On the Distribution of Estates and the Distribution of Wealth: Evidence from the Dead

Abstract

Detailed information about the distribution of estates left at death has commonly served as the basis for the estimation of wealth distributions among the living via the mortality multiplier method. The application of detailed mortality rates by demographics and other determinants of mortality is crucial for obtaining an unbiased representation of the wealth distribution of the living. Yet, in this paper we suggest that a simplified mortality multiplier method, derived using average mortality rates and aggregate tabulations by estate size, may be sufficient to derive compelling estimates of wealth concentration. We show that the application of homogeneous multipliers leads to estimates that are close in level and trend to the concentration of wealth derived in the existing literature with the detailed mortality multiplier method for a variety of countries. The use of mortality rates graduated by estate size does not confute this finding. We also derive the general formal conditions for the similarity between the distributions of wealth of the living and estates at death and discuss the main caveats. These findings may unlock a wide array of aggregate estate tabulations, previously thought to be unusable, for estimating historical trends of wealth concentration. (Stone Center on Socio-Economic Inequality Working Paper Series)