CONGRESS OF THE UNITED STATES

CONGRESSIONAL BUDGET OFFICE

CBO

Trends in

Family Wealth,

1989 to 2013 

AUGUST 2016

Top 10 Percent

51st to 90th

Percentiles

Bottom 50 Percent

Holdings of Family Wealth

Trillions of 2013 Dollars

1989 1992 1995 1998 2001 2004 2007 2010 2013

0

15

30

45

60

75
CBO

Notes

Numbers in the text and exhibits may not sum to totals because of rounding.Unless otherwise specified, all dollar amounts are reported in thousands of 2013 dollars. Family wealth over timadjusted for inflation using the price index for personal consumption expenditures as calculated by the Bureau Economic Analysis. The analysis for this report used data from the Survey of Consumer Finances, a triennial survey of U.S. familiesponsored by the Board of Governors of the Federal Reserve System in cooperation with the Department of thTreasury. In some places, those data were supplemented with information from Forbes magazine’s list of the nawealthiest 400 people.Shaded vertical bars in some exhibits indicate periods of recession, which extend from the peak of a business cyctrough. Annual statistics from the data taken from the Survey of Consumer Finances are positioned with August year as the midpoint of the collection period. Supplemental data for this report are available on CBO’s website (www.cbo.gov/publication/51846).
CBO

Contents

Summary and Introduction 

How Is the Nation’s Wealth Distributed? How Did the Distribution of Wealth Change From 1989 to 2013? How Did Changes in Families’ Assets and Debt Contribute to Changes in the Wealth Distribution From 1989 to 2013? What Sources of Data Did CBO Use? 

Exhibits

1. Holdings of Family Wealth, by Wealth Group 

2. Wealth for Families at Selected Percentiles of the Distribution 3. Average Wealth for Families in the 51st to 90th Percentiles of the Wealth Distribution 4. Changes in the Assets and Debt of Families in the 51st to 90th Percentiles of the Wealth Distribution 5. Average Wealth for Families in the 26th to 50th Percentiles of the Wealth Distribution 6. Changes in the Assets and Debt of Families in the 26th to 50th Percentiles of the Wealth Distribution 7. Average Wealth for Families in the Bottom 25 Percent of the Wealth Distribution 8. Changes in the Assets and Debt of Families in the Bottom 25 Percent of the Wealth Distribution 9. Share of Families in Debt and Average Indebtedness for Those Families 

10. Median Family Wealth, by Age Group 

11. Median Family Wealth, by Education Group 

Appendix: Data, Measures of Wealth, and Previous Analyses of Income Definitions About This Document 

CBO

Trends in Family Wealth, 1989 to 2013

Summary and IntroductionIn 2013, aggregate family wealth in the United States was $67 trillion (or about four times the nation’s gross domestic product) and the median family (the one at the midpoint of the wealth distribution) held approximately $81,000, the Congressional Budget Office estimates. For this analysis, CBO calculated that measure of wealth as a family’s assets minus its debt. CBO measured wealth as marketable wealth, which consists of 

assets that are easily tradable and that have value even after the death of their owner. Those assets include home equity, other real estate (net of real estate loans), financial securities, bank deposits, defined contribution pension accounts, and business equity. Debt is nonmortgage debt, including credit card debt, auto loans, and student loans, for example. 

How Is the Nation’s Wealth Distributed?In 2013, families in the top 10 percent of the wealth distribution held 76 percent of all family wealth, families in the 51st to the 90th percentiles held 23 percent, and those in the bottom half of the distribution held 1 percent. Average wealth was 

about $4 million for families in the top 10 percent of the wealth distribution, $316,000 for families in the 51st to 90th percentiles, and $36,000 for families in the 26th to 50th percentiles. On average, families at or below the 25th percentile were $13,000 in debt. There are significant differences in wealth among different age and education groups. In 2013, the median family wealth of families headed by someone who was age 65 or older—$211,000—was more than 31⁄2 times the median wealth of families headed by someone between the ages of 35 and 49. Similarly, median wealth of families headed by someone with a college degree—$202,000—was almost four times the median wealth of families headed by someone with a high school diploma. 

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:

B The wealth of fam

of the distribution the wealth at the 9adjusting for chan

B The wealth of thos

greater than the w1989. 

B The wealth of fam

was 6 percent less tin 1989. 

The distribution of wilies was more unequa1989. For instance, thfamilies at the 90th pthose in the middle w$861,000 over the peshare of wealth held bcent of the wealth dis67 percent to 76 percwealth held by familiedistribution declined 
CBO

SUMMARY AND INTRODUCTION TREN

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 2012.1

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.)

