ISR Awards

Studying Wealth in America (Phase I)

The creation and analysis of intergenerationally linked income data has revolutionized the study of economic mobility in this country. However, our understanding of mobility is still limited by severe data gaps. Studying wealth (i.e., net worth) is an equally compelling avenue for understanding mobility in the American context, especially as income and wealth are from perfectly correlated, wealth is much more unequally distributed, and wealth plays an independent role in the intergenerational transmission of advantage (Killewald, Pfeffer, and Schachner 2017; Pfeffer and Killewald 2018; Pfeffer and Schoeni 2016). And yet we do not have data resources to answer basic questions, such as: How does the overall distribution of wealth vary across U.S. areas, and within neighborhoods? How high is the intergenerational correlation in wealth and which areas show higher and lower intergenerational wealth mobility?
These and other pressing questions on the distribution of household wealth and its consequences for future generations cannot be met by the currently available data infrastructure. There are three main national surveys that collect data on household wealth: the Survey of Consumer Finances (SCF), the Panel Study of Income Dynamics (PSID), and the Survey of Income and Program Participation (SIPP). While these surveys have been used to estimate national levels of and trends in wealth inequality (Pfeffer, Danziger, and Schoeni 2013; Pfeffer and Schoeni 2016; Wolff 2017), none of them allow the analysis of geographic variation in wealth levels and inequality, not even at the state level, nor the analysis of the distribution of wealth within geographic units, i.e., wealth segregation. Similarly, while our own prior work has made use of the PSID to provide national estimates of intergenerational wealth correlations, black-white differences in wealth correlations, and the association between parents? wealth and children?s educational success (Pfeffer 2018; Pfeffer and Killewald 2018, 2019), no data are currently available to compare the degree of intergenerational wealth persistence across any geographic units within the US. It is not obvious that areas with low income inequality or low income mobility are the same as those with low wealth inequality or low wealth mobility. In fact, a recent international comparison shows that there is no correlation at all between national levels of wealth inequality and national levels of income inequality (Pfeffer and Waitkus 2019).
This project will remedy this large data gap by creating, analyzing, and distributing intergenerationally linked, tax record-based proxy measures of wealth for the entire United States. It builds on work by Raj Chetty and collaborators who have analyzed and distributed intergenerationally linked U.S. tax records on income (Chetty et al. 2017; Chetty, Hendren, Kline, and Saez 2014; Chetty, Hendren, Kline, Saez, et al. 2014) as well as work by Emmanuel Saez and Gabriel Zucman who have computed initial wealth measures from U.S. tax records (Saez and Zucman 2016, 2020).