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Here are the 10 countries with the highest wealth inequality:

  1. Netherlands (0.902)
  2. Russia (0.879)
  3. Sweden (0.867)
  4. United States(0.852)
  5. Brazil (0.849)
  6. Thailand (0.846)
  7. Denmark (0.838)
  8. Philippines (0.837)
  9. Saudi Arabia (0.834)
  10. Indonesia (0.833)

Why are the Netherlands, Sweden, and Denmark among the countries with the largest wealth gaps in the world. This is puzzling especially since they rank much lower in income inequality.

Rick Smith
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user366312
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    The figures look very strange to me - virtually the reciprocal of what I would have expected. Oddly Norway, I note from the text, a country in many ways similar to those quoted has an index of about 0.25. Very odd. Most reports I read suggest that Scandinavia and EU countries such as France, Germany and the Netherlands have far higher "equality" than the US or the UK. Certainly one would expect them to be far more "equal" than societies like Saudi Arabia. There seems something wrong here. – WS2 Jun 21 '21 at 08:36
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    @WS2 note this is the index of wealth inequality and not income inequality. – Maciej Stachowski Jun 21 '21 at 08:46
  • I'm not convinced all the countries being western European by itself would be a strong reason to believe they have the same contributors to wealth inequality, that are also different from the contributors for most of the other countries on the list. If there isn't a lot of overlap there (and arguably even if there is), this would basically be 3 distinct questions. – NotThatGuy Jun 21 '21 at 09:53
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    If I see a list of all countries in the world sorted by any criteria whatsoever that puts Norway at one end of the list and Sweden on the other, I would seriously doubt the methology of whoever made that list. I can't think of any criteria where Sweden and Norway are so distinct that the entire rest of the world fits somewhere in between. Most certainly not wealth distribution. – quarague Jun 21 '21 at 11:16
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    This is why wealth gap alone is not a good metric about how good life quality in a country is. If country A had 99% of its population on the brink of starvation, and the other 1% rich, but country B had 99% of the population having very good living standards but the other 1% being utterly inconceivably ludicrously rich, then income inequality in country B would be much higher, yet it would still be a much better place to live in. – vsz Jun 21 '21 at 12:21
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    Are the rich families counted in the wealth gap? Many are resident abroad to avoid taxes. The most famous examples are the major shareholders of Heineken resident in London and Ikea resident in Switzerland. – FluidCode Jun 21 '21 at 14:22
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    @quarague agree that it's a bit unlikely to be that extreme, but it is true that Norway has something that separates it from Denmark and Sweden here: oil. Denmark and Sweden used to be seen as the posh countries by Norwegians, and that wealth is still there – but concentrated in old heirlooms. But then in the 70s, oil made Norway richer than its neighbours had ever been, and unlike other oil nations they made sure to distribute that wealth quite fairly across the population. – leftaroundabout Jun 21 '21 at 16:04
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    @quarague per OP's source, Norway at 0.798 is firmly in the top half of the table. – Maciej Stachowski Jun 21 '21 at 16:06
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    I don't know about Sweden, but in the case of the Netherlands, is only the European part of the Netherlands considered, or are the Caribbean territories also considered? – The Photon Jun 21 '21 at 17:02
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    @quarague Do you have anything to back that up besides "they're next to each other on the map and seem kinda similar politically and stuff"? – TCooper Jun 22 '21 at 18:21
  • Not sure if I can ask, but why is Ukraine at the bottom? Does this mean we have lower wealth inequality? – LUser Jun 23 '21 at 12:24
  • Economics Explained has a video on precisely this. tl;dr: they've had modern capitalism for the longest time, and a high income today can't compete with compound returns that have been accruing from the early 17th century. – Phil Frost Jun 23 '21 at 16:44
  • What is the definition of "wealth gap"? Can you add it to your question? – Peter Mortensen Jun 23 '21 at 21:16
  • @PhilFrost That doesn't sound totally accurate though. Europe before the second world war had a lot of poor people who emigrated, while America was the land of dreams, but the second world war reset a lot of things in the European countries, while America got more and more unequal. I think as the others explained here, the welfare society implemented in Europe, while making everybody kinda equal, also made wealth accumulation much harder, while whoever still have some wealth/capital could multiply their wealth and get further and further away from the mean. – xji Jun 30 '21 at 17:05
  • Think I posted a comment before, not sure why it was removed. I was thinking exactly of asking this question, after reading about Germany's widening wealth gap, e.g. https://www.theguardian.com/world/2014/oct/23/wealth-gap-inequality-germany-higher-study and https://www.zeit.de/wirtschaft/2020-07/vermoegensverteilung-deutschland-diw-studie-ungleichheit Glad that the OP asked it. – xji Jun 30 '21 at 17:08
  • Regarding Sweden, a major contributing factor is considered to be the large number per capita of both multinational companies and successful startups. According to this article, Stockholm tops unicorn list for hubs in Europe per capita, Sweden has the largest number of unicorns per capita in the world, save for Silicon Valley. – Carl May 14 '22 at 15:54

