Measuring Inheritance Through Surveys

BANCA D’ITALIA
E U R O S I S T E M A
by R. Gambacorta and A. Neri
Bank of Italy - Statistics Directorate
Measuring inheritance through surveys: the experience of Bank of Italy Rome 22-23 September 2014
Joint IEA/ISI Strategic Forum 2014

Measuring inheritance through surveys
Why it is important to have a good estimate of inheritance?
Inheritance affects:

Accumulation behaviour (saving and consumption choices, income)

Wealth concentration

Intergenerational mobility
Debate on inheritance tax Rome 22-23 September 2014 2

The Survey of Household Income and wealth
Target variables: Income, Wealth and other socio- economic indicators.
Time span: Since 1965 (yearly up to 1986; since 1987 every two years)
Sample: 8,000 households
“Split panel” component (about half) since 1989
Mode of administration: Face to face (CAPI)
Special modules (expectations, social capital, capital gains,..)
3
Rome 22-23 September 2014

First approach to measure inheritance

Special modules:

Received transfers (1991,2002,2014)

Received, given, expected transfers (2002,2014)

Follow-up questions of each item (amount, year received, from whom received..) (1991,2002,2014) Rome 22-23 September 2014 4

Received transfers Rome 22-23 September 2014 5
Think of all the transfers of assets that you (or your spouse/cohabitant) have received as a bequest or gift and answer the following questions: Bequest Gift To the head of household or his/her spouse/ cohabitant From parents (or grandparents) or other persons? Year of the transfer Value of the transfer in the year it was made € or Value of the transfer € in ……. (year) 1 2 HH 1 SP 2 PA- GR 1 OTHER 2 |__|__|__|__| __|.|__|__|__|.|__|__|__| |__|.|__|__|__|.|__|__|__| |__|__|__|__| 1 2 HH 1 SP 2 PA- GR 1 OTHER 2 |__|__|__|__| |__|.|__|__|__|.|__|__|__| |__|.|__|__|__|.|__|__|__| |__|__|__|__| 1 2 HH 1 SP 2 PA- GR 1 OTHER 2 |__|__|__|__| |__|.|__|__|__|.|__|__|__| |__|.|__|__|__|.|__|__|__| |__|__|__|__| 1 2 HH 1 SP 2 PA- GR 1 OTHER 2 |__|__|__|__| |__|.|__|__|__|.|__|__|__| |__|.|__|__|__|.|__|__|__| |__|__|__|__| 1 2 HH 1 SP 2 PA- GR 1 OTHER 2 |__|__|__|__| |__|.|__|__|__|.|__|__|__| |__|.|__|__|__|.|__|__|__| |__|__|__|__|

Expected transfers 6

Intergenerational transfers in the 2002 SHIW: accounting for expectations 7
… and then In the end you will leave or bequeath to your children or grandchildren a total amount of wealth (at today’s prices) Greater than your present wealth Approximately equivalent to your present wealth Lower than your present wealth or about…. |__||__||__|.|__|__|__|.|__|__|__| €

Wealth by origin
The 2002 module allows a complete decomposition of household net wealth by origin:
Wt = WtL+ WtR - WtG
(L=life-cycle, R=received, G=given)
Importance of received transfers: 훼훼푅푅=푊푊푅푅/푊푊
The knowledge of the year of transfers allows the capitalization of amounts
8 Rome 22-23 September 2014

Intergenerational transfers in Italy Rome 22-23 September 2014 9
Source: Cannari, L. & D'Alessio, G. (2008), Intergenerational transfers in Italy, Bank of Italy.
1991 2002 Average (€) Ratio to net wealth Average (€) Ratio to net wealth Without capitalisation Inheritance ......................... 34,057 25.2 51,485 28.7 Gift..................................... 7,647 5.7 8,937 5.0 Total received transfers .... 41,704 30.9 60,422 33.6 With capitalisation Inheritance ......................... 53,044 39.3 85,489 47.6 Gift..................................... 12,972 9.6 13,217 7.4 Total received transfers .... 66,017 48.9 98,706 54.9

0306090120150180210240270up to 30years31-40 years41-50 years51-60 years61-70 yearsOver 71years0306090120150180210240270Transfers receivedNet WealthLife-cycle wealthTransfers given
HOUSEHOLD NET WEALTH BY ORIGIN, 2002
(thousands euros)
Source: Cannari, L. & D'Alessio, G. (2008), op. cit.

