The “Intergenerational Transfer of Wealth 2020” publication is based upon data collected by the Household Finance and Consumption Survey (HFCS). The HFCS was conducted under the auspices of the European Central Bank’s Household Financial and Consumption Network (HFCN). This is a network of Eurosystem experts (drawn mainly from national central banks in the Eurozone) and was set up in December 2006 with all Euro area countries participating. The HFCN is the guiding body in all matters relating to the HFCS.
The fieldwork for the first wave of HFCS surveys were carried out in most countries (except for Ireland and Estonia) in 2010 and 2011. The second wave was carried out between 2013 and 2015, the third was carried out in 2017 and 2018 and the fourth in 2020 and 2021. The results for participating countries are available on the HFCN website above.
The HFCS is a household survey which collects data on household consumption and finances. It covers areas such as demographics, real and financial assets, liabilities, consumption and saving, income and employment, future pension entitlements, intergenerational transfers, gifts and attitudes to risk. The main aim of the survey is to gather micro-level, structural information on households’ assets and liabilities in the Euro area. In addition, in order to adequately capture and analyse economic decisions of households, it is necessary that some additional information is also collected (i.e. on income, consumption, etc.).
HFCS 2020 had an achieved sample of 6,020 households from an initial sample size of 14,548 households. This included an oversample of household from areas with relatively high home ownership rates and high average Local Property Tax (LPT) bands.
The HFCS 2020 questionnaire contained a section on inheritances and gifts where respondents were asked if the household had received any inheritances or substantial gifts at any point from someone who was not a part of their household at time of interview. If the household received a transfer, further details were collected including the number of transfers received, the year of transfer, sources of transfer, type of asset transferred, value of asset transferred. If respondents reported owning their household main residence (HMR) or other property, they were subsequently asked whether they inherited or were gifted the asset. All households were asked whether they expect to receive an inheritance or gift at some time in the future.
Cleaning and processing of variables related to inheritances and gifts was carried out in tandem with the processing of the main HFCS variables. In certain cases, text strings (used as an “other” category for some questions) were re-coded to the proper category while further validation checks were done. Further checks and edits were carried out specifically on inheritance and gift related variables for the purpose of this publication.
This is a process to assign values to missing data. While unit non-response (i.e. the complete record is missing) was dealt with by the weighting procedure, item non-response (where the respondent has either refused to answer a question or doesn’t know the answer) had to be assigned a value. Certain variables were defined by the HFCN as requiring a 100% response so where the answer could not be derived from other sources, this nonresponse was corrected by imputation.
Multiple imputation based on Gibbs sampling methodology was used to impute missing values. With this method, five imputed values based on different random draws are provided to the user for each missing value, resulting in five copies of the complete dataset. Gibbs sampling is an iterative Markov procedure of successive simulation of the distribution of variables conditioned on both observed data and distributions of variables previously simulated in the same iteration. The model imputes each missing observation using a maximal set of covariates (from the list determined by the user) from the appropriate subpopulation. For example, in the imputation of the value of bonds, only households that have bonds are considered.
Multiple Imputation was utilised in this publication to account for item non-response in inheritance and gift related variables. Higher rates of item non-response were seen in variables related to the value of inheritances and gifts. Thus, there is a higher imputation rate for inheritance and gift values relative to other variables presented in this publication.
The item non-response rate and thus the imputation rate for certain inheritance and gift related variables was:
In terms of the processing of inheritances and gifts related data the following steps were carried out.
Inheritances and Gifts data relating to households who participated in HFCS 2018 and HFCS 2020 were incorporated into the HFCS 2020 dataset.
Checks were completed to ensure consistency between the number of inheritances and gifts received and year, value, type, and source of each of those transfers.
Multiple imputation was undertaken to address item non-response in inheritance and gift related variables. This process is described further below.
Inheritance and gift participation and values and were summarise by a variety of groupings, including: the characteristics of the household reference person (age, highest level of education), household characteristics (region, household composition and size, tenure status), income and wealth distributions, type of asset transferred and source of transferred asset.
In order to provide national results, the survey results were weighted to represent the entire population. The process of deriving weighs is described fully in the HFCS 2020 Background notes.
All cells in the result tables with less than 25 observations are suppressed.
The regional classifications in this release are based on the NUTS 2 (Nomenclature of Territorial Units) classification used by Eurostat. Changes made under the 2014 Local Government Act prompted a revision to the Irish NUTS 3 Regions. Three Regional Assemblies were established (Northern & Western, Southern, Eastern & Midland). The composition of the regions is set out here.
