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

2 The use of micro based registers Household wealth Individuals Income Social status Family type Education Working place Micro based registers in the wealth project Dwellings Household cars Other micro based registers Debt Financial assets Enterprises Activity code Number of employees Turnover Explaining variables at micro level RegistersUse Research Statistics Analysis Research Statistics Analysis Example: Analysis of owner occupiers’ net wealth

3 Households’ real assets Billion DKK (current prices) Owner occupied dwellings Co-operative dwellings Housing assets, total GDP Housing assets, % of GDP Household cars Yachts 10 Aircrafts owned by households 1 Real assets, total Main results Household wealth Share of households’ real assets 95,5%4,2% + 0,3%

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 Real estate value register  Real estate no.  Official real estate valuation (tax value) Building and estate register  Real estate no.  Postal code  Municipal code  Region Merging Key: Real estate no. Merging Key: Real estate no. Estate sales register  Real estate no.  Actual sale values 1. Geography dimension Official valuation and geography dimension  Real estate no.  Official real estate valuation  Postal code, municipality, region 2. Real estate sales

6 Register: Market value for owner occupied dwellings Household wealth Owners of real estate  Real estate no.  Personal ID no.  Business register no.  Owner share Business register  Business register no.  Type of ownership Owners belonging to the household sector  Real estate no.  Personal ID no.  Business register no.  Owner share Filter: Persons and sole proprietorships Official real estate valuations  Real estate no.  Official estate valuations  Postal code, municipality, region  Actual sale values Merging (basic register) Key: Real estate no. 3. Sector delimitation: Household sector Owners belonging to the household sector  Real estate no.  Personal ID no.  Business register no.  Owner share 4. Official estate valuations broken down by individuals and geography

7 Estimation of actual market values for owner occupied dwellings 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 Household wealth Market value = Official estate value * market value coefficient

8 Estimation of market values for owner occupied dwellings Household wealth One family houses only Coefficients of actual sales values to official real estate values

9 Market values for co-operative dwellings 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 Household wealth

10 Comparison between micro based market value and national accounts data on household real estate. Note: Real estate of households includes dwellings and business real estate of household sector enterprises. Household wealth

11 Register: Market value for household cars Households’ real assets 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 1. Sector delimitation: Household sector 2. Market value Price register from Danish Motorcar Society  Vehicle key number  Age  Market value Merging Keys: Vehicle key number, age 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

12 Register: Market value for household cars Households’ real assets Merged Vehicle register with market value  Owner  Manufacturer  Model, variant, age etc.  Market value Merging Keys: Personal ID no. Business reg. no. Registers with explaining variables (Statistics Denmark)  Geographical localisation  Composition of the owner's family  Family income  Housing condition …other explaining variables 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

13 Household wealth 2008 Household wealth (in billion DKK) Household sector National accounts S.14Aggregate micro data Financial assets CurrencyAF.2130 DepositsAF Securities other than sharesAF Quoted sharesAF Unquoted sharesAF Other equityAF Mutual funds sharesAF Insurance - technical reservesAF Other accounts receivableAF.761 LiabilitiesSecurities other than sharesAF.319 LoansAF Other accounts payableAF.7154 Net financial wealth Real assetsDwellings and other real estate1.707*4.244 Motor vehicles 245** 188** Yachts and aircrafts owned by households 11 Net Wealth * Excl. land ** Only Cars

14 Summary 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 Household wealth