How Did Changes in Families’ Assets and Debt Contribute to Changes in the Wealth Distribution From 1989 to 2013?To explore changes in assets and debt, this report focuses on wealth held by those in the bottom 90 percent of the wealth distribution. A detailed analysis of the categories of assets and debt held by families above the 90th percentile of the wealth distribution is not possible because information about the composition of wealth for the nation’s 400 wealthiest families is incomplete. Also, estimates of the share of total wealth held by families in the bottom 90 percent and its change over time are generally consistent, regardless of data or methodology. (See the appendix for additional discussion.)In 2013, average wealth for families in the 51st to 90th percentiles was greater than it had been in 

1989. In contrast, avebottom half of the disthan in 1989. (Examious groups below the to assess the relative cassets and debt to the over time. Because th10 percent of the distenced by the wealth aAlthough average weain the 51st to 90th pe26th to 50th percentithe decline in wealth more than offset earlieFor those families, incfinancial and other aswealth between 1989 losses in home equity assets after 2007 contrage wealth over the pelies in the bottom 25 p1989 and 2007 but din home equity and inwere among the factoin average wealth for For those at the bottowealth between 1989 2007, the share of famassets increased, as did For instance, 8 percenthan assets in 2007, a$20,000 in debt. By 2had more debt than aaverage, $32,000 in d

1. See Emmanuel Saez and Gabriel Zucman, “Wealth 

Inequality in the United States Since 1913: Evidence 

From Capitalized Income Tax Data,” Quarterly Journal 

of Economics, vol. 131, no. 2 (May 2016), pp. 519–578, http://dx.doi.org/10.1093/qje/qjw004.
CBO

SUMMARY AND INTRODUCTION TREN

What Sources of Data Did CBO Use?For this analysis, CBO examined the distribution of wealth chiefly using data from the Survey of Consumer Finances, supplemented with data from the Forbes 400 list, where necessary. That choice of data allowed CBO to examine trends in wealth for all families. The supplemented SCF covers the entire wealth distribution. The appendix presents a longer discussion of the data and methods used for this analysis. A list of definitions appears at the end of the publication.This report provides a series of snapshots of family wealth; it does not provide information about 

changes in the wealth of particular families over time. Because the SCF samples different families in each year of the survey, families in a particular group in one year will be different from their counterparts in an earlier or later survey. The information presented in this report focuses on measures of family wealth—the stock of economic resources that a family holds at a point in time. In contrast, family (or household) income measures the economic resources that a family gains or loses during a particular period.2 For a 

discussion of changes in the distribution of income and how they might relate to changes in the 

distribution of wealth

factors also influence t

time, including differetances and plans to leasave and rates of return and strategies, and com2. In the past, CBO has 

of income. See for exaThe Distribution of Ho2013 (June 2016), pp51361.
CBO

AUGUST 2016 TREN

Exhibit 1.

Holdings of Family Wealth, by Wealth Group

Trillions of 2013 DollarsSource: Congressional Budget Office, using data from the Survey of Consumer Finances, supplemented with data from Forbes magazine’s 

list of the nation's 400 wealthiest people. 

The Survey of Consumer Finances is conducted every three years. 

1989 1992 1995 1998 2001 2004 2007 2010 2013

0

15

30

45

60

75

Top 10 Percent51st to 90thPercentilesBottom 50 Percent

In 2013, total famiStates—that is, famtheir total debt—wabout four times thdomestic product, adjustment for pricthat is more than dwealth in 1989. Thwas different for faof the population, between 1989 and lies in the top 10 pincreased by 153 pby families in the btion declined by 19 top 10 percent of t2013 were not necin the top 10 perceThe distribution of in 2013 than it had families in the top three-quarters of al1989, their counterall family wealth. Oof wealth held by f90th percentiles de23 percent, and the families in the bottdeclined from 3 pe
CBO

AUGUST 2016 TREN

Exhibit 2.

Wealth for Families at Selected Percentiles of the Distribution

Thousands of 2013 DollarsSource: Congressional Budget Office, using data from the Survey of Consumer Finances, supplemented with data from Forbes magazine’s 

list of the nation's 400 wealthiest people. 

The Survey of Consumer Finances is conducted every three years. 