The highesevel of education of a person is defined as the highest attainment of an educational programme the person has successfully completed. The HFCS used the International Standard Classification of Education (ISCED 2011) to code the data received in the survey. The basic classifications used in this report are:
This is a common concept used in this report. The median value is the mid-point value or the value below which 50 per cent of the observations lie. Because financial and income data is often highly skewed, it is often preferred as a measure compared to the mean, which may be affected by a small number of very high values. For example, in the dataset 1,4,10,20 and 100, the median value is 10 but the mean value is 27.
The wealth or income quintile groups are five equal-sized groups of households, each group containing 20% of households. The income quintile “Less than 20” also referenced in this publication as “First (or bottom) income quintile” contains the fifth of households with the lowest gross household income, group “20-39” contains the fifth of households with the next lowest gross household income etc. The group “80-100” also referenced in this publication as “Fifth (or top) income quintile” contains the fifth of households with the highest gross household income. Likewise, the wealth quintile “Less than 20” or “First (or bottom) net wealth quintile” contains the fifth of households with the lowest net household wealth (and so on).
The net wealth decile groups are ten equal-sized groups of households, each group containing 10% of households. The first (bottom) decile contains the tenth of households with the lowest net household wealth, whereas the tenth (top) decile contains the tenth of households with the highest net household wealth.
A household is defined as a person living alone or a group of people who live together in the same private dwelling and share expenditures, including the joint provision of the essentials of living, such as catering arrangements. The household members defined in this fashion are usually, but not necessarily, related by blood or by marriage. Any other individual or group of people living in the same dwelling constitutes a separate household.
Persons usually resident, but temporarily absent from the dwelling for a period of less than six months (for reasons of holiday travel, work, education or similar) are included as household members.
Persons financially dependent and not having their private household somewhere else (like students studying away from home, persons away for work regularly returning and considering the sampled dwelling as their main place of residence) are included as household members even if their length of absence may exceed six months.
Persons with usual residence in the dwelling but not sharing expenditures (i.e. lodgers, tenants, etc.) are treated as separate households. Consequently, in some specific cases there can be more than one household in a dwelling.
This person is considered to be the person who is most knowledgeable about the financial situation of the household and provides the financial information for the whole household, since this information is collected together for the whole household instead of by individual members. This is done to both minimise response burden and to avoid duplications (since many assets and liabilities are shared between household members).
No specific direction is given as to who is to be taken as the reference person of the household, but it must be an adult member. It is left to individual households to determine who the appropriate person is. There is no problem in normal family-type situations. In other cases (i.e. man, wife and a married child with family) decisions made depend on the circumstances and the approach followed is to take the person whom the household regards as its reference person. This person was also known as the financially responsible person.
This is defined as the dwelling where the members of the household usually live, typically a house or an apartment. A household can only have one main residence at any given time, although they may share the residence with people not belonging to the household.
Household income includes all money receipts which accrue to the household regularly at annual or more frequent intervals. The gross receipts, (i.e. before subtraction of income tax and social insurance deductions) of individual household members are combined to give the average income for the households. The components of gross income are direct income and social transfers.
Direct income is composed of employee income and gross cash benefits or losses from self-employment. It also includes pensions from individual private plans, income from rental of property or land, regular inter-household cash transfers received, interests, dividends and profit from capital investments in unincorporated business. Social transfers include Jobseekers payments, state pensions and family/children related allowances such as maternity/adoptive benefit, child benefit, one-parent family payments and carers’ payments). It also includes housing allowances such as rent supplement, free phone/electricity etc, fuel allowances and exceptional needs payments. Other social transfers include survivors’ payments, sickness payments, disability payments, education-related allowances and social exclusion not elsewhere classified.
Gross household income excludes certain receipts which are generally of an irregular and non-recurring nature. The principal exclusions are receipts for sale of possessions, withdrawals from savings, loans obtained, loan repayments received, windfalls, prizes, retirement gratuities, maturing insurance policies etc. Furthermore, transfers of money between household members (i.e. pocket money, housekeeping money etc.) are ignored since the household is treated as a single unit.
This is defined as the sum of real and financial assets.
Only certain assets and liabilities are included. In particular, the present value of all future, expected defined benefit pensions is excluded, which can be a sizable portion of the wealth of many households. The present value of future, voluntary, expected defined contribution pensions is included.
This is defined as gross wealth less total debt.
