High Net Wealth Research Articles

An Application of the Dagum Type III Model to Measure Household Net Wealth Inequality in Indonesia

Abstract This paper applies the Dagum Type III model to measure household net wealth inequality in Indonesia utilising data from the Indonesian Family Life Survey (IFLS) 1993–2014. The results are the distribution of household net wealth in Indonesia is right-skewed, with long-and sparse-hand tails that reflect a large proportion of households that have very low net wealth and a small proportion of households that have very high net wealth. Further, the inequality of household net wealth in Indonesia declined, as shown by the decrease in the Gini coefficient.

A Report from LGBTI Philanthropy

A Report from LGBTI Philanthropy

Effects of the financial crisis on household financial risky assets holdings: Empirical evidence from Europe

The aim of this paper is to analyze the dynamic nature of holding financial risky assets by households before and after the 2008 financial crisis. We use data from Wave 2 (2006–2007) and Wave 4 (2010–2011) of the Survey of Health, Ageing and Retirement in Europe (SHARE), which cover the time periods before and after the 2008 financial crisis, respectively. Empirical evidence shows that households with higher net wealth, higher educational level, higher probability of receiving inheritance, better self-perceived health status, and more social activities tend to own risky assets in both waves. However, household size has significantly negative effect only in Wave 4. Overall, households are less inclined to hold risky assets after the financial crisis. The dynamic results reveal that households with increased net wealth between these two periods have stronger (weaker) association with holding of financial risky assets. Households with older respondent (aged over 65) are less likely to change their financial decisions regarding the owning of risky assets. However, highly-educated households exhibit two different financial behaviors, either increased or decreased probability of owning risky assets. We also find varying effects among countries.

LESSONS FROM COVID-19: SMALL AND FINANCIALLY STRONG FAMILY

Households should small and but financially strong, especially to deal with a crisis where most families face a reduction in income but relatively constant expenditure. To maintain the standard of living, they need a buffer, measured from net wealth, i.e. total value of assets deducted by debts. There is no justification for how small the family size should be. For most households, higher net wealth is achieved when they have smaller household size, while only the poorest and richest households can get benefits from additional household members. However, we should also aware of the pseudo-increase of net wealth, i.e. households obtain an increasing net wealth because of additional household members but unable to push them to higher decile.

Leisure & travel as class signifier: Distinction practices of China's new rich

Along with its open-door policy and economic reforms, wealth accumulation in China has experienced tremendous growth in a short time. Notably, a group of new rich has emerged in the process of wealth and social reconfiguration. Being rich creates tremendous possibilities for individuals to tailor their leisure activities and lifestyles. Situating individuals' travel in the overall spectrum of leisure, this study explores the distinction practices adopted by China's new rich at leisure sites. Phenomenological interviews were conducted with 29 China's High Net Wealth individuals. The findings discover the spectrum of highbrow–lowbrow tastes occurring at leisure sites with three patterns of leisure constructions: conspicuous waste, conspicuous taste, and lifestyle. Supplementing Veblen and Bourdieu's traditions, the study further deepens scholars' comprehension of social distinction in tourism academia.

Understanding the determinants of rooftop solar installation: evidence from household surveys in Australia

Australia is a world leader in household uptake of solar photovoltaic systems. In this paper, we use household‐level data to identify economic, social, and environmental factors that influence actual uptake and the intention to install. We find that higher net wealth is generally associated with higher likelihood to install. Households that have mortgages, that spend more on electricity, and that pay higher average electricity prices are more likely to intend to install. Environmental preferences and related behaviours, property tenure, and space constraints are associated with both actual uptake and intention to install. We use data from the Survey of Income and Housing of 2015‐16 and the Household Energy Consumption Survey of 2012.

The Effect of Demographic Factors on Investor’s Risk Tolerance using Fuzzy Analytic Hierarchy Process

This paper attempts to achieve three objectives, first: to investigate the effect of demographic factors of the investor (age, gender, number of dependents, level of education, occupation, average monthly income, investment experience and net wealth) on investor’s risk tolerance using FAHP. Second: to identify the difference or agreement between the results of AHP and those of FAHP. Finally: to identify the difference or agreement between investor’s risk tolerance calculated by the expert (using the suggested model) and those estimated by the investor. Results show that all indicated demographic factors may affect investor's risk tolerance, where middle-aged, male, small numbers of dependents, high qualification, business owner, high-income, long-term investment experience and High-net wealth are more risk tolerance than others. Beside, findings indicate that there is no significant difference between the results of FAHP and those of AHP, and that there is no significant difference between the risk tolerance levels calculated by the expert (using the suggested model) and those estimated by the investor.

