How is Wealth Distributed in Israel? Milgrom and Heart Bar

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This research examines wealth disparities in housing assets in Israel. This study is the first of its kind in Israel.

This research is the first of its kind, examining wealth disparities in housing assets in Israel through the analysis of property distribution. The discussion of economic and social inequality in Israel has been at the center of public discourse for several years, with increasing awareness of the importance of income and asset distribution in the economy. Until now, the discussion has mainly focused on income distribution due to the lack of sufficient data on asset distribution in Israel. Therefore, the factual picture regarding economic well-being presented to decision-makers and the public is limited. When analyzing economic disparities between citizens and different groups, it's essential to consider that wealth, in addition to income, plays a significant role in household prosperity.

Davies and Partners point out several reasons for the centrality of wealth in a household's economic situation. Firstly, it serves as an additional source of income through returns generated from various assets. Secondly, wealth allows for the smoothing of consumption, providing a buffer against negative income shocks, such as illness, unemployment, or retirement. Thirdly, wealth provides households with a source of funding for entrepreneurial activities, either directly or indirectly, by serving as collateral for loans to businesses. While income data provide insights into current living standards, wealth data offer a glimpse into a household's past and future financial well-being. Therefore, research on wealth distribution is of particular interest because wealth represents the cumulative effect of historical disparities (in income, inheritance, etc.) and has a central role in shaping future economic disparities, influencing household investments in education, housing, entrepreneurship, and economic security.

To accurately identify economic disparities in Israel, it is essential to measure wealth distribution, as focusing solely on income distribution generates a partial and sometimes misleading picture. In most countries worldwide, wealth inequality is significantly higher than income inequality. For example, Sweden, known for its income equality, exhibits substantial wealth inequality. Additionally, there is often a generational correlation in wealth as a large fraction of wealth is passed through gifts and inheritance - creating a barrier to social mobility and affecting equal opportunities within society.

In Israel, an official measurement of wealth distribution was last conducted in 1964. The most recent research on wealth distribution in Israel comes from scholars Shoroks and Davis for Credit Suisse, who annually publish estimates of wealth distribution in 174 different countries. In their 2014 report, they stated that in Israel, the top decile holds about 67% of the country's wealth, while the top percentile alone holds about 38% of the wealth. However, it is essential to note that relying solely on the Credit Suisse findings on wealth distribution in Israel is somewhat limited because their estimates are based on valuation alone and not on actual measurements of wealth.

This research represents the first analysis of the survey conducted by the Central Bureau of Statistics in 2013 regarding property ownership, known as the "Long-Term Survey, Cycle 2, 2013" (referred to as the "Property Survey"). It relies on various statistical methods and parallel findings from other countries to supplement the missing data in the survey. In the preparation of this survey, Israel joins 31 other countries in the world, most of which are OECD members that have examined wealth distribution in their countries in recent years.

In this research, we assess the current and comprehensive distribution of wealth in Israel, as well as the distribution of property ownership in the country. Measurement of poverty and asset wealth is of crucial importance in reflecting the real economic and social disparities in Israel. We hope that the measurement of wealth distribution and the discussion surrounding it will lead to an active policy aimed at finding realistic solutions to reduce inequality and lift households from property-related poverty.