metadata: authors: 0: author: D'Alessio,Giovanni
1: author: Neri,Daniella Allegra
2: author: Toma,Irene
count: World
docna: 0: docna: Usus Fructus : Taking Account of Property
            Use Rights in Household Wealth Measurement
docty: Policy Research Working Paper
abstracts: cdata!: This paper discusses the inclusion of
            usufruct rights in household wealth estimates, emphasizing
            the theoretical rationale for adjusting traditional
            estimates that do not include this component. It then
            applies this concept to the Italian context using Survey on
            Household Income and Wealth data. Despite usufruct being
            relatively rare (around 3 percent of residential homes),
            adjusting for it impacts the wealth distribution, with some
            increases characterizing younger households. Overall,
            adjusted estimates show a significant decrease in the
            concentration indices compared with unadjusted ones. These
            findings suggest the importance of considering this
            component in standard household wealth estimates,
            particularly in countries where use rights are more common.
display_title: Usus Fructus : Taking Account of
            Property Use Rights in Household Wealth Measurement
listing_relative_url: /research/2024/09/34397018/usus-fructus-taking-account-property-use-rights-household-wealth-measurement
topicv3: Poverty Measurement and Analysis m1326941 707,Inequality and Shared Prosperity m1327655 700
publishtoextweb_dt: 2024-09-30T00:00:00Z
dois: 10.1596/1813-9450-10936
origu: Off of Sr VP Dev Econ/Chief Econ (DECVP)
no_of_pages: 19
author_keys: 0: author_key: 1458895
1: author_key: 2045537
2: author_key: 1707245
model_extractions: Policy Research Working Paper 10936

# Usus Fructus

Taking Account of Property Use Rights in Household Wealth Measurement _G. D’Alessio_ _A. Neri I. Toma_ Development Economics Development Data Group September 2024
Policy Research Working Paper 10936

# **Abstract**

This paper discusses the inclusion of usufruct rights in household wealth estimates, emphasizing the theoretical rationale for adjusting traditional estimates that do not include this component. It then applies this concept to the Italian context using Survey on Household Income and Wealth data. Despite usufruct being relatively rare (around 3 percent of residential homes), adjusting for it impacts the wealth distribution, with some increases characterizing younger households. Overall, adjusted estimates show a significant decrease in the concentration indices compared with unadjusted ones. These findings suggest the importance of considering this component in standard household wealth estimates, particularly in countries where use rights are more common.

This paper is a product of the Development Data Group, Development Economics. It is part of a larger effort by the World Bank to provide open access to its research and make a contribution to development policy discussions around the world. Policy Research Working Papers are also posted on the Web at http://www.worldbank.org/prwp. The authors may be contacted at gdalessio@worldbank.org.

_The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent._ Produced by the Research Support Team
# **Usus Fructus: Taking Account of Property Use Rights in Household Wealth Measurement**

G. D’Alessio,* A. Neri ** and I. Toma *

# **JEL Classification** : D23, D31, P14.

**Keywords** : property rights, use rights, usufruct, wealth distribution.

# **Index**

|1.|Introduction ............................................................................................................... 4|
|---|---|
|2.|Some general reflection on use rights ....................................................................... 4|
|3.|The data ..................................................................................................................... 6|
|4.|Taking account of use rights in Italy ......................................................................... 8|
|5.|Free residential houses in HFCS data ....................................................................... 9|
|6.|Conclusions ............................................................................................................. 10|
|Ap|pendix A: statistical tables ......................................................................................... 11|
|Ap|pendix B: SHIW empirical evidence on the value of use rights ................................ 17|
|Ref|erences ....................................................................................................................... 19|

_Usufructus est ius alienis rebus utendi fruendi, salva rerum substantia_ Roman law

* The World Bank, Development Data Group - Living Standards Measurement (DECLS Unit).

** Bank of Italy, Directorate General for Economics, Statistics and Research.
# **1. Introduction**<sup>1</sup>

Household sample surveys are invaluable tools for understanding economic dynamics, social structures, and the distribution of resources within societies. Among the various indicators collected in these surveys, wealth stands out as a fundamental indicator of economic well-being and household stability.

The inclusion of wealth data in household surveys is crucial for several reasons. Firstly, wealth provides insights into the economic status and living standards of households, providing a more comprehensive view beyond income alone. While income reflects the flow of resources over time, wealth captures accumulated assets and savings, providing a measure of long-term financial security and capacity for investment. Additionally, wealth data allow policy makers, researchers, and analysts to assess disparities in asset ownership, intergenerational wealth transfer, and access to economic opportunities, thereby informing targeted interventions and policy initiatives aimed at reducing inequality and promoting economic inclusion.

Net wealth encompasses tangible assets such as land, real estate, valuables, and financial instruments like savings accounts and stocks, while debts constitute the negative component. Traditionally, the real items considered in household surveys are those for which households hold full property rights. However, this approach may not capture the full spectrum of resource ownership held by households.

Solely focusing on assets with full property rights may overlook significant aspects of wealth accumulation and resource utilization. In many contexts, individuals or households may possess partial rights or entitlements to certain assets, such as in the case of usufruct contracts, where individuals hold the right to use and enjoy property owned by others. Neglecting the patrimonial value of such assets can lead to a distorted understanding of wealth distribution and economic well-being, particularly in communities where informal arrangements or non-traditional property rights prevail.

This paper aims to address the gap in wealth assessment methodologies by advocating for the inclusion of assets with partial rights in household surveys. Specifically, we will explore the importance of taking account of use rights, such as those conferred by usufruct contracts, when estimating household wealth. By incorporating these nuanced dimensions of asset ownership, we seek to provide a more comprehensive and equitable framework for assessing wealth that better reflects the socio-economic realities of diverse communities. An application to the Italian case offers the opportunity to assess a significant impact on wealth distribution, even in a country where this kind of phenomenon is relatively uncommon.

# **2. Some general reflections on use rights**

Household wealth is traditionally divided into two components, real and financial. Financial wealth represents the net value between the claims (e.g., the bank deposits) and the obligations (e.g., the debts) that the household has towards other households or economic entities. By definition, for every claim and obligation held, there exists a corresponding obligation and claim of the same amount held by someone else.

