Speaking of household wealth - financial wealth, real and debt - it is fashionable. But, on closer inspection, economists have always occupied the wealth. Household consumption depends on disposable income, but is also influenced by wealth. The information about financial instruments - deposits, shares, securities, insurance products - where families invest give us information on their risk appetite. Wealth provides signals about the characteristics of financial systems, because every country intermediaries offer some tools than others, by virtue of regulations, market power and weight of taxes. With the crisis of public pension systems has become more important than before the study means for the families to deal with the accumulate retirement. In most countries the housing wealth of households increased their financial assets, raising more interest in the evolution house prices.
More recently, the economic crisis and falling stock prices and housing in many countries have strengthened the discussion of the importance of the values \u200b\u200bof these activities, not only for the conduct of monetary policy, but also the effects financial stability. Finally, one of the recommendations of the report Stiglitz-Sen-Fitoussi on "Measurement of economic performance and social progress" invites us to consider "income and Consumption Jointly with wealth."
Focusing on the aggregate level of household wealth - and then ignoring its distribution among the citizens - the Italian situation can be summarized in five points.
(i) gross financial wealth. Italian families have a financial wealth than the gross disposable income lower than U.S., UK and Japan but higher than the large euro area countries (a similar ranking would be achieved by placing the wealth relative to GDP) . What causes these differences? First, the percentage of people investing in shares directly or through mutual funds, pension funds and insurance companies is higher in the United Kingdom, the United States and Japan. Second, the household investment in private pensions are more important in the United States and the United Kingdom and the euro area, where public pensions - not included in financial assets - are more important. A third element is that, as we shall see, in countries such as Spain and Italy, the families have a high real wealth. Investment in housing may have contributed to "crowd out" investments in financial assets.
(ii) debt. Until before the explosion of the crisis, in 2008, household debt grew in all countries. The level of debt is highest in the UK, with a value that exceeds 150 percent of disposable income, followed, with values \u200b\u200baround 125 per cent, Member U.S. and Spain, with the latter country has in the past 15 years, the most spectacular growth. In Italy the household debt amounted to about 60 percent of disposable income, a very low value. The propensity of households to borrow is influenced by several factors, which vary in different national contexts: the relationship between the value of the loan offered by the bank and the value of the home offered as collateral, the threshold for tax deductibility of interest on loans to the 'purchase of housing, the efficiency of the rental market, which influences the choice of individuals to live in their own homes, the spread of a mechanism, absent in Italy but spread to Anglo-Saxon countries, according to which banks have an automatic extension of the loan if the increased value of the collateral offered by the families. Finally, the per capita income and the savings rate could affect - in the opposite direction - household debt.
(iii) Net Wealth Financial data. The net wealth of households is the difference between the gross financial wealth and debt. Italian families, by virtue of their low debt, net financial wealth have always lower than in Japan, but in line with the values \u200b\u200bthat are observed in the United Kingdom and the United States, and of course always higher than in Germany, France and Spain.
(iv) real wealth. Despite the financial activities of the economies of the past twenty years, real assets are the predominant part of household wealth in most countries, with two important exceptions represented by the United States and Japan. Although comparisons between countries should be taken with caution, because the measurement of the value of housing is not harmonized, the real wealth is equal to more than 8 times the disposable income in Spain, due to housing boom that lasted until 2007. The real wealth is about 5 times the income in Italy, France and the United Kingdom. Lower values \u200b\u200bare observed in Germany, Japan and the United States.
The high value of the real wealth of the Italian has several explanations. The houses have traditionally been considered a safe investment, because of the backwardness of the financial markets in the past and high inflation of the seventies and eighties. In our country, moreover, have never verified the dramatic reduction in property prices that have often characterized the United Kingdom or the United States. The imperfections in the rental market and the centrality of the family have always stimulated the demand for housing property. The increasing ownership of the buildings can also be interpreted as a precautionary choice by an aging population, have an important role in this inter-generational transfers of houses. Coming to more recent factors, the difficulties of the stock market between 2000 and 2002, the failures of two industry groups that had issued bonds and the case of Argentina have increased housing demand and contributed to the rise in prices until 2007.
(v) total net wealth. Adding the net financial wealth and real wealth of households is obtained as an indicator of total net wealth. The highest values \u200b\u200bare found in Spain, with a level of around 9 times the disposable income, determined dall'elevatezza of real wealth. In Italy, France and the UK have values \u200b\u200bgreater than 7 times the income. Japan has a value of less than 7 times the disposable income. Total wealth around 5 times the disposable income are found in Germany and the United States: the first is hampered by relatively small amounts of financial assets, while in the latter the real assets of households are low and their debt is high.
Apart from distributional considerations, wealth indicators tell us, then, that Italian families have a "cushion" high by international comparison, to draw upon when unforeseen events and to cope with old age. But these indicators reflect the past history. Nothing assures us that the current situation will prevail in the future. If households consume the wealth accumulated increase their well-being today, but at the expense of future generations. It is boring to repeat, but must return to Italy to increase its income.
Riccardo De Bonis, Bank of Italy.
This note summarizes the article published in No. 3, December 2010, consumer rights and market. The views presented are personal and do not engage the responsibility of the Bank of Italy.
(originally on appparso nelmerito.com , January 21, 2011)
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