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Survey of euro area households finds that the inequality of the net wealth distribution is similar in Estonia to that in the whole euro area

Tairi Rõõm Economist at Eesti Pank, 28.12.2016.Print version
The median level of net wealth of households in the euro area declined by approximately one tenth between 2010 and 2014; the inequality of the net wealth distribution increased moderately in the same period. The household wealth in Estonia is comparable to that in the other Central and Eastern European countries participating in the HFCS. The Gini coefficient of net wealth, which measures inequality, is very close in Estonia (0.69) to that of the euro area (0.685).

The Eurosystem’s Household Finance and Consumption Survey (HFCS) was carried out in 18 euro area countries as well as in Poland and Hungary in 2013 and 2014. The survey was being run for the second time and collected data on the assets, liabilities, income and consumption of households. The results from the survey of Estonian households are available here.


Compared with the first wave of the survey, which was mostly carried out in 2010, the net wealth of the median euro area household declined by approximately 10%. The changes in net wealth varied substantially across surveyed countries. The steepest falls were seen in the southern European countries that were most strongly affected by the European debt crisis in 2010─2014, while the median level of net wealth increased in some euro area countries like Germany, Austria and Finland. The dynamics of net wealth in this time period cannot be assessed for Estonia since Estonia did not take part in the first wave of the HFCS.

The main reason for the decline in the level of net wealth was the fall in real estate prices experienced by many of the countries surveyed in 2010–2014. The decline in real estate prices had a strong impact on net wealth because real estate holdings make up the largest part of households’ assets. The decrease in net wealth was larger for households with mortgages since they were affected more by the decline in real estate prices due to the leverage effect. The median value of net wealth declined by 20% among homeowners with mortgages. To a lesser extent, the decrease in net wealth was also driven by an increase in the outstanding value of debt. The debt burden mainly increased for households in the two upper quintiles of the net wealth distribution.


As a rule, net wealth is distributed more unequally than income and consumption, and this is also the case in the euro area countries. The median household in the euro area had net wealth of 104,100 euros, while the household at the 90th percentile had 496,000 euros (the 90th percentile is the household separating the poorest 90% of households from the richest 10%). Inequality of net wealth has increased slightly since the first wave of the survey, or has remained more or less the same, depending how inequality is measured. The Gini coefficient, which is the most commonly used measure of inequality, increased from 0.68 to 0.685, but the difference is within the bounds of statistical error.


The value of the net wealth of the median Estonian household was 43,600 euros in 2013. This was one of the lowest figures in any of the countries that took part in the survey, but household incomes in most of the countries in the euro area are also higher than in Estonia. The median level of net wealth of Estonian households is comparable to that of the other Central and Eastern European countries where the HFCS survey was run. The net wealth of the median household in Poland, Slovakia and Slovenia is larger than that in Estonia, while in Latvia and Hungary it is smaller (see Figure 1).




The estimate for the Gini coefficient shows the inequality of the distribution of net wealth among Estonian households to be very similar to that in the euro area. The Gini coefficient for net assets in Estonia was 0.69 in 2013 (see Figure 2).





he results of the second wave of the HFCS survey in the euro area countries are available on the website of the European Central Bank.


The results of the survey in Estonia can be found on the Eesti Pank website.


Background Information


On 23 December the European Central Bank published the results of the second wave of the Household Finance and Consumption Survey (HFCS) of households in the euro area. The survey aims to map the wealth of households and it also collects data on incomes and consumption. The first wave of the survey was run in 2008–2011 in 15 euro area countries. An expanded group of countries took part in the second wave, and Estonia was one of the new participants. Households were surveyed in 2013 or 2014 in 18 euro area countries, Poland and Hungary, and a total of 84,000 households were interviewed in the second wave of the survey.


The Household Finance and Consumption Survey is carried out regularly every three years. It is a comprehensive survey that covers all the countries of the euro area and allows the financial positions of households to be compared across countries. The survey was carried out in Estonia in 2013 and 2220 households were interviewed for it. The next survey in Estonia will be carried out in 2017.


The Gini coefficient is a measure of inequality that ranges from zero to one. The closer it is to one, the more unequal is the distribution of wealth. If the Gini coefficient is zero, wealth is equally distributed, while a value of one indicates perfect inequality. The Gini coefficient for net wealth in Estonia in 2013 was 0.69, and the Gini coefficient for incomes was 0.36.







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