The notion of real wealth, instead, is inherently linked to the rights over resources with an economic value. Being an owner of real assets (e.g., apartments, land, livestock) usually means being

> 1 We would like to thank Luigi Cannari for the suggestions provided on an earlier version of the paper. The opinions expressed in this paper are of the authors alone and do not necessarily represent the views of our institutions.
the holder of the full set of rights that can be defined over the good, as the right to use, to sell, to bequeath, to use as collateral, to make other use,<sup>2</sup> free of any encumbrances or deficiencies.<sup>3</sup> However, there are cases in which different people (or economic entities) hold different rights on the same asset. From the economic point of view, all these cases can be included in the notion of wealth as well.

The most frequent case is the separation of the use rights from the bare ownership, as happens in the contract of usufruct. According to an old maxim of Roman law, "Usufruct is the right to use and enjoy the property of others while preserving the substance of the property". In practice, the usufructuary buys (or acquires in some way) from the bare owner the right to use the property for some time (usually as long as he or she lives). From an economic point of view, the full value of the property is shared between the two contractors.

The main aspects of usufruct, i.e. the temporary right to use an asset owned by someone else, are common across the legislations of many countries like France, Germany, the Netherlands, the United States, Canada, Brazil, South Africa, India, Mexico, and the Philippines.<sup>4</sup> In Italy, the usufructuary can use the good, without altering its substance, and derive profit from that possession. If not explicitly stated differently in the contract, the usufructuary can also transfer the right to others (i.e. rent or make available to others the property, as long as he or she holds the right). The bare owner will hold again the full ownership only at the end of the defined period of time (or at the death of the usufructuary).<sup>5</sup> In the Italian housing market, real estate agencies currently offer for sale the bare ownership of some houses, along with the usual sales of full-property houses. Most of the time, these houses are owned by elderly people who want to continue to live in their homes for all their life and try to monetize the value of the property when they are no longer alive. On the other hand, the buyer of bare ownership is often someone who wants to make a medium- or long-term investment (depending on the age of the seller), with some elements of riskiness due to the randomness of the event that will transfer to him the use rights of the house. The asking price for these homes is usually significantly lower than those for which full ownership is sold, and the difference is inversely linked to the age of the owner.

When the period of time of the contract refers to the life of the usufructuary, the valuation of the two parts is usually obtained through an actuarial formula that combines the full value of the property, an interest rate, and the life expectancy of the usufructuary. However, for fiscal purposes, in Italy an official table is currently published providing the shares of bare ownership and usufruct, according to the current legal interest rate and mortality tables. For example, in table A1 that refers to 2023, we derive that a 73–75-year-old owner could sell the bare ownership of a house for about 65 percent of its full value. The value that remains in the hands of the usufructuary (35 percent of its full

> 2 According to European SNA 2008, “The legal owner of entities such as goods and services, natural resources, financial assets and liabilities is the institutional unit entitled in law and sustainable under the law to claim the benefits associated with the entities” (EC and others, 2009, 3.21). The conceptualization of ownership as a bundle of rights is described in United Nations (2019).

> 3 In practice, any legal system contains some limitations on the use of the assets held, for example, those concerning the possibility of building a house on owned land.

> 4 Sometimes, and especially in low- and middle-income countries, the rights associated with ownership are not limited by private contracts but by law and social context. For example, in China, the property of urban land belongs to the state in a way similar to that described above for England, while that of rural land to collective entities (i.e. group of farmers). On the impact of incomplete property rights on informal housing prices, see also Cheng (2023).

- 5 Romans use to mention "Usus, fructus, abusus" to describe the rights associated with ownership: the right to use the property (usus), the right to enjoy its fruits or benefits (fructus), and the right to abuse or dispose of it (abusus).
value) corresponds to the right to use that property until death.<sup>6</sup> This table changes periodically, according to some significant revisions of the two ingredients of the formula. For our analysis, for the sake of simplicity, we will resort to the values contained in these tables over time, which approximate the actuarial formula.

Taking account of use rights that derive from a contract of usufruct in the survey measurement of household wealth implies two different tasks: (1) If the interviewed household has the use rights (bought or received for free, it does not matter), the capital value of such rights should be considered together with other real assets. (2) If the household interviewed instead is granting the use rights to someone else, the value of such a right must be subtracted from the full value of the property, i.e., the valuation of the property must take into account the missing use rights.<sup>7</sup> It is worth noting that in Italy usufruct is not the only form of right on someone’s else property, although it is probably the most frequent. Similar to usufruct is the “right to inhabit”, which typically arises by law when one spouse passes away and leaves behind a house of residence that was jointly owned or owned solely by the deceased spouse. In such a case the surviving spouse keeps the right to live in the house of residence lifetime, even if other heirs acquire a share of ownership. So as the usufructuary, the survivor spouse is responsible for the maintenance of the property and must pay associated expenses like taxes and utilities, while cannot make significant alterations to the property without permission. Contrary to usufruct, however, the right to inhabit is personal, and cannot be transferred or assigned to another individual.<sup>89</sup> It is important to underline that the condition of a usufructuary is substantially different from that of a household that lives in a property offered by another household for free. Granting a property free of charge to someone else implies a current transfer that, by its own nature, can be stopped at any time, and thus has no certain value for the future. The absence of any right suggests excluding them from the notion of wealth.

# **3. The data**

In this paper, we will use the data from the Bank of Italy’s Survey of Household Income and Wealth (SHIW), conducted in Italy since the 1960s to gather information on household income, consumption, wealth, and various aspects of household economic behavior. It has been conducted yearly on a national two-stage sample of 4,000 households up to 1984; since 1986 it has been carried out every two years (with some exceptions) using a sample of 8,000 households (Bank of Italy, 2022; Baffigi et al., 2016).

> 6 A similar example of “split property” is provided by the “rule of 99 years” in England and Wales where purchasing a leasehold property means buying the right to live in and use the property for the duration of the lease only (typically 99 years). As the lease term decreases, also the value of the property tends to decrease.

