Household wealth

1
Household wealth

• What we can learn
• from micro data registers
• Gitte Frej Knudsen
• Søren Brodersen

2
The use of micro based registers
Household wealth
Explaining variables at micro level
Registers
Use

• Individuals
• Income
• Social status
• Family type
• Education
• Working place

• Micro based registers in
• the wealth project
• Dwellings
• Household cars

Research Statistics Analysis

• Other micro based
• registers
• Debt
• Financial assets

• Enterprises
• Activity code
• Number of employees
• Turnover

Example Analysis of owner occupiers net wealth
3
Household wealth
Main results
Share of households real assets
95,5
4,2
0,3

Households real assets
Billion DKK (current prices) 2004 2005 2006 2007 2008 2009
Owner occupied dwellings 2.446 2.837 3.107 3.913 4.000 3.561
Co-operative dwellings 134 152 253 228 244 208
Housing assets, total 2.580 2.989 3.361 4.141 4.244 3.769
GDP 1.466 1.545 1.632 1.691 1.737 1.660
Housing assets, of GDP 176 193 206 245 244 227
Household cars     132   188  
Yachts         10  
Aircrafts owned by households         1  
Real assets, total       4.443  
4
Examples of micro based results
Household wealth

• Co-operative dwellings
• Value The average value in the Copenhagen area
• is 10 higher than in the rest of the country
• Type of family 50 of co-operative owners are
  single
• Geography 70 of co-operative dwellings are in
  the Copenhagen area
• Owner occupied dwellings
• Value The average single family house in the
• Copenhagen area, has a value 83 above
• the average for the rest of the country
• Social status Pensioners own 16 of the market
  value
• Working place 55 of the market value is owned
  by persons
• who work in the private sector

5
Register Market value for owner occupied
dwellings
Household wealth
1. Geography dimension

• Building and estate register
• Real estate no.
• Postal code
• Municipal code
• Region

Merging Key Real estate no.

• Real estate value register
• Real estate no.
• Official real estate valuation
• (tax value)

2. Real estate sales

• Estate sales register
• Real estate no.
• Actual sale values

• Official valuation and
• geography dimension
• Real estate no.
• Official real estate valuation
• Postal code, municipality, region

Merging Key Real estate no.
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Register Market value for owner occupied
dwellings
Household wealth
3. Sector delimitation Household sector

• Business register
• Business register no.
• Type of ownership

• Owners of real estate
• Real estate no.
• Personal ID no.
• Business register no.
• Owner share

• Owners belonging to the
• household sector
• Real estate no.
• Personal ID no.
• Business register no.
• Owner share

Filter Persons and sole proprietorships
4. Official estate valuations broken down by
individuals and geography

• Official real estate valuations
• Real estate no.
• Official estate valuations
• Postal code, municipality, region
• Actual sale values

Merging (basic register) Key Real estate no.

• Owners belonging to the
• household sector
• Real estate no.
• Personal ID no.
• Business register no.
• Owner share

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Estimation of actual market values for owner
occupied dwellings
Household wealth

• 1. Estimation of coefficients relating actual
  sale values
• to official real estate valuations
• k is a geographical area, e.g. a postal code
• j is an owner occupied dwelling (type j), traded
  in the geographical area k
• 2. Estimation of market value at micro level

Market value Official estate value market
value coefficient
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Household wealth
Estimation of market values for owner occupied
dwellings
One family houses only Coefficients of actual
sales values to official real estate values
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Market values for co-operative dwellings
Household wealth

• Challenges
• No central registration of owners
• No official real estate valuation of co-operative
  dwellings
• Assumptions for estimation of market values at
• micro level
• All adults at the same address own equal shares
  of the co-operative dwelling
• The total real estate value owned by the
  co-operative is distributed proportionally among
  dwellings according to square meters
• Coefficients between actual sales values and
  official estate value are estimated at regional
  level only
• Conclusion
• Estimates suffer from incomplete
  information for ownership and actual sales
  values unlike register information on owner
  occupied dwellings

10
Comparison between micro based market value and
national accounts data on household real estate.
Household wealth

• Note Real estate of households includes
  dwellings and business real estate of
  household sector enterprises.

11
Register Market value for household cars
Households real assets
1. Sector delimitation Household sector

• Vehicle register
• Owners
• Personal ID no.
• Business reg. no.
• Vehicle key number
• Manufacturer
• Model, variant, age
• other technical data

• Business register
• Business register no.
• Type of ownership

• Owners belonging to the
• household sector
• Personal ID no.,
• Business reg. no.
• Vehicle key number
• Manufacturer
• Model, variant, age
• other technical data

Filter Persons and sole proprietorships
2. Market value

• Imputation programme
• Impute market value
• when no match is found

• Owners belonging to the
• household sector
• Personal ID no.,
• Business reg. no.
• Vehicle key number
• Manufacturer
• Model, variant, age
• other technical data

• Price register from
• Danish Motorcar Society
• Vehicle key number
• Age
• Market value

Merging Keys Vehicle key number, age
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Register Market value for household cars
Households real assets

• 3. Challenges
• The Price register from Danish Motorcar Society
  contains only cars
• No prices for cars older than 20 years
• 10 percent of the household cars have no match
  between the Price register and the Vehicle
  register
• 4. Assumptions for estimation of market values at
  micro level
• No market value for household vans, motor cycles,
  mobile homes etc.
• All cars older than 20 years have a market value
  equal to zero.
• Imputed market values for 10 percent of the
  household cars
• 5. Explaining variables

• Registers with explaining
• variables (Statistics Denmark)
• Geographical localisation
• Composition of the owner's family
• Family income
• Housing condition
• other explaining variables

• Merged Vehicle register
• with market value
• Owner
• Manufacturer
• Model, variant, age etc.
• Market value

Merging Keys Personal ID no.
Business reg. no.
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Household wealth 2008
Household wealth
(in billion DKK) (in billion DKK) Household sector Household sector
  National accounts S.14 Aggregate micro data
Financial assets                Currency AF.21 30  
Financial assets                Deposits AF.22 765 492
Financial assets                Securities other than shares AF.3 159 206
Financial assets                Quoted shares AF.511 106 122
Financial assets                Unquoted shares AF.512 232  
Financial assets                Other equity AF.513 161 16
Financial assets                Mutual funds shares AF.52 206  
Financial assets                Insurance - technical reserves AF.6 1.781  
Financial assets                Other accounts receivable AF.7 61  
Liabilities Securities other than shares AF.3 19 19
    Loans AF.4 2.315 2.243
    Other accounts payable AF.7 154
    Net financial wealth Net financial wealth 1.013 -1.426
Real assets Dwellings and other real estate Dwellings and other real estate 1.707 4.244
    Motor vehicles Motor vehicles 245 188
    Yachts and aircrafts owned by households Yachts and aircrafts owned by households   11
  Yachts and aircrafts owned by households Yachts and aircrafts owned by households   11
  Net Wealth Net Wealth 2.965 3.017
Excl. land Only Cars
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Summary
Household wealth

• Households real assets estimated at micro level
  amounts at the end of 2009 to approximately 2.4
  times GDP
• Micro registers can be used for distribution
  analysis
• (by income, gender, age, family size, occupation
  etc.)
• Reliable estimates of market values for owner
  occupied
• dwellings at micro and macro level
• Estimates for co-operative dwellings are less
  reliable but still useful