Top 1 Percent Is Richer than Data Shows, ECB Paper Finds

The oft-cited line that the top 1 percent of U.S. households lay claim to 30 percent of the nation’s wealth may be 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 to as much as 35 percent to 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 used 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 wrote, the effect in the Netherlands is much larger. Incorporating billionaires lists pushes its concentration at the top to between 12 percent and 17 percent -- close to nations such as Spain and Belgium -- compared with the 9 percent 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.

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