1989 1992 1995 1998 2001 2004 2007 2010 2013

0

200

400

600800

1,000

1,200

90th Percentile75th Percentile25th Percentile50th Percentile

Between 1989 and assets minus total dfor families at diffedistribution. In 2075th percentiles hathan their counterpcent and 29 percenlies at the median hthan in 1989, but ftile had 6 percent ldid in 1989. The changes from reflect increases in (before the start of 2009) and decreaseFrom 1989 througlarly in percentage 25th, 50th, 75th, athe wealth distriburecession, wealth dby 2013 no group hlevel. The decline wand 2013 for famil75th percentiles (4and 23 percent, resat the 90th percentby 7 percent durinSome of the growth larly before the receto the aging of the educational attainmOlder or more edumore wealth than teducated counterpaExhibit 11). 
CBO

AUGUST 2016 TREN

Exhibit 3.

Average Wealth for Families in the 51st to 90th Percentiles of the Wealth Distribution

Thousands of 2013 DollarsSource: Congressional Budget Office, using data from the Survey of Consumer Finances.The Survey of Consumer Finances is conducted every three years. 

1989 1992 1995 1998 2001 2004 2007 2010 2013

0

50

100

150

200

250

300

350

400450

For the group betw10 percent of the naverage family weatotal assets minus ithigher in 2013 thacounterparts in 19wealth in 2007 was had been in 1989 bfifth between 2007 increase between 19of rising wealth bef2009 but with partduring the recessioIncreases in the valuassets, and other assand business assets) increase in wealth bfor families in this however, were offsemortgage debt over and its aftermath wall asset categories 
CBO

AUGUST 2016 TREN

Exhibit 4.

Changes in the Assets and Debt of Families in the 51st to 90th Percentiles of the 

Wealth DistributionSource: Congressional Budget Office, using data from the Survey of Consumer Finances.The Survey of Consumer Finances is conducted every three years. Positive percentages indicate an increase in assets or a decrease in debt; negative percentages indicate a decrease in assets or an increase in debt. Dollar amounts are average values for families that hold each category of asset or debt.

–31% +58%

Home Equity Financial Assets Other Assets Nonmortgage Debt

93 91 94 99 99 100 97 95 96 72 62 72

-50

0

50

100

150

200

1989 2007 2013 1989 2007 2013 1989 2007 2013 1989 2007 2013

–8%

+98%

–19% +50%

0% –49%

Percentage of Families That Hold Each Category of Asset or Debt

Thousands of 2013 Dollars

From 1989 until th2009, increases in hvalue of financial aaccounts and finanassets (such as busiother than a familycontributed to risinwere above the med90th percentile in twealth. Those incresomewhat by rising that time.The recession and by declines in all asthe 51st to 90th peIn particular, betwdeclines in home eqof financial assets pin total family wealcent drop in busineother assets consistowned businesses texhibit) diminished 15 percent of familThe declines in assreductions in the nnonmortgage debt counterparts in 200holding nonmortga72 percent to 62 pe2013. For the famiamount of debt remaverage. 
CBO

AUGUST 2016 TREN

Exhibit 5.

Average Wealth for Families in the 26th to 50th Percentiles of the Wealth Distribution

Thousands of 2013 DollarsSource: Congressional Budget Office, using data from the Survey of Consumer Finances.The Survey of Consumer Finances is conducted every three years. 

1989 1992 1995 1998 2001 2004 2007 2010 2013

0

10

20

30

40

5060

70

Average family weatotal debt) for fam50th percentiles of increased between declines in wealth after the recession offset those gains. held by those famicent less than that 1989, whereas in 2was about 68 percetheir counterparts equity and in the vaas retirement accouother assets (such as than a primary resirising wealth, althoamount of debt for 1989 and 2007 som(see Exhibit 6). 
CBO

AUGUST 2016 TREN

Exhibit 6.

Changes in the Assets and Debt of Families in the 26th to 50th Percentiles of the 

Wealth DistributionSource: Congressional Budget Office, using data from the Survey of Consumer Finances.The Survey of Consumer Finances is conducted every three years. Positive percentages indicate an increase in assets or a decrease in debt; negative percentages indicate a decrease in assets or an increase in debt. Dollar amounts are average values for families that hold each category of asset or debt.

–44% +51%

Home Equity Financial Assets Other Assets Nonmortgage Debt

61 58 72 94 97 96 89 92 93 77 69 78

1989 2007 2013 1989 2007 2013 1989 2007 2013 1989 2007 2013

Percentage of Families That Hold Each Category of Asset or Debt

Thousands of 2013 Dollars

+64% –34% +58% –23%

+10%

–77%

-40

-30

-20

-10

0

10

20

30

40

50

Over the period froin home equity and assets (such as finanaccounts) and othereal estate other thadence) contributed in the 26th to 50th distribution. The sa primary residence points, to 72 perceincreased by 51 perperiod. An increase the average amoun(such as credit card and student loans) increases in the valIn the aftermath of 2009, declining honificantly to the losThe share of familiresidence fell (from and so did their ave44 percent). The shmortgage debt excerose from 1 percenthe value of financitributed to declininoffset somewhat by families in the grouand in the average 
CBO

AUGUST 2016 TREN

Exhibit 7.

