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Yes, Belgians are rich, but they are not the richest in the world!

15 September 2023
Oui, Sire, les Belges sont riches, mais ils ne sont pas les plus riches au monde
A few weeks ago, Credit Suisse and UBS released their Global Wealth Report 2023. The findings, indicating that Belgians are the richest people in the world, were widely covered by the Belgian press. However, a global comparison of wealth is not an easy or straightforward exercise. The available data indicate that while Belgian households are indeed relatively wealthy, they are not the richest in the world.

The report by Credit Suisse and UBS concluded that the level of individual and household wealth in Belgium is the highest in the world. The benchmark used was household net wealth, namely the difference between a household’s assets (possessions) and liabilities (debts).

How do we measure household wealth?

The total wealth of all households is a not suitable measure for international comparisons as it is linked to the number of inhabitants in a country.

To control for population size, average household wealth can be determined by dividing total wealth by the number of households. But averages are strongly influenced by outliers; in the case of wealth, these tend to push the average upwards. Median wealth, the measure used by Credit Suisse and UBS, is a better option as it is not affected by extreme values. The median indicates the middle of the wealth distribution, meaning half the population has less wealth and half has more.

Is a global ranking of wealth possible?

International rankings are complicated as they entail comparing countries with very different economic systems and characteristics. These factors can significantly influence household decisions to save or to take on debt and thus the level of household wealth. For example, state pension entitlements are not taken into account; therefore, in countries with a generous statutory pension scheme, households may set aside less for retirement than in those without such a programme. Public debt is also left out of the equation. However, government debt has to be repaid sooner or later, so it is to be expected that households in countries with high government debt will consider the possibility of higher taxes in the future and therefore save more. In short, ranking countries with very different economic structures is a bit like comparing apples to oranges.

Moreover, there is a dearth of comprehensive data on the wealth of individual households. That’s why surveys tend to be used. However, they do not adequately capture the wealthiest households, which are less likely to take part. Attempts to remedy this through the use of data sources on large fortunes do not offer a real solution either, as they are also incomplete and coverage by country varies widely.

Another problem is that data are not collected in the same way everywhere. The claim that Belgium has overtaken Australia as the richest country in the world is therefore difficult to substantiate, as completely different sources are used for these two countries.

Finally, due to limited recent baseline data, the results were largely extrapolated. For example, the Global Wealth Report data for Belgium and other European countries were derived from 2017 figures, adjusted over a five-year period based on price movements for large categories of financial assets, such as shares, bonds and real estate. Such an approach implies a substantial margin of error.

These various factors mean it is not possible to establish a precisely quantified global wealth ranking by country. The conclusions of Crédit Suisse and UBS should therefore be strongly qualified.

In the euro area alone, two countries are richer than Belgium

Within the euro area, however, a comparison of wealth is possible, using the Household Finance and Consumption Survey (HFCS). This survey is conducted in a similar manner, during the same period and with the same questions in all 20 euro area countries, plus Hungary and the Czech Republic. In Belgium, the survey is organised by the National Bank. The most recent results relate to 2021 (the fourth wave of the survey).

The survey confirms that Belgian households are indeed relatively wealthy. The average Belgian household held net wealth of €408,000 in 2021; the median value was €242,000, well above that for the euro area (EA) as a whole and for neighbouring countries (Germany, France and the Netherlands) (see Figure 1). That being said, the Belgian figures are clearly below those of Luxembourg and Malta, which means Belgians should not be considered the richest people in the world.

Figure 1: Household wealth in Belgium is lower than in Luxembourg and Malta
(average and median values per country)

Chart 1

Source: ECB.

It is noteworthy that even within Western Europe, substantial differences can be observed. An explanation for this heterogeneity falls outside the scope of this article, but the breakdown of household net wealth into assets and liabilities provides a good starting point. For example, owner-occupied housing accounts for a significant share of household assets in most countries. Thus, the high percentage of homeownership and high house prices in Belgium (see Figure 2) help to push the value of Belgian household assets above that of the euro area and major neighbouring countries.

Figure 2: The percentage of homeownership explains a significant share of the differences in household wealth

Chart 1

Source: ECB.

The HFCS also provides a great deal of other data, which allow the distribution of wealth between households to be analysed. On the Bank's website, you can find various publications prepared on the basis of these data, including a detailed summary of the results of the fourth wave of the Belgian HFCS carried out in 2021.

The fifth wave of the HFCS is currently underway. Selected families are strongly encouraged to take part as their participation will allow analyses of this type to be conducted in the future.

In conclusion, a global comparison of household wealth is a complicated exercise for many reasons. The available European data indeed indicate that Belgians are relatively wealthy, but certainly not the richest in the world.

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