The wealth discussed here is net personal wealth – the wealth of all the individuals or households in the economy, defined as the value of their stock of assets net of any liabilities. Data on wealth is generally patchy and difficult to obtain. They generally show that, for most countries, wealth is highly unequally distributed. One reason for this is that individuals typically build up assets over their entire working life, so wealth holdings represent an accumulation of inequality. If the distribution of income becomes more unequal this will tend to produce increasingly unequal wealth holdings.
In their 2016 World Inequality Database working paper (Top Wealth Shares in the UK
over more than a Century), Facundo Alvaredo, the late Tony Atkinson and Salvatore Morelli analysed the distribution of personal wealth in the UK since 1895. Their analysis of UK wealth was based on four data sources:
- Household surveys of personal wealth, such as the UK Wealth and Assets Survey,
conducted by the Office for National Statistics.
- Administrative data on individual estates at death, multiplied-up to yield
estimates of the wealth of the living.
- Administrative data on investment income, capitalized to yield estimates of the
- Lists of large wealth-holders, such as the Sunday Times ‘Rich List’ for the UK.
Alvaredo, Atkinson and Morelli estimated the holdings of individuals (not families or households) of marketable wealth over the period 1895-2012. Wealth includes financial and property assets and other physical wealth such as cars, works of art and durables, but not pension wealth. One key series – and one that has attracted much media interest – is the share of the richest 1% of wealth holders. This is graphed below from 1950 to the latest year available together with the share of the bottom 90%.
Up until the early 1980s, inequality in wealth was clearly declining: the share of the top 1% was falling and that of the poorest 90% rising. These trends did not continue after the early 1980s. Since that date the shares of the richest 1% and poorest 90% have been on gradual upward and downward trends, respectively. In 2012 the richest 1% accounted for a fifth of total wealth in the UK and poorest 90% just under a half.
These trends since the early 1980s are probably mostly due to the considerable increase in income inequality in Britain over the same period. While it is by no means true that the richest 1% of income earners are the same people as the top 1% of wealth-holders, it is still likely that the rising income share of the top 10%, 5% and 1% of income earners over this period got converted into rising wealth shares at the top, as shown here.