Average Wealth for Families in the Bottom 25 Percent of the Wealth Distribution

Thousands of 2013 DollarsSource: Congressional Budget Office, using data from the Survey of Consumer Finances.The Survey of Consumer Finances is conducted every three years. 

1989 1992 1995 1998 2001 2004 2007 2010 2013

-15

-10

-5

0

5

10

15

Unlike families in odistribution, those centile in the years held more in debt taverage. In 1989, faabout $1,000 in dethat group was abo2013, they were abaverage.Between 1989 and as bank deposits) ancles) were generally those families’ asset of nonmortgage debalances, consumer for example), on avof their assets. Afte2009, the decline ifamilies was mainly home equity and to (see Exhibit 8). 
CBO

AUGUST 2016 TREN

Exhibit 8.

Changes in the Assets and Debt of Families in the Bottom 25 Percent of the Wealth Distribution

Source: Congressional Budget Office, using data from the Survey of Consumer Finances.The Survey of Consumer Finances is conducted every three years. Positive percentages indicate an increase in assets or a decrease in debt; negative percentages indicate a decrease in assets or an increase in debt. Dollar amounts are average values for families that hold each category of asset or debt.

–247%

+352%

Home Equity Financial Assets Other Assets Nonmortgage Debt

9 18 14 64 83 80 60 67 70 61 68 68

1989 2007 2013 1989 2007 2013 1989 2007 2013 1989 2007 2013

Percentage of Families That Hold Each Category of Asset or Debt

Thousands of 2013 Dollars

+99% –7%

–5% +76%

–40%

–114%

-40

-30

-20

-10

0

10

20

30

40

50

Although, on averaincreased for familiof the wealth distri2007, that rise was geoning nonmortgperiod. During the average wealth for declined precipitoumain reasons: the lenced by the grouptinued growth of thAverage home equiwas about 250 perc2007. In 2007, 10 homeowners had n2013, that share haAlthough the perceholding nonmortgabetween 2007 and increased from $23it in student loans. of families with stu25 percent to 36 peamount increased fIn contrast, the shacard debt declined cent, and the averaremained relatively 
CBO

AUGUST 2016 TREN

Exhibit 9.

Share of Families in Debt and Average Indebtedness for Those Families

Thousands of 2013 Dollars PercentSource: Congressional Budget Office, using data from the Survey of Consumer Finances.The Survey of Consumer Finances is conducted every three years. 

1989 1992 1995 1998 2001 2004 2007 2010 2013

-50

-25

0

–9

–20

–32

25

50

-20

-10

0

10

20

Average Indebtedness

(Left axis)

Share of Families in Debt

(Right axis)

7 8

12

The share of familitotal debt exceeded almost unchanged and then increased 2007 and 2013. In more in debt than either in 1989 or in cent of families weaverage, their debt $20,000. By 2013, recession of 2007 tlies were in debt anexceeded their asseThe increase in ave2007 and 2013 for the result of falling 

student loan balanc

families in debt had owed, on average, $homes were worth. 19 percent of familon average, $45,000 were worth. The shhad outstanding stucent in 2007 to 64 average amount of tfrom $29,000 to $4
CBO

AUGUST 2016 TREN

Exhibit 10.

Median Family Wealth, by Age Group

Thousands of 2013 DollarsSource: Congressional Budget Office, using data from the Survey of Consumer Finances.The Survey of Consumer Finances is conducted every three years. 

1989 1992 1995 1998 2001 2004 2007 2010 2013

0

50

100

150

200

250

300

65 or Older50 to 64

Younger Than 35

35 to 49

The median wealth headed by someonlower in 2013 than counterpart familie2007, median wealheaded by someonwhat for families h35 and 49, and stayyounger families. Adeclined for all groMarketable wealth—analysis—significanof a family that expincome to come frobenefit pension plaand Social Security able wealth, but defincluded. See the aThe aging of the poincrease in overall fand 2013 (see Exhihead, the more weaand the average age over the period. In lies were headed by 65; in 2013, 24 pertion not aged that wwould have been 1than in 1989, CBO 
CBO

AUGUST 2016 TREN

Exhibit 11.

