Measuring Wealth and Wealth Inequality: Comparing Two U.S. Surveys.

Area of Science:

• Economics
• Survey Methodology
• Household Finance

Background:

• Household wealth and its distribution are critical for economic policy and public understanding.
• Accurate data sources are essential for reliable research on wealth holdings.
• The Survey of Consumer Finances (SCF) and Panel Study of Income Dynamics (PSID) are key U.S. household wealth data sources.

Purpose of the Study:

• To compare the relative strengths of the SCF and PSID for analyzing U.S. household wealth.
• To describe and explain differences in wealth levels and distributions captured by the SCF and PSID.
• To assess the impact of data source choice on estimates of wealth concentration and inequality.

Main Methods:

• Comparative analysis of wealth data from the Survey of Consumer Finances (SCF) and Panel Study of Income Dynamics (PSID).
• Identification of factors contributing to discrepancies in average net worth between the two surveys.
• Examination of wealth distribution across the entire spectrum, with a focus on top wealth percentiles.

Main Results:

• Estimates of household net worth are largely similar across most of the wealth distribution in both surveys.
• Median net worth is slightly higher in the SCF (6%) compared to the PSID.
• Significant differences in wealth estimates are concentrated among the top 1-2% wealthiest households.

Conclusions:

• While both SCF and PSID offer valuable insights, they present differing perspectives on wealth concentration at the very top.
• For wealth inequality across the broader population, both surveys provide broadly similar results.
• Researchers should be aware of these data source specificities when analyzing household wealth and its distribution.