Top 1 Percent Is Even Richer Than Surveys Say, ECB Paper Finds

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The oft-cited line that the top 1 percent of U.S. households lay claim to 30 percent of all wealth is probably an understatement, according to a European Central Bank working paper.

Incorporating “missed” data on rich households pushes the share of wealth held by top earners up to between 35 percent and 37 percent, wrote Philip Vermeulen, a senior economist at the ECB. That’s higher than the 34 percent suggested by the 2010 U.S. Survey of Consumer Finances data from the Federal Reserve.

“Our knowledge of the wealth distribution is less than perfect,” Vermeulen wrote. “The results clearly indicate that survey wealth estimates are very likely to underestimate wealth at the top.”

Richer households have a lower response rate to surveys measuring their assets, so holdings are undervalued, Vermeulen wrote. He uses data from Forbes billionaires lists in his analysis to provide new wealth distribution estimates for the U.S. and nine European nations.

Though the U.S. change is “marginal,” the author writes, the effect in the Netherlands is much larger. Incorporating billionaires list pushes its concentration at the top to between 12 percent and 17 percent -- close to nations such as Spain and Belgium -- compared to the 9 percent concentration survey data would suggest.

The working paper represents the views of the author and doesn’t reflect those of the ECB, according to the study, which was released this month.

To contact the reporter on this story: Jeanna Smialek in Washington at jsmialek1@bloomberg.net

To contact the editor responsible for this story: Carlos Torres at ctorres2@bloomberg.net

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