More billionaires and bigger fortunes – but lower relative inequality
Private wealth in Sweden has tripled since the turn of the millennium. The number of billionaires has increased fivefold. Yet relative inequality has not risen. How can that be?
Olle Hammar is an associate senior lecturer at the School of Business and Economics, and one of his research areas is economic inequality. He and his colleagues have just completed a project linked to the World Inequality Lab, whose work focuses on creating comparable time series of economic inequality in different countries.
“There’s considerable interest in wealth inequality, both globally and in Sweden. But since there hasn’t been any comprehensive data on wealth in Sweden since the wealth tax was abolished in 2007, much of the debate has been based on an incomplete picture of how assets and liabilities are distributed.”
As part of the project, Hammar and his colleagues created a database on wealth in Sweden, covering the period from 1999 to 2020.
“We looked at registers of property ownership, shareholdings, pension entitlements, income, and liabilities, in combination with private ownership registers and national accounts totals.”
The findings show that the total value of private wealth has tripled in real terms since 1999. The increase is not confined to the wealthiest – median wealth has increased fivefold as well, as has the number of billionaires, measured in Swedish kronor.
So, what explains the decline in relative inequality?
“It largely comes down to what Swedes own. When we talk about wealth, we include all forms of wealth, including funded pension assets outside the public pension system. Those assets are what drive this decline in inequality.”
The study’s findings were not what Hammar and his colleagues had initially expected.
“We were surprised to find that relative inequality had declined. But when we broke down the data, we saw that one explanation was the growth in funded pensions. Around 20 per cent of the population have no wealth once you take their debts into account – their net wealth is basically zero. But because they’re forced to pay into a pension scheme that’s tied to the stock market, which has gone up a great deal, it ends up being hugely important for a large part of the population, relative to their overall wealth.
This project has been underway for ten years. What’s next?
“First, we’ll publish this study. After that, we want to look at individuals’ backgrounds, intergenerational mobility, or inequality in relation to family background. And we’d also like to look at incomes over the past hundred years.”