Inequality in life and death – how 1/3 of the population passes away leaving behind debt in Vienna

Despite the fame of Austrian composers Franz Schubert and Mozart, both passed away with minimal wealth, leaving their families unable to afford proper funerals. Two centuries later, many people still pass away with debts.

Franziska Disslbacher and Severin Rapp use novel administrative data on terminal wealth in Vienna to study the distribution of wealth at death and the factors explaining this inequality such as age, housing tenure choice, and bequest motives.

KEY FINDINGS

• Inequality in wealth at death is significant and between 20-30% of the population passes away leaving behind debt.
• The drivers of the distribution of wealth among the living and the dead are different.
  • Lifecycle effects have limited explanatory power for the distribution of wealth at death.
  • Individuals who express preferences regarding post-mortem estate allocation tend to accumulate more wealth than others. Bequest motives contribute to a more equal distribution of wealth at death.
  • Similar to research on living wealth, homeownership correlates with higher wealth, though housing wealth does not benefit the bottom of the distribution across Viennese districts.
  • Means-tested long-term care transfers significantly amplify terminal wealth inequality.
• These findings have important implications for debates regarding wealth distribution, intergenerational transmission, the mortality multiplier method, and the impact of public policy on the distribution of estates.

AUTHORS

• Franziska Disslbacher, WU – Vienna University of Economics and Business, London School of Economics, International Inequalities Institute, Stone Center on Socio-Economic Inequality, Graduate Center at the City University of New York, WID Fellow
• Severin Rapp, Stone Center on Socio-Economic Inequality, Graduate Center at the City University of New York

MEDIA CONTACT

•  press[at]wid.world