CBO Report: Trends in Family Wealth, 1989 to 2013
How Did the Distribution of Wealth Change From 1989 to 2013?
Over the period from 1989 through 2013, family wealth grew at significantly different rates for different segments of the U.S. population. In 2013, for example:
- The wealth of families at the 90th percentile of the distribution was 54 percent greater than the wealth at the 90th percentile in 1989, after adjusting for changes in prices.
- The wealth of those at the median was 4 percent greater than the wealth of their counterparts in 1989.
- The wealth of families at the 25th percentile was 6 percent less than that of their counterparts in 1989.
The distribution of wealth among the nation’s families was more unequal in 2013 than it had been in 1989. For instance, the difference in wealth held by families at the 90th percentile and the wealth of those in the middle widened from $532,000 to $861,000 over the period (in 2013 dollars). The share of wealth held by families in the top 10 percent of the wealth distribution increased from 67 percent to 76 percent, whereas the share of wealth held by families in the bottom half of the distribution declined from 3 percent to 1 percent.
Two developments contributed to the change in the distribution of wealth: Compared with families in the top half of the distribution, families in the bottom half experienced disproportionately slower growth in wealth between 1989 and 2007, and they had a disproportionately larger decline in wealth after the recession of 2007 to 2009.
Estimates of the trends in wealth dispersion at the very top of the distribution differ depending on data set and methodology. Estimates based on data from the Survey of Consumer Finances (SCF), supplemented with data on the nation’s 400 wealthiest families, suggest that the share of wealth held by those in the top 1 percent increased by 6 percentage points—from 31 percent to 37 percent—between 1989 and 2013. By contrast, estimates based on other data and methodologies suggest that the share of wealth held by the top 1 percent increased by 14 percentage points—from 28 percent to 42 percent—between 1989 and 2012.
CBO’s analyses in this report—including that of trends in the share of wealth held by the top 10 percent of the distribution—are not very sensitive to the differences in estimates of wealth in the top 1 percent of the distribution. A detailed investigation of the sources of the differences in estimates of wealth held at the very top of the distribution would have been a significant undertaking that was outside the scope of this analysis.
Changes in wealth over the period were not the same for families headed by people of different ages or with different amounts of education. Families headed by someone who was age 65 or older held greater median wealth in 2013 than their counterparts did in 1989, but the same was not true for families headed by a person younger than 65. Median wealth was greater in 2013 than it had been in 1989 for families headed by someone with at least a bachelor’s degree; the opposite was true for their less educated counterparts. (Examining median wealth for those groups over time allowed CBO to avoid placing disproportionate weight on changes in wealth at the top of the distribution.)
Full Report below…
Trends in Family Wealth, 1989 to 2013