1. Wealth and inheritance in Britain from 1896 to the present A B Atkinson Nuffield College, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford, and London School of Economics

2. Plan 1.The recent rise in UK personal wealth 2.Inheritance in the UK: sources and methods 3.A return of inheritance in Britain? 4.Comparison with France 5.Conclusions.

3. 1. The recent rise in UK personal wealth

4. Role of housing

5. National wealth/income

6. Public and corporate sectors

7. 2. Inheritance in UK: Sources and methods Data from 1896 to 2008 (only 13 missing years)

8. Need adjustments Non-filers; Exempt (settled) property and under- and over- valuation; Gifts inter vivos not subject to duty. NB Not all adjustments made in estimating total wealth apply.

9. Gifts inter vivos

10. 3. Return of inheritance in UK?

11. 2 U-shapes U U

12. In relation to total personal wealth

13. Accounting equation Basic accounting equation used by Piketty: ratio of transmitted wealth, B, to national income, Y, is equal in year t to B t /Y t = m t μ t * W t /Y t where m t is the mortality rate, μ t * is the ratio of the average wealth of decedents (corrected for gifts inter vivos) relative to the average wealth of the living, and W t denotes total personal wealth, or B t /W t = m t μ t *

14. Mortality and μ

15. Decompositioon Piketty on France: “the historical decline in the mortality m t seems to have been (partially) compensated by an increase in the μ t * ratio. Consequently, the product of the two, that is the inheritance-wealth ratio b wt = m t μ t *, declined much less than the mortality rate”. In the UK, from 1977 to 2006, the rise in the B/Y ratio by a factor of 1.69 can be seen as the product of 0.75 (mortality decline) 1.23 (rise in μ*) and 1.83 (rise in W/Y). In the earlier upturn, from 1921 to 1932, by a factor of 1.54 can be seen as the product of 1.06 (slight mortality increase) 1.03 (virtually constant μ*) and 1.41 (rise in W/Y).

16. 4. Comparison with France

17. France

18. Comparison

19. Decomposition change 1977 to 2006 FranceUK Rise in B/Y2.391.69 made up from Change in mortality 0.790.75 Change in mu1.751.23 Change in B/Y1.741.83 Note: Each cell shows the ratio of the 2006 value to that in 1977, so that B/Y in France in 2006 was 2.39 times the value in 1977.

20. Conclusions Estate data for UK not go so far back in time, although more frequent in recent years; Knowledge about gifts inter vivos much less satisfactory in UK; and adjustments approximate; Have seen recent rise in B/Y but less than in France (unless increase in gifts under-stated); Rise in UK mostly driven by rise in W/Y; Also U-shape in first third of C20; Need to interpret recent U-shape in light of changing net worth of public and corporate sectors.

21. More urgency for reforming wealth transfer tax