Median Family Wealth, by Education Group

Thousands of 2013 DollarsSource: Congressional Budget Office, using data from the Survey of Consumer Finances.The Survey of Consumer Finances is conducted every three years. 

1989 1992 1995 1998 2001 2004 2007 2010 2013

Graduate DegreeBachelor’s DegreeLess Than High SchoolHigh SchoolSome College

0

100

200300

400

500

Families headed by or graduate degree in 2013 than their that was not true foone with less educa2007, median wealfor families headed bachelor’s degree, ifamilies headed by diploma or some cotively unchanged foone with less than During the recessiowealth declined for Increases in the shacollege degree helpwealth between 198Historically, familipeople have held mheaded by less educage educational attincreased during thwas for families heacollege education: Iwas on par with or lies headed by a higbecause the some-coto have student debfamilies were headea bachelor’s degreeHad the average edfamilies in 1989 nowealth would have 2013 than in 1989
CBO

Appendix: 

Data, Measures of Wealth, and Previous Analyses of I

The Congressional Budget Office drew on data from several sources for its examination of the distribution of wealth among U.S. families. This appendix describes the kinds of data used, explains CBO’s approach to defining family wealth, and briefly describes the agency’s previous work on the distribution of income.Sources of DataIn general, researchers look toward two main sources of data for analyses of family wealth: the Survey of Consumer Finances (SCF), a periodic cross-sectional survey of U.S. families and their finances that is sponsored by the Federal Reserve Board in cooperation with the Department of the Treasury, and federal tax returns. Each source offers advantages, but each has shortcomings as well. For example, the SCF data are collected only every three years, rather than annually. The lack of demographic information in the tax data precludes researchers from identifying the distribution of family wealth on the basis of age or education. Neither source fully identifies wealth across the nation’s entire distribution of wealth.

The analysis for this report primarily used SCF data spanning the surveys from 1989 to 2013, the first and last years for which those data are consistently available (2013 is the most recent year for which those survey data are available). For the portion of the analysis that examined overall wealth, those data were augmented with information on the nation’s 400 wealthiest people as listed by Forbes magazine (see Exhibit 1 and Exhibit 2). 

Survey of Consumer Finances and Data on the Forbes 400Every three years, the SCF gathers information—including demographic data—on a sample of U.S. families that makes it possible to identify the distribution of wealth on the basis of age and education. The SCF data also include information on family balance sheets, income, and pensions.1 Data for the 

1989 SCF were collected between October 1989 and March 1990. For subsequent surveys, the data were collected between May and December of the 

survey year, with Augof that range.The SCF presents thruse in an analysis such sampling techniques hrestrict analyses of SCthe sample years in th

fined to that period. Srely on self-reported iceptible to measuremthird, because each itedifferent group of famthis report amount to for every third year frdo not provide informwealth of specific famthe next. CBO’s estim4 percent higher in 20fore should be interprof a family at the medfor the effects of chanabove the wealth of a It should not be taken the family at the med4 percent over the nex

1. For more information on the SCF, see Board of Governors 

of the Federal Reserve System, “Research Resources: Survey of Consumer Finances,” (September 2014) http://go.usa.gov/xx7x4.
CBO

APPENDIX TREN

Although the SCF covers nearly the full distribution of family wealth, by design it does not include information on the nation’s wealthiest people, as listed by Forbes magazine.2 CBO supplemented the 

SCF data with the Forbes data to identify the shares 

of wealth held by different groups (Exhibit 1) and to calculate the various percentiles of family wealth (Exhibit 2).3

The Forbes data were not used for the analysis 

underlying the other exhibits in this report, except for defining family groups on the basis of wealth percentiles, because those data did not provide information on the various asset and debt categories (Exhibits 4, 6, and 8) or data on age (Exhibit 10) or education (Exhibit 11). Nonetheless, incorporating such demographic information for the people in the Forbes data would not have materially affected the results. In 2013, that group of 400 people constituted a share that was smaller than 0.001 percent of the nation’s 123 million families. Adding them 

to the analysis would have made no discernible difference in the median wealth by age and education or for assets and debt held by those below the 90th percentile of the wealth distribution. CBO also did not examine how the assets and debt of families in the top 10 percent of the wealth distribution changed over time because of the lack of information on the assets and debt among families on the Forbes 400 list. The supplemental data to this report contain information about average wealth over time for families in the top 10 percent of the distribution. To calculate how much the aging of the population contributed to the change in median family wealth between 1989 and 2013, CBO applied a reweighting technique developed by John DiNardo and colleagues.4 CBO used that approach to calculate a counterfactual outcome (median family 

wealth) in 2013 as though the age distribution of the population in 2013 was the same as the age distribution in 1989 (see the discussion of Exhibit 10). CBO applied the same method to calculate the degree to which an increase in educational attainment contributed to the change in median family wealth over the period (see the discussion of Exhibit 11).5

