Yet we know remarkably little about how this wealth is distributed.
The Central Bank defines “total net worth” as the difference between the stock of total assets and liabilities. Assets include land, real estate, business equity, agricultural assets, vehicles, cash, life assurance reserves, pension fund equity, and personal property.
The ECB estimates that across Europe households in the bottom 10 per cent own €1,200 in net wealth while households in the top 10 per cent have on average €506,000 in net wealth. This means they have 422 times the net wealth of the bottom 10 per cent. The household main residence makes up over half of all net wealth in the euro area.
The most reliable data on the distribution of wealth in Ireland comes from Brian Nolan, in 1991. Nolan used 1987 data from an ESRI survey, Income Distribution, Poverty and Usage of State Services, to estimate the wealth of Irish households.
Nolan estimated that
- The top 10 per cent of households held 42.3 per cent of net household wealth
- The top 5 per cent held 28.7 per cent of net household wealth
- The top 1 per cent held 10.4 per cent of net household wealth
- The bottom 50 per cent of households held just 12.2 per cent of net household wealth
What the figures don’t show is the distribution within the bottom 50%. Although the average is €74,823, it is likely to be very unevenly distributed, with some in the bottom 50% having much more than this, but many having close to zero or even negative net wealth.
A survey of households finance and consumption (Household Finance and Consumption Survey HFCS) is due out in Ireland in October 2014. While this is very welcome and will give an indication of the dynamics of wealth, assets and debt, it is likely only to be a snap-shot in time (the survey was done over the last year) and so won’t tell us about the changing nature of wealth inequality in Ireland over the boom and bust period. It will also be a survey, which typically underestimates wealth inequality.
Nevertheless, it will be useful to add to our knowledge of the role of personal wealth in the economy, and a broader understanding of the extent of economic inequality in Ireland.
Cormac Staunton is Policy Analyst with TASC. You can follow him on Twitter: @Cormac_Staunton