Q: What is household wealth distribution statistics?

A: Total household wealth is a topic that traditional statistics has been exploring for decades, but only since 2015 has it focused more actively on the question of how that wealth is distributed among households. It was in that year that the G‑20 group of the world’s largest economies, as part of the second phase of its Data Gaps Initiative (DGI) aimed at the coordinated closing of data gaps in official statistics, explicitly recommended that data necessary for the calculation of statistical indicators of household wealth distribution, as well as certain other data that did not exist at the time, but were needed by economic policy makers, should begin to be collected.

Q: Who produces statistical indicators of household wealth distribution for Croatia and the EU?

A: The European System of Central Banks (ESCB) produces the set of these indicators for euro area countries and selected countries outside the euro area and has been releasing them on its website under the title Distributional Wealth Accounts (DWA) on a quarterly basis since January 2024. Indicators include the measures of the level, distribution and concentration of various forms of household assets and liabilities, as specified in the overview note published on the CNB website.

Q: What is the role of the CNB in producing the statistics of household wealth distribution for Croatia?

A: Every three years, the CNB performs the Household Finance and Consumption Survey (HFCS). The results of the survey are delivered to the ECB as input data for the calculation of indicators of household wealth distribution within the DWA dataset. In addition, CNB experts participate in the work of the ESCB bodies that develop and define the methodology for both the calculation of indicators within the DWA and the performance of the HFCS survey.

Q: Where are the statistics of household wealth distribution for Croatia and the EU published?

A: For Croatia, the time series of DWA indicators begins from the second quarter of 2017 and is regularly updated with new values. It is possible to download all the values of DWA dataset indicators from the ECB website for all countries included. At the same time, the CNB published certain statistical indicators calculated for Croatia directly from the HFCS dataset on its website as an addendum to the analysis and presentation of results. The ECB publishes the indicators for other EU countries that perform the survey, and Oesterreichische Nationalbank (ÖNB) publishes these data in its HFCS Dashboard.

Q: For what purpose are the statistical indicators of household wealth distribution used?

A: The main purpose of the calculation of these indicators is to provide economic policymakers with an analytical basis for designing socially sensitive economic policy measures. Specifically, most economic policy measures have an asymmetrical effect on households, depending on the level of assets, debt and income of each household: as a rule, restrictive measures have a disproportionately stronger impact on poorer households, that is, those with lower income and a lower surplus of assets over liabilities, while expansionary measures usually disproportionately benefit wealthier households with higher income and a higher surplus of assets over liabilities. Central banks use data on household wealth distribution to better understand the effect of monetary measures on various household groups and their overall impact on the economy as well as to assess possible risks to financial stability. With time, these indicators started to be used for the calculation of various measures of social inequality in a particular country and for the comparison of measures thus calculated across countries and over time, for the needs of both the professional and the general public.

Q: What are the typical inequality measures based on the indicators of household wealth distribution?

A: One of the most popular measures is the Gini coefficient, bearing the value between 0 and 1 (that is, between 0% and 100%). The value 0 (0%) represents perfect equality (all households are equally wealthy), while 1 (100%) represents perfect inequality (a single household has all the income, and others have none). Therefore, the greater the Gini coefficient, the greater the inequality of wealth distribution among households. Among other measures, the simplest to calculate and compare across countries are the symmetrical ratio of the total wealth of households at the top of the distribution to the bottom of the distribution (e.g. the total wealth of the 20% of households with the highest wealth divided by the total wealth of the 20% of households with the lowest wealth) or the share of the total wealth of households that constitute the group with the 10%, 1% or even 0.1% of the highest wealth in the total wealth of all households.

Q: What do these measures tell us about the social inequality in Croatia?

A: According to the latest available comparable values of the Gini coefficient for the inequality of household net wealth (net wealth equals the value of total assets minus liabilities) based on HFCS data, in terms of the inequality of net wealth, Croatia ranks in the lower half of the group of countries for which the value of this indicator has been calculated, i.e., among the countries with relatively low inequality.

Source: OeNB HFCS-International-Key-Figures-Dashboard
Note: EA denotes the euro area.

However, based on DWA data from the same period, the values of the Gini coefficient comparable over time suggest that Croatia is among the countries with a higher inequality of household net wealth in an almost identical group of countries.

Source: ECB Data Portal
Note: EA denotes the euro area.

The higher relative inequality based on the data from the DWA dataset versus that based on the data from the HFCS dataset is noticeable in certain other countries as well, with the greatest change of a similar direction seen in Belgium and Lithuania. There are several reasons for the difference.

First, it is necessary to note that the DWA dataset is a set of experimental statistical indicators still being developed. The differences stem from the fact that the HFCS is a set of survey indicators, and in most countries, the wealthiest segment of households is not inclined to participate in the survey, which is why statisticians have an insufficient number of observations for this segment to conduct a reliable analysis. Therefore, when calculating DWA indicators, the ESCB uses HFCS data and sophisticated statistical methods in an attempt to estimate the missing observations for the wealthiest households, which is the main cause of the difference in the measure of inequality of net household wealth between the HFCS and the DWA dataset.

In addition, the ESCB uses HFCS data to estimate the total value of the categories of household assets and liabilities for which reliable sources of data from the national accounts are not available. Particularly noteworthy is the estimation of the total value of household housing stock, which, in some countries, is estimated based on HFCS data, and in others (Croatia included) based on the national accounts data. In the case of Croatia, the total value of the housing stock owned by households estimated from HFCS data is almost twice as high in the fourth quarter of 2020 as the total value recorded in the national sector accounts indicators in the same period. Given the exceptionally high relative importance of housing wealth in the total wealth of households in Croatia, this is the second most important source of the difference in household wealth inequality in Croatia according to HFCS data relative to DWA data.

Q: How is the methodology for the calculation of DWA indicators developed and what does that mean for their comparability with HFCS indicators?

The ECB, in cooperation with national central banks, continues to develop the methodology for the calculation of DWA indicators of household wealth distribution, which is, for now, experimental. On the other hand, the methodology for the collection of HFCS data and the calculation of HFCS indicators has become the official ESCB methodology since 2025, in application since 2026. Therefore, it should be expected that the HFCS data collected in subsequent waves of this survey will be of even higher quality than in the past, which will mean less adjustments in the process of calculating DWA indicators. At the same time, the development of the methodology for calculating DWA indicators will continue with the aim of one day evolving from experimental to official ESCB methodology. This should, in the future, improve the comparative analyses of social inequality based on these indicator sets.