Tax Data Instead of using inforresearchers turn to dareturns when they are of wealth. To do so, hthe amount of wealth of the amount it pays 

CBO did not use estabecause those data capor 2 percent of the wetax reporting limits arvery few people inherthe estate tax laws, thaccount for most inheforms request virtualltion of the kind usefucould not examine wegroup using data from Similarly, CBO did nthis analysis because tited demographic infofore could not examingroup on the basis of 

2. One study placed the sum of the wealth of the Forbes 400 

families at about 3 percent of total family wealth in 2013. See Jesse Bricker and others, “Measuring Income and Wealth at the Top Using Administrative and Survey Data,” Brookings Papers on Economic Activity (March 2016), http://tinyurl.com/zqyw46m. For the 2015 Forbes list, 

see Kerry A. Dolan and Luisa Kroll, “Inside the 2015 Forbes 400,” Forbes (September 29, 2015). 

3. See Jesse Bricker and others, “Measuring Income and 

Wealth at the Top Using Administrative and Survey Data,” Brookings Papers on Economic Activity (March 2016), http://tinyurl.com/zqyw46m. Those authors also 

used the SCF and performed a similar adjustment with the Forbes 400 data in their analysis. For calculating percentiles and shares of wealth, CBO judged that the Forbes 400 families were at the top of the wealth distribution.

4. See John DiNardo, Nicole M. Fortin, and Thomas 

Lemieux, “Labor Market Institutions and the Distribution of Wages, 1973–1992: A Semiparametric Approach,” Econometrica, vol. 64, no. 5 (September 1996), pp. 1001–1044, http://dx.doi.org/10.2307/2171954. 

5. Because CBO did not have information on the age and 

education of families on the Forbes 400 list, those data were excluded from the calculation of the counterfactual outcomes.

6. For more information 

estimate wealth, see, for the Twenty-First Centuand Wojciech Kopczuk Shares in the United SEstate Tax Returns,” N

(June 2004), pp 445–4

7. CBO has used income 

the distribution of houexample, CongressionHousehold Income and www.cbo.gov/publica
CBO

APPENDIX TREN

The use of income tax data also requires analysts to estimate total wealth on the basis of annual income, an exercise known as the capitalization method. That method requires researchers to impute wealth arising from the asset categories that do not generate taxable income and to make assumptions concerning rates of return on capital.8

Moreover, income tax data cannot account for people who do not file tax returns, and there would need to be a mechanism for including those people in the analysis of the distribution of wealth. 

Comparing Wealth Estimates Derived From Different Sources of Data Regardless of the type of data used to identify the distribution of wealth in the United States, estimates consistently skew toward the top. Both the SCF and the tax data identify similar shares of wealth in the top 10 percent of the distribution. CBO estimates that families in the top 10 percent of the wealth distribution held 76 percent of wealth in 2013. Other researchers, using tax data, estimate that families in the top 10 percent of the wealth distribution in 2012—one year prior—held 77 percent of wealth. But estimates of the share of wealth held by those at the very top—families in the top 1 percent or the top 0.1 percent—differ depending on the data set and the method used, particularly after 1980. For example, estimates based on income tax data after 1980 show a steep increase in the share of wealth held by the top 1 percent. (For instance, one report shows an 

increase from 28 percent in 1989 to 42 percent in 2012.)9 Conversely, estimates based on estate tax 

data and the SCF show a smaller increase for that group over the same period. (For instance, data from the SCF show an increase in the share of wealth held by the top 1 percent from 31 percent in 1989 to 37 percent in 2013.)10 Because of the 

strong assumptions and imputations needed for applying the capitalization method, some researchers have pointed to the SCF and the estate tax approach as more reliable for measuring trends.11

That is an area of active research.Differences in measurement among the three methods can arise for at least two reasons. One concerns the unit of analysis. Estimates that use estate tax data examine the wealth of individual people, those that use income tax data examine the wealth of tax units, and those that use data from the SCF examine the wealth of families. The second difference concerns underlying computational assumptions, including those about rates of return that are used to convert income amounts into wealth stocks under the capitalization method. 

Ways to Define WealthFor this analysis, family wealth includes only marketable assets, which can be bought or sold and 

can outlive an owner. as defined benefit penSecurity benefit paymMeasures that use nonsomewhat less concendistribution than thoswealth. 

