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Crawford, Rowena
Innes, Davis
O'Dea, Cormac
Year of Publication: 
Series/Report no.: 
IFS Report No. R109
Institute for Fiscal Studies (IFS), London
The accumulation (and "decumulation") of wealth is a process that has come increasingly under the spotlight in recent years. There is growing policy and societal interest in understanding when, how and why households are building up (and running down) wealth, how this differs between different types of households, and how this process has changed over time and might continue to change in future. Despite this interest, existing evidence for the UK is relatively limited - largely because until recently there has been a lack of good data on wealth holdings of individual households. In this report, we aim to improve understanding of these issues considerably using new data from the Wealth and Assets Survey (WAS). This is a panel survey, which interviews the same households every two years, and collects detailed data on households' wealth (in particular, the level of wealth held in many different types of assets). The first WAS interviews were conducted between 2006 and 2008, and to date there are three "waves" of data available (interviews conducted in 2006-08, 2008-10 and 2010-12). To set the scene, Chapters 2 and 3 describe the distribution and detailed composition of household wealth in Great Britain in 2010-12. We divide household wealth into three broad components - property, financial and pension - and also consider finer categories within these. The analysis shows the following. Total household wealth is distributed very unequally. The wealth of the median household - that is, the household in the middle of the wealth distribution - is £172,000, while 9% of households have no positive net wealth, and 5% of households have in excess of £1.2 million. The Gini coefficient - a commonly used measure of inequality, which takes the value 0 under complete equality and 1 under complete inequality - is 0.65 on total household wealth, compared to 0.40 for household net income. Financial wealth is the most unequally distributed component of wealth, with a Gini coefficient of 0.91, followed by private pension wealth (Gini of 0.73) and then property wealth (net of mortgage debt; Gini of 0.64). Some of the inequality in wealth holdings reflects lifecycle factors. All components of wealth display a "lifecycle" pattern with average wealth increasing with age until around the mid-60s, and then declining thereafter. For example, median total household wealth is £23,000 for those aged 25-34, £382,000 for those aged 55-64 and £173,000 among those aged 85 and over. [...]
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Research Report

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