> 7 In cases in which the use rights of a property are obtained at the cost of a payment lower than that present value on the market (i.e. a subsidized rent), the present value of this difference could be considered as part of the household wealth as well. In practice, this can be the case only when the actual rent paid is largely lower than the market value and when the contract extends for a considerable period of time.

- 8 Notwithstanding this difference, when in legal context it is needed to assign a value to this inherited right to inhabit, jurisprudence tends to use the same tables used for evaluating the usufruct.

> 9 Further rights on someone’s else property exist in the Italian legislation but are less frequent and conceptually less relevant for their impact in terms of household wealth. In the case of “enfiteusi”, for example, the lessee (called the "enfiteuta") holds the right to use and enjoy the property (traditionally a plot of land) for an extended period, typically long-term, in exchange for certain obligations, usually payment of an annual fee or rent, or improvements of the property. This form is nowadays very rare and - due to the contextual obligations - does not significantly impact the wealth of the two subjects.
In the questionnaire, the information about the tenure of the house of residence, inclusive of the usufruct, has been collected regularly since 1989. The questionnaire also includes a different item devoted to the “free of charge” use of the house, that does not involve any right on the property and is thus excluded from our analysis. The right to inhabit is instead missing among the provided modalities; it is plausible that the respondents in that condition chose the option “free of charge” or the residual option “other”. This implies a presumable underestimation of the situations of use rights that include both cases.

The share of households living in usufruct does not show a strong trend over time; it is on average around 3.5 percent between 1989 and 1998, 2.7 percent between 2000 and 2008, and 3 percent between 2010 and 2020. The shares show limited variations across geographical areas, while a significant concentration of the phenomenon emerges in households whose head is older than 65 years, with an overall average of 5.6 percent (Table A2, top panel). In just under half of the cases, the bare owners of houses granted in usufruct are the children of the occupants; in one-third of the cases, the bare owners are the parents, while in most of the remaining cases they are other relatives. The share of bare owners outside the family circle is limited, around 8 percent (Table A3, top panel). Overall, this result demonstrates that the usufruct contract is predominantly used for managing family properties for tax and intergenerational transfer purposes. Conversely, its usage among unrelated parties to monetize real estate beyond one's own lifetime is relatively modest.

In contrast to usufruct, homes occupied rent-free are primarily inhabited by young families, and little more frequently located in the Center and the South and Islands than in the North (Table A2, bottom panel). In half of the cases, the owners of these houses are the parents, while the opposite relationship is observed more rarely (around 13 percent). On the whole, the family circle absorbs on average 85 percent of the cases of houses occupied for free (Table A3, bottom panel).

According to what was stated in the previous section, we will add to the wealth of the households the value of the use rights for those who live in usufruct only, while overlooking the houses occupied for free that do not provide the occupants any right. The value of the usufruct right depends on the age of the reference person and is estimated based on the shares provided in official tables used for the computation of taxes (see Table A1 for 2023).

On the other hand, while there is a large amount of data for every property held by households, the information on the specific destination of usufruct (i.e. granted to others in usufruct) is not always available in SHIW. In many surveys (1989, 1993, 1995, 1998, 2000, 2002) in the question about the use of the houses held, the item related to the “usufruct” is absent, and the cases are included in the “other” residual basket; in the 2020 questionnaire the term “usufruct” is explicitly recalled but only together to the “free of charge, from relatives and friends” that, as reminded earlier, does not imply rights and is thus a different condition. Thus, information on the properties granted in usufruct to someone else, useful for our analysis, is collected only in 1991 and from 2004 to 2016. The results reported in the next section will thus refer to these years only.

The share of such properties is small and quite irregular over time; on average it is equal to 0.9 percent of the residence houses for the four surveys up to 2008 and 0.8 percent for the four surveys from 2010 to 2016. The lower share found on this side, compared to that shown above for the usufructuary, could depend also on the fact that the usufruct is not necessarily a contract involving households on both sides; other entities (firms, banks, public institutions) could grant usufruct contracts. However, we have seen that many times it is a family matter. There is a likely effect of under-reporting behavior that affects the houses that are not used for residence (Cannari and D’Alessio, 1990 and 1993; Baffigi et al., 2016).

The value of the use rights on houses granted in usufruct must be subtracted from the wealth of the bare-owner households. However, in SHIW the information on the age of the usufructuary is
not available<sup>10</sup> ; it is thus unknown which share of the full value of the property to apply. In order to obtain a tentative estimate of the value of the use rights to be subtracted from the full value of these properties, and then from the wealth of these households, we will resort to some imputations based on different hypotheses, to test the robustness of our results.

# **4. Taking account of use rights in Italy**

As recalled earlier, standard household wealth estimates do not include use rights. According to our approach, this implies an underestimate of the wealth for those households who live in usufruct and an overestimate for the households who grant usufruct rights to others. Some evidence on the need to assign a wealth value to the use rights based on SHIW data is provided in Appendix B.

Using data from SHIW we can estimate both cases in several waves (1991, and from 2004 to 2016). However, as explained before, information on the age of the usufructuary is available only when the interviewed household is the usufructuary and not when he is the bare owner. For such cases we have assumed (H1) that the usufructuary is 25 years older than the corresponding bare owner, being this the approximate age gap between fathers and sons. This situation approximately corresponds to that of a parent who transfers bare ownership to their child, retaining usufruct. A similar age gap could also be the case of an elderly person who, perhaps in the absence of heirs, sells bare ownership of the house of residence to ensure a more comfortable old age while retaining the right to live there for free.

As we have seen in the previous section, partial support for this hypothesis is offered by the interviewed usufructuaries that, when asked about the bare owners of the homes they occupy, most of the times indicate their children, with a share little below 50 percent (Table A3, top panel). However, in one-third of the cases the relationship is reversed, being the parents the bare owners and the children the usufructuaries and in a further 20 percent the age gap between bare owners and usufructuaries is totally unknown. This uncertainty suggests testing the robustness of the results by evaluating also two alternative assumptions: H2) the usufructuary is as old as the bare owner; H3) the usufructuary is 6 years older than the bare owners, being approximately 6 years the average gap between the sample age average estimates of usufructuaries and bare owners.