Marketable WealthCBO defined family wbetween a family’s assconsists of all financiafinancial securities, thpolicies, trust funds, dment accounts (includaccounts, Keogh plancurrent and past jobs)estate (net of real estaness equity. Debt is nsists of consumer deband auto loans) and oloans). Wealth from dmeasured as the reporvey respondents. CBO potential early withdrtaxes to be paid when marketable wealth is band debt that are readit is straightforward to those data.12

8. For an analysis using income tax data and the 

capitalization method, see Emmanuel Saez and Gabriel Zucman, “Wealth Inequality in the United States Since 1913: Evidence From Capitalized Income Tax Data” Quarterly Journal of Economics, vol. 131, no. 2 (May 2016) pp. 519–578, http://dx.doi.org/10.1093/qje/qjw004.

9. Ibid.10. For a discussion of such discrepancies, see Jesse Bricker and 

others, “Measuring Income and Wealth at the Top Using Administrative and Survey Data,” Brookings Papers on Economic Activity (March 2016), http://tinyurl.com/

zqyw46m. 

11. See Wojciech Kopczuk, “What Do We Know About the 

Evolution of Top Wealth Shares in the United States?” Journal of Economic Perspectives, vol. 29, no. 1 (Winter 2015), pp. 47–66, http://dx.doi.org/10.1257/jep.29.1.47. 

12. For a discussion of we

in the SCF, such as huannuities or trusts, see 

Streams: Wealth and InFinance and Economi(Board of Governors oMarch 2009), http://g
CBO

APPENDIX TREN

Nonmarketable WealthAn alternative definition of wealth also could account for sources of future income that would not retain value after their owner’s death. In particular, that measure could include expected future income from defined benefit pension plans and Social Security.13 Such a measure of wealth would 

be more difficult to construct and is beyond the scope of this report, but it could offer a more accurate representation of a person’s expected resources during his or her lifetime. Because pension benefits and Social Security payments are more equally distributed than is marketable wealth, CBO expects that an analysis that used such a measure would, at any point in time, increase the share of total family wealth identified for families at the bottom and middle of the distribution and decrease that held by families at the top. One group of researchers has estimated the share of wealth in the top 10 percent of the distribution 

from its examinations both of marketable wealth and of expected income streams from defined benefit pensions (but not Social Security).14 Their results 

indicate that, in 2013, the share of wealth held by families in the top 10 percent of the distribution was about 70 percent when expected income from defined benefit pensions was added to marketable wealth and about 76 percent when defined benefit pensions were excluded.

Projecting income streams from defined benefit pensions or Social Security is beyond the scope of this report. And because of changes in coverage under defined benefit plans and changes in Social Security benefits during the period examined here, it is difficult to predict the extent to which adding the two sources of wealth would change the trends in family wealth at various points of the distribution, or how it would change the trends in median family wealth by age and education.15

CBO’s Income AnCBO has in the past egrowth in income amo

in economic conditioprograms, and federal differences in the growacross the income spehouseholds in the lowincome, inflation-adju46 percent higher in 2CBO estimates, whic41 percent increase fo80th percentiles for thgrowth in the inflatioof households in the 8in the top percent of bution was substantia70 percent and 192 pFigure A-1).17

The unequal distributthe U.S. population is Differences in family ion savings, inheritancecomposition of assets some of the increases itime are the result of t

13. For an example of research that incorporates 

nonmarketable wealth with the SCF data and examines 

trends in wealth in the 1990s, see William G. Gale and Karen M. Pence, “Are Successive Generations Getting Wealthier, and If So, Why? Evidence From the 1990s,” Brookings Papers on Economic Activity (Spring 2006), pp. 155–234, http://tinyurl.com/zuus4v6. For an example 

of research that incorporates expected streams of income from defined benefit plans and Social Security to study changes in wealth over time, see Edward N. Wolff, “U.S. Pensions in the 2000s: The Lost Decade?” Review of 

Income and Wealth, vol. 61, no. 4 (December 2015), 

pp. 599–629, http://dx.doi.org/10.1111/roiw.12123.

14. Sebastian Devlin-Foltz, Alice Henriques, and John 

Sabelhaus, “Is the U.S. Retirement System Contributing to Rising Wealth Inequality?” Russell Sage Journal of the Social Sciences (forthcoming). The authors impute defined benefit pension wealth in SCF data to examine the effect of retirement assets on the share of wealth held by families at the top of the wealth distribution. 