Wealth by destination
The 2002 module allows an additional decomposition of households net wealth by destination:
Wt + WtR*= WtG* - St*
St =Savings
(*to be given-received in future)
11 Rome 22-23 September 2014

HOUSEHOLD NET WEALTH BY DESTINATION, 2002
(thousands euros)
0
30
60
90
120
150
180
210
240
270
0
30
60
90
120
150
180
210
240
270
up to 30
years
31-40 years
41-50 years
51-60 years
61-70 years
Over 71
years
Transfers to be received
Net wealth
Future net dissaving
Transfers to be given
Source: Cannari, L. & D'Alessio, G. (2008), op. cit.

Second approach to measure inheritance 13
Ongoing questions about the provenience of properties owned by the household
“How did the household acquire ownership of the dwelling? “ (purchased, inherited, built,..)
Market value
the estimation of the probability of selling the property is required

Value of real estate inherited or received as a gift (percentage ratio to net worth)
14
Source: Cannari and D’Alessio (2014)
15
25
35
45
55
65
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
Adjusted for probability of sale
Unadjusted
Adjusted for probability of sale and capitalisation

The Household Finance and Consumption survey

The HFCS is a harmonized sample survey on wealth and income of euro-area households coordinated from the ECB but conducted on a voluntary basis by the euro area national central banks (NCBs).

The survey provides unique information on households’ economic behaviour in the euro area for both researchers and policy makers.

For the first wave 62,000 households have been interviewed, collecting about 500 core variables based on a blueprint questionnaire.

Main topics: household structure, incomes, real and financial wealth, debts, inheritance. Rome 22-23 September 2014 15

Inheritance in the HFCS

Questions on received inheritance or substantial gifts. For each asset:

kind of asset

year in which the asset was received

value at the time the asset was received

from whom it was received

One general question on expectation:
And in the future, (do you/does anyone in your household) expect to receive a substantial gift or inheritance (from someone outside the household)? Rome 22-23 September 2014 16

Share of households that expect or have received an inheritance
17
0
10
20
30
40
50
60
AT
BE
DE
ES
FR
GR
IT*
PT
SK
Expect
Received
Expected or received
Note: (*) For Italy data refer to the 2002 survey.

Issues in measuring inheritance/gifts in surveys

High quality data require asking both retrospective information and expectations

Wealth and received inheritance are highly concentrated (in Italy 62% and 88%). Non response is higher for wealthy households

Under-reporting, problems of recall, response by proxy, difficulties in predicting future behaviors...

Cross-country comparisons are even more difficult Rome 22-23 September 2014 18

Great potential of survey data:
Impact of inheritance on wealth distribution: in Italy, received transfers account for 30-55 % of wealth. Their importance increases over time.
Inheritance in a lifetime perspective (controlling for age and expectations)
Impact on intergenerational mobility
Microsimulation models
19

BANCA D’ITALIA
E U R O S I S T E M A
by R. Gambacorta and A. Neri - Bank of Italy - Statistics Directorate
Measuring inheritance through surveys: the experience of Bank of Italy Rome 22-23 September 2014
THANK YOU
FOR YOUR ATTENTION

Measuring Inheritance Through Surveys

Recommended

Recommended

More Related Content

Similar to Measuring Inheritance Through Surveys

Similar to Measuring Inheritance Through Surveys (20)

More from StatsCommunications

More from StatsCommunications (20)

Recently uploaded

Recently uploaded (20)

Measuring Inheritance Through Surveys