The results of the 3 hypotheses are shown in Table A4. The estimates of the net wealth adjusted for the use rights are almost always higher than the unadjusted ones; the increase of the net wealth values is, on average across the considered SHIW waves, between 0.9 (H1), 0.7 (H2) and 0.6 per cent (H3). The increase tends to characterize more frequently the households whose reference persons are less than 40 years old (from 1,9 to 1,6 percent on average across years, depending on the hypothesis done) and those residing in the South and in the Islands (from 1.3 to 1.2 percent). The higher impact on average wealth observed for the households with a younger reference person compared to the others is due to their higher life expectancy, which implies a higher value attributable to the observed use rights. This effect more than counterbalances the higher share of usufructuaries among the elderly.

In terms of concentration, the changes induced by the adjustments show a reduction of the Gini index of almost 1 percentage point (on average across the years approximately 0,008), regardless of the assumption made (Figure 1). This change seems attributable to a double effect. On the one side, the share of adjusted net wealth held by the richest 20 percent stably decreases compared to the unadjusted estimates (-0.43 and -0.13 percent on average for the top and the following tenth of household); on the other, the share of the third and fourth tenths of households (i.e. those from the 20<sup>th</sup> to the 40<sup>th</sup> percentile of the wealth distribution) increases in both cases of a quarter of a percentage point (Table A5). In sum, the phenomenon seems to favor more markedly usufructuary households

> 10 In future waves this information should be collected to allow a more precise estimate of this amount.
who belong predominantly to lower-middle wealth classes at the expense of the richest 20 percent, who grants the usufruct.

<!-- Start of picture text --> Figure 1 - Gini concentration index - Adjusted and<br>unadjusted net wealth<br>0.650<br>0.640 Unadjusted<br>H1<br>0.630<br>H2<br>0.620<br>H3<br>0.610<br>0.600<br>0.590<br>0.580<br>0.570<br>1985 1990 1995 2000 2005 2010 2015 2020<br><!-- End of picture text -->

# **5. Free residential houses in HFCS data**

The Household Finance and Consumption Survey (HFCS) is a comprehensive and harmonized survey conducted at the national level within the Eurozone. It aims to collect detailed data on household finances and consumption. The SHIW survey is the Italian part of the HFCS.

According to this source, the share of main residences used for free is a significant issue in several countries, including Austria, Croatia, Cyprus, Estonia, Greece, Poland, Portugal, Slovenia, and Spain, where the share of households is around 10 percent, close to or higher than in Italy (Table A6).

By examining the age of the reference person, we can gain evidence of the relative importance of this tenure mainly for the young and the old. In many countries (Austria, Cyprus, Czechia, Estonia, Germany, Hungary, Latvia, Poland, and the Slovak Republic), the age profile shows a U shape, and the shares of households whose reference person is below 30 years or above 65 years are the highest. In many other countries (Italy, Croatia, France, Greece, Lithuania, Portugal, Slovenia, and Spain) the share is generally decreasing with age.

Unfortunately, the harmonized survey's questionnaire collects information on the tenure status for the main residence, but it does not allow us to distinguish the forms that provide the occupants with a right to use the property (e.g., usufruct), that we have considered for the household wealth measurement, from other forms of free use (e.g. temporary use permit), that we have considered current transfers, and thus outside the wealth definition.

Still, in all countries, the share of free users is mainly concentrated in the bottom class of the wealth distribution (Table A7). It is thus presumable that even considering a small share of the households living for free in the main residence as holders of a right of use would significantly lower wealth inequality for these countries.

It is only a hypothesis. The lack of data prevents us from being more precise. The relevance of this aspect would suggest delving deeper into the issue, including questions in the questionnaires that can clarify whether the free use of these houses can be defined as a right held by occupants and
helps to define their value by clarifying whether the occupation is subject to uncertainty and whether it is short or long term.

# **6. Conclusions**

The paper addresses the theme of the inclusion of use rights held in the form of usufruct in household wealth sample estimates. After recalling the theoretical appropriateness of correcting traditional estimates for this component, the paper presents an application to the Italian case. Using SHIW data shows that, although the phenomenon of usufruct is relatively uncommon (around 3 percent of households), the distribution of wealth is significantly affected by such an adjustment. Younger households appear to be relatively slightly wealthier than in unadjusted estimates. Overall, adjusted estimates exhibit levels of the Gini concentration index that are lower than unadjusted ones by approximately 1 percentage point.

The estimates do not take account of a different form of use right, namely the right to inhabit, which typically arises when one spouse passes away and leaves behind a residential home that was jointly owned or owned solely by the deceased spouse. On the one hand, SHIW data do not provide information about this condition; on the other, the right to inhabit is personal and cannot be transferred or assigned to another individual; in the absence of a market, the monetary evaluation of this right can be more complex. In any case, this additional element should also be considered in the measurement of household wealth.

We also conducted a brief analysis of residential homes occupied free of charge by households in European countries whose data are included in the HFCS. In several countries, residential homes occupied for free are relatively widespread, with shares similar to that found in Italy. However, the lack of data does not allow us to identify those cases in which the occupation takes place on the basis of a right of use which justifies its inclusion in households' wealth. An initial tentative evaluation shows that the effects of such an adjustment could lead to a significant reduction in wealth inequality.

