NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Deconstructing Household Wealth Trends in the United States, 1983 - 2013

Edward N. Wolff

NBER Working Paper No. 22704
Issued in September 2016
NBER Program(s):Labor Studies, Productivity, Innovation, and Entrepreneurship

I use the Survey of Consumer Finances (SCF) to analyze wealth trends from 1983 to 2013. Asset prices plunged between 2007 and 2010 but then rebounded from 2010 to 2013. Median wealth plummeted by 44 percent over years 2007 to 2010 and wealth inequality was up sharply. These two movements can be traced to the high leverage of middle class families, the high share of homes in their portfolio, and the drop in house prices. There was virtually no change in median wealth and wealth inequality from 2010 to 2013 according to the SCF despite the recovery in asset prices. A decomposition analysis based on “pseudo-panels” indicates that for the middle three wealth quintiles, capital revaluation explained virtually all of the change in simulated mean wealth over the 1983-1989, 1989-2001, 2001-2007, 2007-2010, and 2010-2013 periods, and implicit savings were negative. Trends in inequality as measured by the change in the P99/P2080 ratio largely reflected differences in rates of return and savings rates between the top one percent and the middle three wealth quintiles. Over 1983-1989, the higher savings rate of the top group explained all the increase. Over 1989-2001, 2001-2007, and 2010-2013, their higher savings rate led to an increase in the P99/P2080 ratio but this was offset by the higher rate of return of the middle group, which lowered inequality. Over years 2007-2010, both the higher savings rate of the top group and their higher rate of return contributed about equally to the rise in the P99/P2080 ratio.

download in pdf format
   (409 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w22704

Users who downloaded this paper also downloaded* these:
Ferrie, Massey, and Rothbaum w22635 Do Grandparents and Great-Grandparents Matter? Multigenerational Mobility in the US, 1910-2013
Wolff w20733 Household Wealth Trends in the United States, 1962-2013: What Happened over the Great Recession?
Niimi and Horioka w22687 The Impact of Intergenerational Transfers on Household Wealth Inequality in Japan and the United States
Wolff w18559 The Asset Price Meltdown and the Wealth of the Middle Class
Wolff w24085 Household Wealth Trends in the United States, 1962 to 2016: Has Middle Class Wealth Recovered?
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us