The Distribution of Wealth.

Author:Brown, Christopher
Position:Book review

The Distribution of Wealth, by Michael Schneider. Northhampton, Mass.: Edward Elgar. 2004. ISBN 1840648147, $82.25. 148 pages.

The author claims this slender volume represents the first "comprehensive treatment of the personal distribution of wealth in the modern sense" (p. xi). Michael Schneider has covered numerous sides of the wealth distribution question-from the meaning and measurement of wealth to redistributive policy--with considerable skill and clarity. Be advised, however, that no real effort has been made here (aside from short references to inheritance) to identify and explicate institutional sources of wealth inequality as well as its intergenerational transmission.

Wealth is notoriously difficult to define and measure. Variable definition here (as is so often the case in the social sciences) is conditioned by the availability of data sufficiently uniform so as to enable intertemporal and cross-country comparisons. Schneider's exclusion of "human capital" from his definition of personal wealth--"the value of tangible assets owned by the individual/household and the net total of the individual/ household's claims on tangible assets" (p. 2)--will raise the hackles of some economists. Is a new-mint neurosurgeon with outstanding educational loans truly less wealthy than a retired bus driver with a paid-off mortgage and $300,000 in pension assets?

Chapter 3 ("Empirical Studies of the Distribution of Wealth") supplies a valuable primer on techniques used to estimate the personal distribution of wealth for the USA, Canada, Western Europe, Scandinavia, Japan, and Korea. The most common approach, called the "estate multiplier," begins with estate data gathered for tax purposes or probate inventories (which in a given year cover only a small percentage of individuals) and arrives at population estimates by multiplying each case by the reciprocal of the mortality rate for a person of that specific age and gender. Schneider does not mention that U.S. estimates are biased downward because estate tax records omit wealth held in trust (which is substantial and tends to be concentrated among the very rich). Counting the present value of social security benefits as wealth would make the distribution of wealth appear more equitable, even though wealthier people live longer and thus collect more benefits.

The statistics displayed by Schneider in chapter 3 serve to fortify and embellish a position shared by virtually all social scientists: Wealth is tightly held...

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