These results also suggest that the replication of the analysis in countries where the phenomenon of use rights separated from bare ownership is more widespread than in Italy could produce a much greater impact on wealth estimates.
# **Appendix A: statistical tables**

# **Table A1 - Fiscal value of the usufruct and of the bare property, depending on the age of the usufructuary, Italy, 2023**

_(percentages)_

|**Age of the usufructuary**|**Share of the value of the**<br>**usufruct**|**Share of the value of the bare**<br>**property**|
|---|---|---|
|**From 0 to 20years**|95|5|
|**From 21 to 30years**|90|10|
|**From 31 to 40years**|85|15|
|**From 41 to 45years**|80|20|
|**From 46 to 50years**|75|25|
|**From 51 to 53years**|70|30|
|**From 54 to 56years**|65|35|
|**From 57 to 60years**|60|40|
|**From 61 to 63years**|55|45|
|**From 64 to 66years**|50|50|
|**From 67 to 69years**|45|55|
|**From 70 to 72years**|40|60|
|**From 73 to 75years**|35|65|
|**From 76 to 78years**|30|70|
|**From 79 to 82years**|25|75|
|**From 83 to 86years**|20|80|
|**From 87 to 92years**|15|85|
|**From 93 to 99years**|10|90|
|**More than 99years**|-|-|

Source: decree of the Italian Ministry of Economy and Finance of 13 December 2022, published in the Official Gazette no. 292 of 15 December 2022.
**Table A2 – Share of households living in usufruct or free of charge in Italy, 1989-2020** _(percentages)_

||**Age**<br>**U t**|**of the refe**|**rencepers**|**on**<sup>**(*)**</sup><br>**M**|**Geo**|**graphical**|**area**<br>**Sth**||
|---|---|---|---|---|---|---|---|---|
|**Period**|**p o**<br>**40**<br>**years**|**41-50**<br>**years**|**51-65**<br>**years**|**ore**<br>**than 65**<br>**years**|**North**|**Center**|**ou**<br>**and**<br>**Islands**|**Total**|
||<br>|||<br>Usufr|uct<br>||||
|**1989 -1998**|2.8|1.4|2.0|7.5|3.6|4.1|3.0|3.5|
|**2000-2008**|2.1|2.2|1.5|4.6|3.2|1.9|2.6|2.7|
|**2010-2020**|3.1|2.1|1.4|4.7|3.2|2.0|3.2|3.0|
|**Total**|2.7|1.9|1.6|5.6|3.3|2.7|2.9|3.1|
|||||Free of c<br>|harge<br>||||
|**1989 -1998**|11.9|4.9|2.8|6.8|6.2|7.7|7.7|7.0|
|**2000-2008**|11.6|8.8|3.9|5.1|6.1|8.4|8.4|7.3|
|**2010-2020**|12.1|10.3|5.4|4.4|5.6|8.1|9.7|7.5|
|**Total**|11.8|8.0|4.0|5.5|6.0|8.1|8.6|7.2|

Source: Our elaboration on SHIW data.

(*) The reference person is defined as the member with the highest income.

**Table A3 – Ownership of houses occupied in usufruct or free of charge in Italy, 2002-2016** _(percentages)_

|**Period**|**Parents**|**Sons or**<br>**Daughters**|**Other**<br>**relatives**|**Other**<br>**households**|**Other**|**Total**|
|---|---|---|---|---|---|---|
|||<br>|Us<br>|ufruct<br>|||
|**2002-2008**|31.5|46.2|14.4|3.0|5.0|100.0|
|**2010-2016**|33.3|45.9|12.4|2.4|6.1|100.0|
|**Total**|32.4|46.0|13.4|2.7|5.5|100.0|
||||Free o|f charge|||
|**2002-2008**|51.4|13.1|17.2|10.1|2.3|100.0|
|**2010-2016**|48.2|12.7|16.3|13.9|2.7|100.0|
|**Total**|49.8|12.9|16.8|12.0|2.5|100.0|

Source: Our elaboration on SHIW data. Data for 2020 and before than 2000 are missing.
# **Table A4 – Net wealth estimates adjusted for the use rights, Italy, 1991-2016**

