Transcript Household Real Wealth in OECD Countries Massimo Coletta and Riccardo De Bonis (Bank of Italy) OECD Working Party on Financial Statistics 29 November -

Household Real Wealth in OECD Countries
Massimo Coletta and Riccardo De Bonis
(Bank of Italy)
OECD Working Party on Financial Statistics
29 November - 1 December 2010
Motivation
• Non-financial assets make up, together with financial assets,
household total wealth
• Real assets may impact on consumption (the “wealth
effect”) and are a buffer against macroeconomic shocks
• In the aftermath of the recent crisis, statistics on real assets
have become more relevant to better monitoring price
movements and to detect bubbles that would threaten
economic stability
• The Inter-Agency Group on Economic and Financial
Statistics set up by the IMF has identified as area of data
improvement also the sectoral balance sheets, particularly
of
households
and
non-financial
corporations
(recommendation #15)
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Outline
1. Data
2. What do the data say?
3. Issues for discussion
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1. Data
National statistics on real wealth are non homogeneous,
because of different methodologies
Most of the OECD countries provide data on total
household real assets and/or the component dwellings
A minority of countries also provides estimates of the value
of land and, as a memo item, of durables
Probably the column “land” is not comparable across
countries. In some countries the land is the “land
underlying buildings” plus “the agricultural land” (e.g.
France). In other countries the land includes only the
agricultural land (e.g. Italy)
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1. Data (follows)
• Some countries have estimates of real assets but the
data are not transmitted to the OECD: e.g. Bank of
Spain publishes statistics on its website
• According to the breakdown of the table 7HAL:
– 9 OECD countries transmit both total real
assets and dwellings
– 11 countries provide only the total or the
dwellings
– 14 countries do not provide info on real assets
even partially
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Data availability
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2. What do the data say?
• The following table shows the ratio of household
real wealth to disposable income for 20 countries
• We consider also countries that give only data on
dwellings
• The hypothesis is that dwellings represent the
larger component of household real wealth
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Real wealth/disposable income
* Only dwellings
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2. What do the data say?
We can distinguish countries into three groups
• Six countries have a ratio around 2: e.g. the US,
Czech Republic, Denmark, Israel, Norway
• Other countries have a ratio between 2 and 4: e.g.
Belgium, Canada, Japan, and Germany
• A last group of nations has a ratio greater than 4:
Australia, New Zealand, the UK, France, Italy, and
Spain. The highest value is found in Spain: it is
very relevant considering that only dwellings are
taken into account !
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2. What do the data say?
Financial assets
• In most of the countries the ratio of
household financial assets to disposable
income is lower than 4 and/or smaller than
real assets
• On the contrary Belgium, Canada, Denmark,
Japan, the Netherlands, Switzerland, the UK
and the US have higher financial wealth, that
is often greater than real assets
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2. What do the data say?
Net worth to gross disposable income
• Finally we looked at the ratio of total net worth sum of net financial and real assets - to disposable
income
• Australia, Israel and New Zealand are not
computed because their financial data are not in the
OECD website
• We adopted a threshold of 6 to select the wealthier
countries
• 9 countries are above 6: Spain (an outstanding
value!) but also the UK, Switzerland, Italy, Japan,
and France.
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Net worth to disposable income
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3. Issues for discussion
• In most of the countries real wealth is greater than financial
assets
• Sometimes real wealth is negatively linked to the size of a
country (look at Norway, Fin, and the US) and positively to
the population density, as it is in the UK, FR, and IT. But there
are exceptions like Aus and NZ, where real assets are large
• Of course real assets are influenced by other causes:
demographic trends, price bubbles, weight of finance etc.
• Should countries clarify some methodological issues? May the
land be more important than dwellings, like in France and
Japan?
• Are producer households an issue?
• Might new data change the economic interpretations?
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