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NBER WORKING PAPER SERIESTHE LEVEL AND DISTRIBUTION OF GLOBAL HOUSEHOLD WEALTHJames B. DaviesSusanna SandströmAnthony B. ShorrocksEdward N. Wolff Working Paper 15508http://www.nber.org/papers/w15508NATIONAL BUREAU OF ECONOMIC RESEARCH1050 Massachusetts AvenueCambridge, MA 02138November 2009

We thank participants at the May 2006 UNU-WIDER project meeting on Personal Assets from a Global

Perspective, and the August 2006 International Association for Research in Income and Wealth 29th

General Conference in Joensuu, Finland, for their valuable comments and suggestions. Special thanksare due to Tony Atkinson, Brian Bucks, Markus Jäntti, and Branko Milanovic. Responsibility for errorsand omissions is our own. The views expressed herein are those of the author(s) and do not necessarily

reflect the views of the National Bureau of Economic Research.

© 2009 by James B. Davies, Susanna Sandström, Anthony B. Shorrocks, and Edward N. Wolff. Allrights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit

permission provided that full credit, including © notice, is given to the source.

The Level and Distribution of Global Household WealthJames B. Davies, Susanna Sandström, Anthony B. Shorrocks, and Edward N. Wolff NBER Working Paper No. 15508November 2009JEL No. D31,E01,E21,O10

ABSTRACT

We estimate the level and distribution of global household wealth. The levels of assets and debts for39 countries are measured using household balance sheet and survey data centred on the year 2000.

The determinants of mean financial assets, non-financial assets, and liabilities are studied empirically,

and the results used to estimate average wealth holdings for countries lacking direct evidence. Data

on the pattern of household distribution of wealth are assembled for 20 countries, which together account

for 59 per cent of the global population and 75 per cent of global wealth. The observed relation between

wealth and income distribution in these 20 countries allows estimates of wealth inequality to be produced

for many other nations. Combining the figures for individual countries reveals that net worth averaged

US$44,024 per adult in PPP terms across the globe. Wealth of US$8,635 was needed to be in the top

half of the global distribution, and US$518,364 to be in the top one per cent. The top 10 per cent owned

71 per cent of world wealth, and the Gini coefficient for the global distribution of wealth is estimatedto be 0.802, indicating greater inequality than that observed in the global distribution of consumption

or income.James B. DaviesThe University of Western OntarioDepartment of EconomicsSocial Science Centre, Room 4071London, Ontario, Canada, N6A 5C2 jdavies@uwo.caSusanna SandströmUNU/WIDERKatajanokanlaituri 6 B00160 Helsinki, FinlandSusanna.Sandstrom@wfp.orgAnthony B. ShorrocksUNU/WIDERKatajanokanlaituri 6 B00160 Helsinki, Finlandshorrocks@wider.unu.eduEdward N. Wolff Department of EconomicsNew York University19 W. 4th Street, 6th FloorNew York, NY 10012and NBERedward.wolff@nyu.edu

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1 Introduction

The world distribution of income has recently been the subject of much attention. Availableevidence suggests that global income inequality is high and not trending down over time(Bourguignon and Morrison 2002; Milanovic 2002, 2005). Indeed, in some regions bothpoverty and income inequality appear to be on the increase. Given these findings, interestnaturally turns to global disparities in other dimensions of economic status, resources orwellbeing, of which one of the most important is household wealth. In recent years thenumber of countries with good wealth data has increased and it is now possible to try toestimate the global distribution of household wealth, which is the goal of this paper.The core data for this exercise are provided by national wealth distribution data that areavailable for 20 countries. These countries include the largest and richest countries in theworld and together account for 59% of the world’s population and, we estimate, 75% of itswealth. While it is interesting to look at the distribution of wealth just for these countries, andwe do provide those results, our main focus is on an estimate of the full global distribution of wealth. This requires imputation of both wealth levels and distribution to the countries withmissing data. Much of the paper is occupied with the development and application of thoseimputations. We find that the global distribution of wealth so estimated is quite close to thatfor the 20 core countries—yielding a Gini coefficient of .802 for example in comparison with.796 for the core group.Estimating the global distribution of wealth involves two stages. First, the average wealth

level

in each country is established. This is done by using national household balance sheet(HBS) data, and survey data where there are no HBS numbers, and then extending the wealthfigures to nations with neither kind of data using regression based imputations. The secondstage requires the

shape

of the distribution to be computed for each country. Again there arecountries with direct data (the 20 referred to above), and others for which the pattern must beestimated using the best available proxies. Our ultimate aim is to produce household wealthdistribution estimates on a per adult basis for the year 2000

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. This paper focuses almost

1Although HBS data are available annually in many countries, wealth distribution data typically come from surveysthat are conducted at intervals of three or more years and whose results are available only with a significant lag. Theyear 2000 provides us with a reasonably recent date and good data availability.

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