NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Wealth Portfolios in the UK and the US

James Banks, Richard Blundell, James P. Smith

NBER Working Paper No. 9128
Issued in August 2002
NBER Program(s):   AG

In this paper, we attempt to explain differences between the US and UK household wealth distributions, with an emphasis on the quite different porfolios held in stock and housing equities in the two countries. As a proportion of their total wealth, British households hold relatively small amounts of financial assets - including equities in stock - compared to American households. In contrast, British households appear to move into home ownership at relatively young ages and a large fraction of their household wealth is concentrated in houseing. Finally, the age gradient in home equity appears to be much steeper in the UK while US households exhibit a steeper age gradient in stock equity. We argue that the higher price housing price volatility in the UK combined with much younger entry into home ownership there are important factors accounting for the relatively small participation of young British householders in the stock market. We show it is important to acknowledge the dual role of housing - providing both wealth and consumption services - in understanding wealth accumulation differences between the US and the UK. Institutional differences, particularly in housing markets, that affect the demand and supply of housing services, turn out to be important in generating portfolio differences between the two countries. In particular, these differences in housing price risk imply steeper life-cycle accumulations in housing and less steep accumulation in stock equity over the life cycle in the UK.

download in pdf format
   (383 K)

email paper

The NBER Bulletin on Aging and Health provides summaries of publications like this.  You can sign up to receive the NBER Bulletin on Aging and Health by email.

This paper is available as PDF (383 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w9128

Published: James Banks & Richard Blundell & James Smith, 2004. "Wealth Portfolios in the United Kingdom and the United States," NBER Chapters, in: Perspectives on the Economics of Aging, pages 205-246 National Bureau of Economic Research, Inc.

Users who downloaded this paper also downloaded these:
Campbell w12149 Household Finance
Banks, Blundell, and Smith Wealth Portfolios in the United Kingdom and the United States
Attanasio and Weber w15756 Consumption and Saving: Models of Intertemporal Allocation and Their Implications for Public Policy
Poterba and Samwick w6185 Household Portfolio Allocation Over the Life Cycle
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

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

Contact Us