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€ 112,000: difference between inheriting or not

By on 23 December 2016

Inheritances and wealth transfers are essential for the financial well-being of European households, while income has significant less effect. These are the results of scientific research in eleven European countries including the Netherlands, published mid-November. The research team relied on more than 62,000 data of European households.

Lead researcher Philip Korom of the German independent organisation for scientific research Max Planck Society concludes that households that received inheritances and transfers own ‘considerably’ more money than households that did not get these (yet). Korom relied on data from the 2013 Household Finance and Consumption Survey (HFCS), initiated by the European Central Bank (ECB).

Family wealth more decisive than income

In Europe, the overall difference between inheriting or not is € 112,000. Thanks to inheritance and transfers, households with a top-class capital (the top-10%) even distanced themselves with € 517,000 from households that are left nothing (yet). ‘If we look at households in the absolute top, the differences run even to over €1 million,’ Korom writes.

In 2013, EU households had an average of 1.6 children; multiplied by €112,000 and divided by two (the husband’s ánd wife’s inheritances), the overall amount Europeans are inheriting is around €90,000. If we take one million euro’s as a starting point for the absolute top, overall there is €800,000 to be left. Korom criticises the dataset of HFCS though, because (multi)millionaires would often refuse to participate in surveys.

The levels of our earnings seem to establish our financial position to a much lesser extent. With European households, a 1%-increase in income leads to an average capital growth of around 0.1% to 0.6%. Inheritances and transfers, however, can increase the equity position of European households up to 27%.

Welfare state versus parental home

Inheriting property appears to be primarily a South European phenomenon. Korom notes that in countries with social welfare such as the Netherlands, Germany, Belgium, Austria and Luxembourg, fewer households inherit a family home. Particularly the high-capital households inherit at least one house. Groups with a low or average capital often remain in a rented accommodation.

In Southern European countries, inherited property is a big boost for the financial well-being of all sorts classes of capital. It is a widespread phenomenon that families pass on the parental homes from generation to generation.

Capital gap

Korom indicates that private equity has become important to scientists globally. Mainly thanks to recent research by the French economist Thomas Piketty the gap between rich and poor proves to keep on widening this century. Inheritances and benefactions just accelerate that trend.

The divide between rich and poor is as significant as it was in the 20s of the last century. Take the total of American private equity for example people with top-class capital have the same dominant share like just before the American Great Depression of 1929, a period regarded as the greatest economic crisis of the twentieth century.

Inheritances strengthen capital gap

Research in 2015 by Piketty shows that in most countries, 50 to 60 percent of the capital of individuals derives from inheritances and transfers. In the 70s of the last century, this was 45%, and Piketty predicts that this percentage will rise to 80 or 90 percent and will then stabilise. For several generations now, Swedish inheritances and benefactions are already the great decisive driving forces (as much as 75%) behind domestic capitals, as demonstrated by Swedish researchers last year. Besides, British researchers also demonstrated that inheritances and benefactions secure the financial wellbeing of British families for five generations already.

There are also researchers who just suggest that we are not that conservative in handling an inheritance. This week we discussed Danish research which shows that in the first year after inheritance, Danish savings accounts look less promising than before the death of a family member. Assistant Professor Alessandro Martinello of Lund University, Denmark speaks of ‘slack saving efforts and increase increasing consumption’. Recent American research indicates that we spend half of the money we inherit. How conservative is your saving policy?



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Bas van Essen

Savingsmonitor is a news blog reporting about savings behavior and statistics across whole the European Union. Bas van Essen is responsible for the content. Bas is a former business reporter, who covered the Dutch startup scene, the job market and personal finance. Bas served the Dutch Financial Times ('Financieele Dagblad'), the Dutch 'Financiële Telegraaf',, and IDG. He followed a Master Communication Science and MBA Big Data & Business Analytics at the University of Amsterdam.