2 Answers2

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There's an interesting, if long, paper on that topic. The paper specifically focuses on the Netherlands, but a lot of the arguments are applicable to other modern welfare countries. The authors conclude that:

  • The Netherlands has seen few, if any crisis events that would cause wealth redistribution on a major scale (wars, massive financial crashes) since World War II. The few that did happen seemed to deepen the income inequality even further - the authors bring up the 2008 financial crisis which did little to hurt the valuation of the rich, but caused the lower and middle class to lose a major amount of wealth as their houses - constituting a large chunk of it - sharply dropped in value.
  • The Netherlands has an ultimately regressive tax structure, with income and consumption taxes (which usually affect lower classes, and prevent them from building wealth) being more prominent than wealth taxation, and the wealthy having ample opportunities to hide their wealth offshore.
  • Finally, the argument that probably does most to differentiate those top countries from others is that in countries with a strong social safety net such as the Netherlands, there's both more difficulty and little incentive to accumulate wealth in the first place. Those income and consumption taxes which make it difficult to build savings go into pension funds and free healthcare, which replace the need for individual wealth.
Maciej Stachowski
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    IIRC one of the problems with the stats on the Netherlands is that they don't count our specific pension system as "wealth". This is something that many low-to-mid income people pay a large share of their income into whereas wealthy people are more likely to invest, which counts in this particular statistic. This skews the statistics. – Borgh Jun 21 '21 at 07:57
  • Comments are not for extended discussion; this conversation has been moved to chat. – JJJ Jun 22 '21 at 20:05
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    "with income and consumption taxes (which usually affect lower classes, and prevent them from building wealth) being more prominent than wealth taxation" - isn't that the case for an overwhelming majority of countries in the world? Most have income taxes and a vast majority have no wealth tax aside from property and inheritance. – user4012 Jun 23 '21 at 01:24
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    @user4012 Rather than just the wealth taxation you also want to look at the preferential tax treatment of capital/financial gains vs employment income. Many apparently left-leaning countries are surprisingly lenient towards taxing money earned by non-salaried means. VAT based taxation is quite efficient, it is also not progressive (in its traditional meaning in this context, not the new cuddly-n-nice one) in the least. – Italian Philosophers 4 Monica Jun 23 '21 at 17:32
  • @ItalianPhilosophers4Monica - I know UK has VAT (and yes by default it is not progressive tax), didn't know about scandinavia – user4012 Jun 23 '21 at 18:06
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For this admittedly older OECD page:

Inequality of disposable income in the Netherlands is relatively low from international perspective, with a Gini coefficient of 0.28 in 2013, compared with 0.32for the OECD average. Income inequality increased between the mid-1980s and mid-1990s but declined thereafter, also during the years of the recent crisis. The ratio of the income of the top 10% to that of the bottom 10% is also moderate,with a ratio of 6.6, compared with 9.6 on average across OECD countries.

...

At the same time, inequality is high in the Netherlands when measured in terms of household wealth (property value, savings, private pensions): the top 1% of the distribution owns around 24% of all net wealth and the top 10% owns 60% of all net wealth, while the bottom three quintiles own almost no wealth. The difference in net wealth between the top 5% and the median household, as a share of median wealth, is 44 compared with an OECD average of 20

Perhaps the answer is that there are a lot ways to measure wealth. Assets and disposable income can be very different. Actual personal spending would be another - but that wouldn't include the benefits of intangible public services.

Glorfindel
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Craig Hicks
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    Note that "private pensions" in the Netherlands are fairly rare. The bulk of the wealth is held in collective pension funds. – MSalters Jun 21 '21 at 12:35
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    I checked further. After including pension assets, the rich of course become even richer, but the top 10% share of the total wealth decreases from 62% to 47% (CBS, 2018). The poorest 10$ go from -3% (debts) to -1%. That's quite surprising TBH - I had expected that the poorest 10% would not have any private pensions at all. – MSalters Jun 21 '21 at 23:03