Private Wealth Across European Countries: The Role of Income, Inheritance and the Welfare State

Using microdata from the Household Finance and Consumption Survey (HFCS), this study examines the role of inheritance, income and welfare state policies in explaining differences in household net wealth within and between euro area countries. First, about one-third of the households in the 13 European countries we study report having received an inheritance, and these households have considerably higher net wealth than those which did not inherit. Second, regression analyses on households' relative wealth position show that, on average, having received an inheritance lifts a household by about 14 net wealth percentiles. At the same time, each additional percentile in the income distribution is associated with about 0.4 net wealth percentiles. These results are consistent across countries. Third, multilevel cross-country regressions show that the degree of welfare state spending across countries is negatively correlated with household net wealth. These findings suggest that social services provided by the state are substitutes for private wealth accumulation and partly explain observed differences in levels of household net wealth across European countries. In particular, the effect of substitution relative to net wealth decreases with growing wealth levels. This implies that an increase in welfare state spending goes along with an increase—rather than a decrease—of observed wealth inequality.

Private Wealth Across European Countries: The Role of Income, Inheritance and the Welfare State

Using microdata from the Household Finance and Consumption Survey (HFCS), this study examines the role of inheritance, income and welfare state policies in explaining differences in household net wealth within and between euro area countries. First, about one third of the households in the 13 European countries we study report having received an inheritance, and these households have considerably higher net wealth than those which did not inherit. Second, regression analyses on households' relative wealth position show that, on average, having received an inheritance lifts a household by about 14 net wealth percentiles. At the same time, each additional percentile in the income distribution is associated with about 0.4 net wealth percentiles. These results are consistent across countries. Third, multilevel cross-country regressions show that the degree of welfare state spending across countries is negatively correlated with household net wealth. These findings suggest that social services provided by the state are substitutes for private wealth accumulation and partly explain observed differences in levels of household net wealth across European countries. In particular, the effect of substitution relative to net wealth decreases with growing wealth levels. This implies that an increase in welfare state spending goes along with an increase - rather than a decrease - of observed wealth inequality. JEL Classification: D30, D31

Spearing High Net Wealth Individuals

Every day dangerous criminals are targeting high net wealth members of our community as they venture onto the internet. Statements from twenty-nine community organizations and mature age internet users were analyzed using structured coding techniques in order to identify the major criminal risks and threats, and key protective safeguards. The study warns that mature users, particularly those with high net wealth, are critically vulnerable to internet fraud, and personal data and identification theft through spear phishing email and remote access trojan malicious software attacks. The major implication for countries with aging populations, and rising numbers of mature internet users, is the urgent need for ongoing development and resourcing of internet security skills and awareness programs; consumer protection laws and law enforcement assistance; affordable protective internet technologies and complementary support schemes; and the strengthening of online business codes and standards, particularly in dealings with older people.

Retirement Plans: Planners and Nonplanners

With the aging of millions of baby boomers, retirement planning is rapidly increasing in importance. This study explores differences in characteristics of individuals who have well-articulated retirement plans and those who do not. Women and those with low financial net wealth are less heavily represented among planners. More heavily represented among the planners are the self-employed, those with high financial net wealth, and those who have spoken to a professional financial planner. The expected primary source of retirement income is also associated with planning status. Those expecting to rely primarily on Social Security for their retirement income are less heavily represented among planners, while those expecting to rely mostly on defined-contribution plans or on savings or income from personal investments are more heavily represented. Since procrastination, inertia, and low expectations of success often impede retirement planning, three recommendations are provided: (a) develop user-friendly software to entice individuals to explore retirement planning in a fun way; (b) improve financial literacy education to develop understanding and motivation; and (c) institute programs that use inertia to encourage greater saving.

Italian Household Wealth in a Cross-Country Perspective

This paper provides a comparative analysis of household wealth in the United States, the United Kingdom, Japan, France, Germany, Spain and Italy, with a special focus on the latter. First, we compare national levels of debt and financial and real wealth. Second, we analyse the composition of financial wealth in more detail, by looking at the instruments in which households invest. Third, we discuss the empirical evidence on household indebtedness. In a nutshell, in Italy household financial assets are not as large as in the US, the UK or Japan, but are larger than in other European countries. This Italian position derives from the greater importance of securities other than shares and unquoted shares and other equity in the household portfolio, while insurance technical reserves are small by international standards. Italy also has a high ratio of real wealth to disposable income. Taking into account that their debt is low, Italian household have a high net wealth among the main OECD countries.

Household Demand for Variable Annuities

Between 1990 and 2000, total sales of variable annuities in the U.S. grew from just over $5 billion to nearly $140 billion. These products now account for approximately half of all private market annuity sales. Variable annuities resemble mutual funds, but they qualify for special tax treatment as insurance products because they provide an option to convert to a life annuity. This paper describes the tax treatment of variable annuities and presents summary information on the ownership patterns for variable annuities. It also explores the relative importance of several distinct motives for household purchase of variable annuities. We use household data from the 1998 and 2001 waves of the Survey of Consumer Finances to examine ownership patterns and to test for the importance of tax and insurance considerations in variable annuity demand. We find that variable annuity ownership is highly concentrated among high income and high net wealth sub-groups of the population, although the concentration is lower than for several other categories of financial assets. We find mixed support for the role of tax considerations in generating variable annuity demand, and we outline a set of research issues that focus on household annuity purchases.