_(euros, percentages)_

||**Unadju**<br>**sted**<br>**N**|**Use**<br>**rights**|**Use**|**right gra**|**nted**|**Adju**|**sted net wea**|**lth**|**Adju**<br>**net we**|**sted /Unadj**<br>**alth****_(percen_**|**usted**<br>**_tages)_**|
|---|---|---|---|---|---|---|---|---|---|---|---|
|**Year**<br>**Ae (ears)**|**et**<br>**wealth**|**held**|**(H1)**|**(H2)**|**(H3)**|**H1**|**H2**|**H3**|**H1**|**H2**|**H3**|
|**g y**<br>**1991**<br>**Up to 40**<br>|80961<br>|2565<br>|2071<br>|2777<br>|2880<br>|81455<br>|80749<br>|80646<br>|0.6<br>|-0.3<br>|-0.4<br>|
|**41-50**|112265|653|1287|2276|2536|111631|110642|110382|-0.6|-1.4|-1.7|
|**51-65**<br>|114989<br>|1074<br>|556<br>|1295<br>|1536<br>|115507<br>|114768<br>|114527<br>|0.5<br>|-0.2<br>|-0.4<br>|
|**> 65**<br>|70387|1536|254|655|882|71669|71268|71041|1.8|1.3|0.9|
|**Area**<br>**North**|102378|1598|1763|2742|3013|102213|101234|100963|-0.2|-1.1|-1.4|
|**Center**<br>|103079|2151|1020|1947|2241|104210|103283|102989|1.1|0.2|-0.1|
|**South and**<br>**Islands**|73236|1174|207|348|377|74203|74062|74032|1.3|1.1|1.1|
|**Total**<br> <br>|93136|1573|1112|1811|2009|93597|92898|92700|0.5|-0.3|-0.5|
|**2004**<br>**Age (years)**<br>**Up to 40**|151672|2888|900|1253|1329|153660|153307|153232|1.3|1.1|1.0|
|**41-50**<br>|217571<br>|3430<br>|401<br>|678<br>|731<br>|220600<br>|220323<br>|220270<br>|1.4<br>|1.3<br>|1.2<br>|
|**51-65**|262622|1167|232|498|583|263557|263291|263206|0.4|0.3|0.2|
|**> 65**<br>**A**|179223|1650|66|159|210|180807|180714|180663|0.9|0.8|0.8|
|**rea**<br>**North**|224372|2923|673|1045|1144|226622|226250|226151|1.0|0.8|0.8|
|**Center**<br>|237504|1714|130|241|268|239088|238977|238950|0.7|0.6|0.6|
|**South and**<br>**Ild**|137741|1495|161|290|334|139075|138946|138902|10|09|08|
|**sans**<br>**Total**<br>**2006**<br>**Ae (ears)**|<br>199296|<br>2221|<br>399|<br>641|<br>707|<br>201118|<br>200876|<br>200809|.<br>0.9|.<br>0.8|.<br>0.8|
|<br>**g y**<br>**Up to 40**|172303|4916|300|455|479|176919|176764|176740|2.7|2.6|2.6|
|**41-50**<br>**51-65**|256683<br>287880|3106<br>1032|456<br>132|776<br>336|833<br>407|259333<br>288780|259013<br>288576|258957<br>288505|1.0<br>03|0.9<br>02|0.9<br>02|
|<br>**> 65**<br>|<br>233701|<br>2152|<br>23|<br>70|<br>93|<br>235830|<br>235783|<br>235760|.<br>0.9|.<br>0.9|.<br>0.9|
|**Area**<br>**North**|256976|3231|390|700|776|259817|259507|259431|1.1|1.0|1.0|
|<br>**Center**|<br>315868|<br>2466|<br>82|<br>151|<br>169|<br>318252|<br>318183|<br>318165|<br>0.8|<br>0.7|<br>0.7|
|**South and**<br>**Islands**|150865|2380|14|27|32|153231|153218|153213|1.6|1.6|1.6|
|**Total**<br> <br>|234970|2809|210|377|419|237569|237402|237360|1.1|1.0|1.0|
|**2008**<br>**Age (years)**<br>**Up to 40**|167703|4479|565|814|870|171617|171368|171311|2.3|2.2|2.2|
|**41-50**<br>|234541<br>|6269<br>|407<br>|754<br>|850<br>|240403<br>|240056<br>|239960<br>|2.5<br>|2.4<br>|2.3<br>|
|**51-65**<br>**> 65**<br>**A**|332080<br>244338|1342<br>1994|226<br>10|615<br>35|737<br>48|333196<br>246322|332807<br>246297|332684<br>246283|0.3<br>0.8|0.2<br>0.8|0.2<br>0.8|
|**rea**<br>**North**|269625|3591|501|911|1025|272715|272305|272190|1.1|1.0|1.0|
|**Center**<br>|288448|3677|152|273|312|291973|291852|291813|1.2|1.2|1.2|
|**South and**<br>||||||||||||
|**Islands**<br>**Total**<br>**2010**<br>**A **|173508<br>243671|2780<br>3357|39<br>285|79<br>520|93<br>588|176249<br>246743|176209<br>246508|176195<br>246440|1.6<br>1.3|1.6<br>1.2|1.5<br>1.1|
|<br>**ge (years)**<br>**Up to 40**|154895|6583|613|905|990|160865|160573|160488|3.9|3.7|3.6|
|**41-50**|248150|5717|875|1524|1689|252992|252343|252179|2.0|1.7|1.6|
|**51-65**<br>|359559<br>|1312<br>|210<br>|489<br>|581<br>|360661<br>|360382<br>|360290<br>|0.3<br>|0.2<br>|0.2<br>|
|**> 65**|267976|1653|83|199|276|269546|269430|269353|0.6|0.5|0.5|
|**Area**<br>**North**|284916|6186|421|758|873|290681|290344|290229|20|19|19|
|<br>**Center**|<br>329996|<br>1138|<br>666|<br>1156|<br>1310|<br>330468|<br>329978|<br>329823|.<br>0.1|.<br>0.0|.<br>-0.1|
|**South and**<br>**Islands**|174466|1293|241|406|454|175518|175353|175304|0.6|0.5|0.5|
|<br>**Total**<br> <br>|<br>258548|<br>3635|<br>412|<br>724|<br>825|<br>261771|<br>261459|<br>261357|<br>1.2|<br>1.1|<br>1.1|
|**2012**<br>**Age (years)**<br>**Up to 40**<br>|136367<br>|3866<br>|1525<br>|2305<br>|2448<br>|138708<br>|137928<br>|137785<br>|1.7<br>|1.1<br>|1.0<br>|
|**41-50**<br>|232228<br>|3549<br>|2246<br>|3934<br>|4328<br>|233531<br>|231843<br>|231449<br>|0.6<br>|-0.2<br>|-0.3<br>|
|**51-65**<br>**> 65**<br>|321248<br>257177|1939<br>2037|528<br>166|1194<br>358|1410<br>461|322659<br>259048|321993<br>258856|321777<br>258754|0.4<br>0.7|0.2<br>0.7|0.2<br>0.6|
|**Area**<br>**North**|257913|3359|1048|1921|2158|260224|259351|259114|0.9|0.6|0.5|
|**Center**<br>|287372|1130|2246|3742|4122|286256|284760|284380|-0.4|-0.9|-1.0|
|**South and**<br>||||||||||||
|**Islands**<br>**Total**<br>**2014**<br>**A **|190191<br>241640|2725<br>2734|193<br>999|350<br>1758|395<br>1960|192723<br>243375|192566<br>242616|192521<br>242414|1.3<br>0.7|1.2<br>0.4|1.2<br>0.3|
|<br>**ge (years)**<br>**Up to 40**|133282|2226|1043|1529|1621|134465|133979|133887|0.9|0.5|0.5|
|**41-50**<br>**5165**|201899<br>279882|2024<br>1167|324<br>331|574<br>750|639<br>887|203599<br>280718|203349<br>280299|203284<br>280162|0.8<br>03|0.7<br>01|0.7<br>01|
|**-**<br>**> 65**|<br>227257|<br>1926|<br>23|<br>49|<br>62|<br>229160|<br>229134|<br>229120|.<br>0.8|.<br>0.8|.<br>0.8|
|||**Unadju**<br>**sted**<br>**Net**<br>|**Use**<br>**rights**<br>**held**|**Use**<br>|**right gra**<br>|**nted**<br>|**Adju**<br>|**sted net wea**<br>|**lth**<br>|**Adju**<br>**net we**<br>|**sted /Unadju**<br>**alth****_(percen_**<br>|**sted**<br>**_tages)_**<br>|
|---|---|---|---|---|---|---|---|---|---|---|---|---|
|**Year**||**wealth**||**(H1)**|**(H2)**|**(H3)**|**H1**|**H2**|**H3**|**H1**|**H2**|**H3**|
||**Area**||||||||||||
||**North**|250978|2086|346|648|734|252718|252416|252330|0.7|0.6|0.5|
||**Center**|243844|1098|979|1578|1731|243963|243364|243211|0.0|-0.2|-0.3|
||**South and**||||||||||||
||**Islands**|152412|1828|18|30|32|154222|154210|154208|1.2|1.2|1.2|
||**Total**|217574|1803|367|635|707|219010|218742|218670|0.7|0.5|0.5|
|**2016**|**Age (years)**||||||||||||
||**Up to 40**|108612|2384|39|56|56|110957|110940|110940|2.2|2.1|2.1|
||**41-50**|186292|1198|0|0|0|187490|187490|187490|0.6|0.6|0.6|
||**51-65**|256688|1220|374|816|965|257534|257092|256943|0.3|0.2|0.1|
||**> 65**|231667|1972|23|65|87|233616|233574|233552|0.8|0.8|0.8|
||**Area**||||||||||||
||**North**|239417|1443|234|509|604|240626|240351|240257|0.5|0.4|0.4|
||**Center**|231262|1486|19|40|47|232729|232708|232701|0.6|0.6|0.6|
||**South and**||||||||||||
||**Islands**|141700|2154|6|17|21|143848|143837|143833|1.5|1.5|1.5|
||**Total **|206422|1680|117|255|303|207985|207847|207799|0.8|0.7|0.7|

