Page 114 - Invited Paper Session (IPS) - Volume 1

IPS102 Ilja K. K. et al.

Measurement of wealth inequality with
distributional financial accounts indicators
Juha Honkkila, Ilja Kristian Kavonius
European Central Bank, Frankfurt am Main, Germany

Abstract
In view of the potential role that distributional data can play in explaining
macroeconomic developments, the European System of Central Banks’
Statistics Committee established an Expert Group on Linking Macro and Micro
Data for the Household Sector (EG-LMM) in December 2015. The aim of this
group is to understand, quantify and explain the main differences between the
Household Finance and Consumption Survey (HFCS) and the Financial
Accounts (FA). The systematic comparison of the two sources distinguishes
between two main explanatory factors: generic differences, which potentially
affect all or various components of wealth, and detailed instrument-specific
differences in definitions and data collection. Ultimately, the EG-LMM aims to
develop Distributional Financial Accounts (DFA) indicators.
The EG-LMM reported its provisional results in the first half of 2019 and this
paper summarises the outcome. As a first step, this paper briefly describes the
most important conceptual differences between micro and macro data on
household wealth. Compared to pure survey data, DFA indicators provide
information on household wealth that is coherent with macro aggregates.
Inequality indicators between these two sources may differ, since the coverage
of survey data is different for various kinds of assets and across various
household groups. The aim of the group was to improve the comparability
and DFA indicators also in long run. Therefore, it has provided number of
issues, which need to be further worked in the medium-term. In the last part
of the paper, these improvements are discussed.

Keywords
distributional financial accounts; wealth distribution; micro-macro linkage;
household wealth

1. Introduction
The financial crisis of 2008 and changes in the economic environment have
increased demand for timely, coherent and consistent distributional
information for the household sector. These new data requirements are
reflected in the G20 data gap initiative which encourages the production and
dissemination of distributional information on income, consumption, saving,
and wealth for the household sector. As a result of this, the OECD together

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