15. Defined benefit pension coverage has decreased and 

defined contribution coverage has increased over the examined period. Because defined contribution wealth is included in marketable wealth but defined benefit wealth is not, the measure of wealth used in this report understates the available resources of families in or near retirement, particularly for the earlier years of the SCF survey, and likely overstates the growth in family resources over time. 

16. For more on CBO’s in

Budget Office, “Incomtopics/income-distribu

17. See Congressional Bud

Household Income and pp. 21–24, www.cbo.g
CBO

APPENDIX TREN

Figure A-1.

Cumulative Growth in Average Inflation-Adjusted After-Tax Income, by Before-Tax Income 

Group, 1979 to 2013PercentSource: Congressional Budget Office.After-tax income is before-tax income minus federal taxes.Before-tax income is market income plus government transfers. Market income consists of labor income, business income, capital gains (profits realized from the sale of assets), capital income excluding capital gains, income received in retirement for past services, and 

other sources of income. Government transfers are cash payments and in-kind benefits from social insurance and other governmentassistance programs. Those transfers include payments and benefits from federal, state, and local governments.

Federal taxes include individual income taxes, payroll taxes, corporate income taxes, and excise taxes.Income is converted to 2013 dollars using the price index for personal consumption expenditures.Income groups are created by ranking households by before-tax income, adjusted for household size. Quintiles (fifths) contain equal 

numbers of people; percentiles (hundredths) contain equal numbers of people as well.

414670192

-100

0

100200300400

1980 1985 1990 1995 2000 2005 2010

Lowest Quintile

Middle Three Quintiles

(21st to 80th percentiles)

81st to 99th Percentiles

Top 1 Percent
CBO

Definitions

Age groups and education groups were established 

for this report on the basis of the age or education of the head of the family, respectively.Assets consist of financial assets, home equity, and other assets. Business equity, a component of other assets, includes net worth in sole proprietorships, limited partnerships, other types of partnerships, S corporations and other types of corporations that are not publicly traded, limited liability companies, and other types of private businesses, including certain family farms and ranches. Family is defined by the Survey of Consumer Finances as the primary economic unit in a household. A family, in this context, consists of a single person or a couple and all other people in the household who are financially interdependent with that person or couple. Family wealth is a family’s assets minus its debt; often referred to as net worth. The measure of wealth examined in this report is marketable wealth. Financial assets include bank deposits, financial securities, the cash value of life insurance policies, and trust funds. Also included are defined 

contribution retirement accounts, including individual retirement accounts, Keogh plans, 401(k) plans, and similar tax-deferred retirement accounts from current and past jobs. Excluded from financial assets in this report are defined benefit pensions and expected income from Social Security; both are forms of nonmarketable wealth.Head of a family is defined by the Survey of Consumer Finances as the male in a mixed-sex couple or the older person in a same-sex couple. A single person is considered a family head.Home equity is the value of the primary residence (if owned by the family) minus the amount owed on mortgages or home equity loans. Indebtedness is the amount by which a family’s debt exceeds its assets. In this report, a family is considered to be in debt if it has more debt than assets. Marketable wealth consists of the difference between a family’s assets that are easily tradable and that retain value after the death of the owner and that family’s debt; in this report, usually called family wealth.

Median wealth is the midpoint of a distribumore and half have lesat the median. Mortgage debt is subprimary residence in tNonmarketable wealfuture income that wotheir owner’s death, sbenefit pension plans Nonmortgage debt co

debt (including credit and other debt (incluOther assets include loans and excluding a vehicles, and business Wealth groups were cranking families by wsize) from data taken of Consumer Financefrom Forbes magazine400 wealthiest people
CBO

About This Document

This report was prepared at the request of the Ranking Member of the Senate Budget Committee. In keeping w

Congressional Budget Office’s mandate to provide objective, impartial analysis, the report makes no recommenNadia Karamcheva prepared the report with guidance from Molly Dahl and Joseph Kile. Jessica Banthin, Jordan Philip Ellis, Ed Harris, Marina Kutyavina, Lucille Msall, Chad Shirley, and Julie Topoleski provided commentKatharine Abraham of the University of Maryland, Kevin Moore of the staff of the Board of Governors of the FReserve System, and Gabriel Zucman of the University of California–Berkeley provided comments. The assistaexternal reviewers implies no responsibility for the final product, which rests solely with CBO.Wendy Edelberg, Mark Hadley, Jeffrey Kling, and Robert Sunshine reviewed the report; Kate Kelly edited it; aJeanine Rees prepared it for publication. This report and supplemental data are available on CBO’s website (www.cbo.gov/publication/51846).

Keith Hall DirectorAugust 2016