Wealth distribution and household economies of scale: Do families matter for inequality?

Activity: Talk or presentationScience to science


Wealth inequality is an increasingly widely accepted measure of social policy outcomes. In contrast to income inequality, where equivalence scales are a popular tool to account for household composition, the role of the family in moderating wealth inequality remains unexplored. In this paper, I argue that family institutions and intergenerational links have substantial ramifications for the measurement of wealth inequality. Supporting this claim, this article develops and estimates wealth economies of scale. Wealth enters individual utility not only through consumption possibilities but also directly. This is the case when people hold wealth because of intergenerational transfer motives. Scale effects may differ between households where wealth is primarily a means to smooth consumption, and households that hold wealth as an end in itself. This is particularly important at the top of the distribution: Since affluent households in particular hold a lower share of their wealth for consumption purposes, the scale effects of other accumulation motives will dominate. Using a model of “capitalistic bequests”, originally developed to explain high savings rates of the rich, this paper is the first to offer a concept of economies of scale for wealth rather than an ad-hoc approach. Adapting the model to accommodate household size effects, I contribute by estimating wealth economies of scale and exploring the implications of this household size adjustment for inequality in Germany. As opposed to approaches hitherto employed to adjust for household size when measuring wealth inequality, taking into account the equivalence scales developed in this approach has more pronounced implications for wealth inequality. A better understanding of the way households structure the link between resources and wellbeing will be not only of academic relevance, but also allow more sophisticated analysis of the redistributional effects of social policies.
Period6 Oct 20228 Oct 2022
Event titleYoung Economist Conference (YEC)
Event typeUnkonwn
Degree of RecognitionInternational


  • inequality
  • household finance
  • bequests