Monday, 10 August 2015

Is wealth inequality high in Denmark and Sweden?

It is well known that the Scandinavian countries have some of the lowest levels of income inequality in the world. According to several recent studies, however, Sweden and Denmark appear to have some the highest levels of wealth inequality. 

Sierminska et al. (2008) examined data on seven countries from the Luxembourg Wealth Study. They found that wealth inequality was highest in the US and Sweden. Davies et al. (2009) examined Household Balance Sheet data on twenty countries. They found that wealth inequality was highest in Denmark, Switzerland and the US, with Sweden in sixth place behind Indonesia and France. Skopek et al. (2014) examined data on eighteen countries from both the Survey of Health, Ageing and Retirement in Europe and the Global Wealth Databooks. They found that in the SHARE data, wealth inequality was highest in Estonia, Switzerland and Israel (with Sweden in sixth place and Denmark in ninth); but that in the GWD data, wealth inequality was highest in Denmark, Switzerland and Sweden. 

In the Discussion, Skopek et al. comment on the unexpectedness of their results:
Most surprising is certainly the finding that the Northern European countries––known for their high level of social equality––exhibit high levels of wealth inequality, although a number of studies have already reported this phenomenon, most of them for Sweden... and also several for Denmark.
I'm not quite sure what to make of these findings yet. One alarm bell is that average wealth appears to differ vastly more across developed countries than either average household income or GDP per capita. For example, according to the SHARE data analysed by Skopek et al., median net worth is €180,820 in Belgium, but only €83,700 in Austria––and this is despite the fact that GDP per capita is slightly higher in Austria.

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