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Correcting for the Missing Rich: An Application to Wealth Survey Data
Author(s) -
Eckerstorfer Paul,
Halak Johannes,
Kapeller Jakob,
Schütz Bernhard,
Springholz Florian,
Wildauer Rafael
Publication year - 2016
Publication title -
review of income and wealth
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.024
H-Index - 57
eISSN - 1475-4991
pISSN - 0034-6586
DOI - 10.1111/roiw.12188
Subject(s) - arbitrariness , econometrics , economics , survey data collection , criticism , goodness of fit , distribution (mathematics) , consumption (sociology) , statistics , mathematics , sociology , social science , law , mathematical analysis , philosophy , linguistics , political science
It is a well‐known criticism that if the distribution of wealth is highly concentrated, survey data are hardly reliable when it comes to analyzing the richest parts of society. This paper addresses this criticism by providing a general rationale of the underlying methodological problem as well as by proposing a specific methodological approach tailored to correcting the arising bias. We illustrate the latter approach by using Austrian data from the Household Finance and Consumption Survey . Specifically, we identify suitable parameter combinations by using a series of maximum‐likelihood estimates and appropriate goodness‐of‐fit tests to avoid arbitrariness with respect to the fitting of the P areto distribution. Our results suggest that the alleged non‐observation bias is considerable, accounting for about one quarter of total net wealth in the case of A ustria. The method developed in this paper can easily be applied to other countries where survey data on wealth are available.