Source: Our elaboration on SHIW data.

(*) The reference person is defined as the member with the highest income.

**Table A5 – Differences between adjusted and unadjusted* net wealth shares held by tenth of households, Italy, 1991-2016** _(percentages)_

|**Tenth of**<br>**households**|**1991**|**2004**|**2006**|**2008**|**2010**|**2012**|**2014**|**2016**|**Average**|
|---|---|---|---|---|---|---|---|---|---|
|**1**|0.02|0.01|0.06|-0.04|0.02|-0.03|-0.04|0.05|0.01|
|**2**|-0.27|0.05|-0.03|0.08|-0.01|0.06|0.01|-0.03|-0.02|
|**3**|0.27|0.21|0.24|0.31|0.22|0.23|0.21|0.26|0.24|
|**4**|0.29|0.16|0.26|0.28|0.32|0.29|0.25|0.21|0.26|
|**5**|0.15|0.09|0.11|0.12|0.19|0.11|0.08|0.06|0.11|
|**6**|0.08|0.06|0.04|0.04|0.04|0.05|-0.01|0.01|0.04|
|**7**|0.01|0.02|0.00|-0.04|-0.01|-0.01|-0.06|-0.03|-0.02|
|**8**|-0.04|-0.03|-0.06|-0.09|-0.04|-0.06|-0.09|-0.06|-0.06|
|**9**|-0.13|-0.15|-0.14|-0.14|-0.13|-0.16|-0.10|-0.11|-0.13|
|**10**|-0.38|-0.42|-0.47|-0.52|-0.59|-0.47|-0.24|-0.37|-0.43|

Source: Our elaboration on SHIW data. * Adjusted estimates = average of H1, H2, H3.
**Table A6 – Share of households living in usufruct or free of charge in European countries** _(percentages)_

|||||**Age c**|**lass *(aver**|**age across**|**years)**|
|---|---|---|---|---|---|---|---|
|**Country**|**2014**|**2017**|**2021**|**Up to 40**<br>**years**|**41-50**<br>**years**|**51-65**<br>**years**|**More than**<br>**65years**|
|**Austria**|7.0|7.2|7.4|6.8|2.0|2.7|15.3|
|**Belgium**|3.1|2.3|2.3|1.2|2.8|1.0|5.0|
|**Cyprus**|17.7|19.0|18.8|18.6|6.3|12.3|39.2|
|**Czechia**|-|-|5.3|7.9|3.1|1.5|8.7|
|**Germany**|4.5|4.0|3.9|4.0|2.5|2.0|7.6|
|**Estonia**|12.7|13.0|11.1|14.8|7.6|9.4|15.4|
|**Spain**|7.9|7.7|7.1|11.9|7.2|5.3|7.1|
|**Finland**|1.1|1.3|1.0|1.3|0.4|0.8|1.8|
|**France**|2.8|2.8|3.2|4.0|3.2|2.3|2.4|
|**Greece**|6.5|7.7|7.0|12.6|7.0|4.4|5.8|
|**Croatia**|-|9.2|12.9|21.4|14.3|7.2|5.7|
|**Hungary**|6.5|5.1|4.8|8.3|3.6|3.4|6.6|
|**Ireland**|1.2|1.8|1.9|1.6|-|-|-|
|**Italy**|11.1|11.1|8.1|16.5|11.6|6.7|9.1|
|**Lithuania**|-|4.2|3.0|5.0|3.9|3.3|2.5|
|**Luxembourg**|5.2|2.8|2.9|5.7|1.7|2.9|3.3|
|**Latvia**|7.6|8.8|5.4|10.2|3.3|4.0|10.9|
|**Malta**|2.5|2.3|5.5|3.6|-|-|-|
|**Netherlands**|0.8|0.7|0.4|1.0|1.0|0.1|0.5|
|**Poland**|13.2|12.4|-|14.7|10.4|10.5|15.7|
|**Portugal**|7.3|7.7|7.7|10.5|8.1|5.9|6.8|
|**Slovenia**|14.2|13.8|13.3|30.3|12.5|7.0|11.2|
|**Slovak**<br>**Republic**|4.4|5.9|4.3|6.7|3.1|2.4|8.2|
|**Total**|6.3|6.2|5.0|7.1|5.6|3.9|6.9|

Source: Our elaboration on HFCS data.

