Wealth distribution is typically more unequal than income distribution – as inequality is cumulatively causative to some extent. I was alerted to the relatively equitable distribution of housing wealth by a recent Henry Ergas column which contains the amazing statement that there is “very little difference in the housing wealth holdings of the bottom and middle-income quintiles for those aged 65 and over” which Henry defends in response to an email of mine to him seeking clarification that the words mean what I think they mean. They do. He says it’s true and I have no reason to doubt him. If so it’s an achievement we should celebrate and the way our cities are going it’s likely to be becoming less and less true with time. Be that as it may it corroborates the diagram above. Look at the US and Australia when comparing average and median wealth – chalk and cheese.
Sadly I would expect our better performance – close to or at best in world if you like your inequality in moderation – to fade, not just because of our cities but also because of our savings policies. Who was it that set up a flat tax on what is now $2 trillion of super savings? That would be the ALP and the union movement.
You can easily spin Henry’s result in another direction – that the only wealth Australians hold is in their home, with consequent malinvestment at the aggregate level and a proneness to investment boom and bust cycles.
What drives this phenomenon especially for OLDER Australians though is the sheltering of the family home from the (otherwise very tight fisted) pension assets test.
What’s up with those figures for Germany and Norway, though? And Spain, for that matter, but for the opposite reason? None of it makes much sense to my (admittedly cursory) understanding of how Europe is doing…
I am surprised that you are surprised that superannuation has not led to a more equal wealth distribution.
While analysis is messy given that wealth is usually reported at a household rather than an individual level, surely the prior is that wealth – in particular superannuation (as indeed housing) will be highly mal-distributed across the population by age. That is you would expect young people and the very oldest to have very low levels of superannuation and the highest levels by those just commencing retirement.
Also as a flat tax accumulation should also reflect earnings disparity. Indeed if you think about it the introduction of compulsory superannuation was very much around making income inequality amongst the aged match the inequality across the working population – in contrast to a pre-existing situation where most of the aged had very similar levels of low pension income.
As to Steve’s point about Germany – there was quite an amount of discussion of this a couple years back – see for example http://www.voxeu.org/article/are-germans-really-poorer-spaniards-italians-and-greeks
You have confused equality with equity, and this totally invalidates everything you say, you snivelling turd.
If wealth was equally distributed, the result would be the deaths of thousands of millions of human beings, so your illiteracy and stupidity extends equally to economics and ethics.
Is Catallaxy missing one of its thread participants?
Maybe Graeme Bird had a sex change?
Future entitlements to pensions are usually excluded from these statistics. In countries with generous earnings-related pensions (even more so if most people rent their housing), this means that only the top of the distribution holds substantial wealth. So some such countries with relatively equal consumption distributions end up with moderately unequal wealth distributions.
I gather this is this case in Sweden (not shown here), but might also explain the German and Dutch patterns.
Re Henry’s comment. Here are some numbers from the 2011-12 ABS wealth survey. Households with reference person over 65: Mean own-home wealth by equivalent income percentile groups.
Bottom 10%: $436,000Next 10%: $284,000
Next 20%: $321,000
Next (middle) 20%: $346,000
I think the high wealth in the bottom decile is because it includes some people with high wealth but little income (and no pension because of the asset test). (Households with zero or negative income have been excluded from the calculation).
Ignoring the bottom decile, there is an increase in housing wealth with income, but it is true that it is relatively small.
Hi Bruce. I am afraid that breaking up the data by income makes it completely uninterpretable (not that this is your error). The lowest group is the most obvious but the entire distribution is contaminated. It really needs to be broken up by age.
‘by age’?? Do you mean ‘by total wealth’? If you do this, the mean level does increase steadily (and substantially). From -$2,800 in the bottom 10%, close to zero in the overall bottom 20%, up to $240,000 in the middle 20%.