
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Johannes Halak: Government of the Federal State of Upper Austria

No 2014-01, Economics working papers from Department of Economics, Johannes Kepler University Linz, Austria

Abstract: It is a well-known criticism that due to its exponential distribution, survey data on wealth is hardly reliable when it comes to analyzing the richest parts of society. This paper addresses this criticism using Austrian data from the Household Finance and Consumption Survey (HFCS). In doing so we apply the assumption of a Pareto distribution to obtain estimates for the number of households possessing a net wealth greater than four million Euros as well as their aggregate wealth holdings. Thereby, we identify suitable parameter combinations by using a series of maximum-likelihood estimates and appropriate goodness-of-fit tests to avoid arbitrariness with respect to the fitting of the Pareto-Distribution. Our results suggest that the alleged non-observation bias is considerable, accounting for about one quarter of total net wealth. The method developed in this paper can easily be applied to other countries where survey data on wealth are available.

Keywords: wealth distribution; non-observation bias; Pareto distribution (search for similar items in EconPapers)
JEL-codes: C46 C81 D31 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2014-01
New Economics Papers: this item is included in nep-ecm
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Persistent link: https://EconPapers.repec.org/RePEc:jku:econwp:2014_01

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