* Age of the reference person, defined according to the UN/Canberra definition.
# **Table A7 – Share of households living in usufruct or free of charge in European countries by wealth quintiles (average values in the period 2014-2021)** _(percentages)_

|**Country**||**Househ**|**old net wealthq **|**uintiles**||
|---|---|---|---|---|---|
||**First**|**Second**|**Third**|**Fourth**|**Fifth**|
|**Austria**|9.8|15.7|7.6|1.9|1.0|
|**Belgium**|4.8|4.1|1.3|1.3|1.2|
|**Cyprus**|63.9|15.1|5.3|4.3|3.6|
|**Czechia**|19.5|5.0|0.6|0.9|0.2|
|**Germany**|5.2|6.8|6.5|1.2|1.0|
|**Estonia**|41.6|10.1|4.5|2.6|2.4|
|**Spain**|25.2|6.8|2.3|1.7|1.8|
|**Finland**|2.1|2.5|0.5|0.4|0.2|
|**France**|4.9|5.7|1.8|1.5|0.8|
|**Greece**|23.8|6.8|2.0|1.5|1.1|
|**Croatia**|46.4|6.2|0.9|0.7|0.8|
|**Hungary**|19.7|3.3|2.0|1.2|0.9|
|**Ireland**|3.4|3.9|0.4|0.3|0.2|
|**Italy**|29.3|15.5|2.7|1.5|1.5|
|**Lithuania**|15.6|0.9|0.7|0.2|0.4|
|**Luxembourg**|8.5|5.8|1.7|0.6|1.0|
|**Latvia**|24.1|7.2|2.9|1.0|0.6|
|**Malta**|15.3|1.7|0.8|0.1|0.1|
|**Netherlands**|1.4|1.1|0.2|0.1|0.2|
|**Poland**|53.2|5.1|3.1|1.7|0.9|
|**Portugal**|22.6|9.2|2.5|2.0|1.6|
|**Slovenia**|50.1|10.9|3.0|2.9|1.8|
|**Slovak Republic**|21.0|1.2|1.1|0.5|0.4|
|**Total**|16.0|7.5|3.3|1.4|1.1|

Source: Our elaboration on HFCS data.
# **Appendix B: SHIW empirical evidence on the value of use rights**

In sections 3 and 4, we have examined the theoretical reasons why use rights associated with usufruct should be quantified and included in the net wealth of the households benefiting from them (and subtracted from that of the bare owners). We have also recalled that in Italy, as in many other countries, the use rights of houses are valued on the market, although this market is sometimes of a limited extent, and we have shown some possible estimation strategies using survey data.

In this Appendix, we will attempt to provide some empirical evidence of the appropriateness of this line of reasoning based on the data collected in the SHIW. We have considered a model in which the subjective judgment on the household's economic well-being is explained by the economic resources in terms of household income and wealth, controlling for a set of socio-demographic conditions (year, number of components, geographical area, municipality size, gender, age, education, and civil status of the adult with the higher income).

In the first experiment, wealth is measured without considering the value of use rights. To assess whether usufruct affects the perceived economic well-being, two dummy variables were introduced in the model, indicating whether the household is a usufructuary or a bare owner. According to the thesis advocated in this study, the coefficient of these dummies should be significantly different from zero, with a positive sign in the first case, and a negative in the second.

The analysis is conducted using an ordinal probit model, as the dependent variable has an ordinal nature. To avoid the potentially adverse effects of outliers often present in income and wealth distributions, both variables were subjected to the inverse hyperbolic sine (IHS) transformation, which is similar to the logarithmic transformation but allows for the treatment of negative values as well (Friedline et al., 2015).<sup>11</sup> The results show that, conditionally to all the socio-demographic conditions considered in the model and to household income and wealth (that have both – obviously – a positive effect on subjective economic well-being), the dummy variable indicating the usufructuary condition has a positive and significant coefficient, suggesting a residual content in terms of the well-being of this condition, not captured by the two variables reporting the economic resources (Table B1; Model 1).<sup>12</sup> The coefficient of the dummy indicating the bare ownership, instead, is slightly negative but insignificant. This result could depend on the low frequency of bare owners caught by the SHIW, also due to the limited attention paid to this phenomenon in the questionnaire.<sup>13</sup> In the second experiment, we used the same model with the only difference that household wealth is adjusted for the value of the use rights, i.e., obtained adding and subtracting respectively the estimated value of the usufruct. In such a model the coefficients of both the dummy variables become not significantly different from zero (Table B1; Model 2), suggesting that the adjustments done have caught the essence of well-being incorporated in those ownership conditions.

> 11 In a limited number of households, net wealth is negative, with debts being greater than assets. In some cases, income can also be negative, mainly due to the presence of business costs greater than the corresponding revenues.

> 12 It is worth noting that, analogously to the properties held, the houses occupied in usufruct contribute to the household income with imputed rents provided by the respondents themselves. Thus, the dummy in the model captures a benefit that goes beyond the value of the current occupation of the house free of charge.

> 13 The filter question defining the list of properties included in the roaster refers to those “held”, without any specific reference to bare ownership. This ambiguity could have emphasized the general tendency of households to under-report the properties owned.
# **Table B1 – Perceived economic well-being explained by income, wealth, and usufruct conditions, 1991 and 2004-2016**

||**Mod**<br>|**el 1**<br>|**Mod**<br>|**el 2**<br>|
|---|---|---|---|---|
|**Variable**|**Parameter**|**p-value**|**Parameter**|**p-value**|
|**Income**|0.6138|<.0001|0.6150|<.0001|
|**Wealth**|0.0564|<.0001|-|-|
|**Adjusted wealth ***|-|-|0.0563|<.0001|
|**Usufructuary**|0.1549|<.0001|-0.0279|0.2978|
|**Bare owner**|-0.0043|0.9421|0.0624|0.2860|

Model = Cumulative probit regression.

Dependent variable = Subjective economic well-being: “Is your household’s income sufficient to see you through to the end of the month? 1 with great difficulty – 2 with difficulty - 3 with some difficulty – 4 - fairly easily – 5 easily – 6 very easily.

Sample size = 55,435 observations in 1991 and from 2004 to 2016.

Further variables included in the model: Year, Number of components (linear and squared), Geographical Area, Municipality size (inhabitants), Gender, Age, Education, and Civil status of the adult with the higher income.

* Adjusted estimates based on H1 assumption (i.e. usufructuary age = respondent age + 25; see the text).

Source: Our elaboration on SHIW data.