All respondent households were asked whether any household member had ever received an inheritance or a substantial gift, including money, a business or any other assets, from someone who is not a part of your current household.
Household were then asked how many such inheritances or substantial gifts they had received.
For each inheritance or gift, they were subsequently asked to provide further details on whether the transfer was an inheritance or gift, the kind of asset that was received, the year it was received, the value of the asset and the source of the transfer. These are further described below.
Inheritance refers to the transfer of assets in connection with death of an antecedent.
Gift refers to the transfer of assets made during the life of a donor, not connected to the death of that person. The “Substantial” nature of the gift, referred to in the question, is left to the interpretation of the household.
Transfers between members of the household (intra-household wealth transfers) are not captured in the HFCS.
Throughout this publication inheritance and gifts are referred to as intergenerational wealth transfers. This is the case for the vast majority of wealth transfer, but some inheritances and gift may not be intergenerational in nature, such as inheritances and gift from siblings or friends in the same generation.
Respondents were asked what kinds of assets the household received. The response option were: Money; Dwelling; Use of a dwelling; Land, Business; Securities or shares; Jewellery, furniture or artwork; Life insurance; Car / vehicle; Other assets
Data relating the inheritance or gifting of the household main residence and other properties currently owned was collected under the assets section of the questionnaire and was incorporated into the inheritances and gifts data to facilitate our reporting categories of:
Households may have received multiple inheritances or gifts of different types of assets. For this reason, households were also assigned to unique asset categories so as the proportion of each category sums to 100% of households who had receive inheritances or gifts.
Respondents were asked from whom it was received, with the possible response options of: Maternal grandparents; Paternal grandparents; Parents, Children, Other relatives; Other.
In the publication we report the participation rate and vale of inheritances and gifts by the primary source of transfer. The primary source refers to the source of inheritance or gift that relates to the most important inheritance or gift for the household’s current wealth.
All household we asked whether they expect to receive an inheritance or substantial gift from someone outside the household in the future
Respondents were asked the value of inheritances or gifts at the time their household received them. For inherited or gifted household main residence (HMR) or other dwellings (where the household owned the dwelling at time of interview), respondents were also asked the current market value of the property. In this publication the value of inheritances and gifts reflects the current market value of HMRs and other dwellings, where the current market value was provided. For all other inheritances and gifts, the value at the time the household received the transfer is used but has been adjusted using the Consumer Price Index (CPI) to create an inflation adjusted real asset value in 2020 values.
In Chapter 5 of the publication result from an econometric analysis of the intergenerational transfers of wealth is presented.
The three parts to the analysis include
The methods used in part 1 and 2 of this analysis follow the research of Lawless and Lynch (2017), Crawford and Hood (2016) and Nolan et al. (2021). Part 3 follows the methods of Fessler and Schürz (2015) and Lawless and Lynch (2017).
All regressions were performed in SAS on each of the 5 implicate dataset separately. Using Proc MIAnalyze the parameters for each of the 5 implicates were combined to estimate a single estimate, standard error and p-value for each independent variable in the models.
The results of the combined regressions are presented in tables 5.1, 5.2 and 5.3.
Following on from results in chapters 2 and chapter 3 the question of the types of households that are most likely to have received an inheritance or gift is further investigated.
Logistic regressions are performed to estimate the relationship between household characteristics and relative probability of having received and inheritance or gift. The average marginal effects from the logit regressions provides the probability of receipt of inheritances or gifts relative the reference group in each characteristic variable.
The regression results from the 5 implicate dataset are combined and presented in Table 5.1. These results show correlation between the variables and not causal relationships.
The dependent variable is a dummy variable of whether or not the household has received an inheritance or gift.
Independent variables included:
These independent variables are categorical and are all relative to a reference group.
The estimates presented are relative probabilities compared to a reference household whose:
Three specifications of the model are run to illustrate how the household characteristics affect the likelihood of receiving 1. any inheritances or gifts; 2. any inheritances; 3. any gifts.
The relative value of inheritances or gifts are estimated for households who have received a transfer. An Ordinary Least Squares (OLS) regression is performed to estimate the relationship between household characteristics and the relative value of inheritances or gifts.
The regression results from the 5 implicate dataset are combine and presented in Table 5.2. These results show correlation between variables and not causal relationships.
The dependent variable is Log of the current inheritance and gift value. The current inheritance and gift value is described above.
Independent variables included:
These independent variables are categorical and are all relative to a reference group.
The estimates presented are relative values compared to a reference household whose:
Three specifications of the model are run to illustrate how the household characteristics affect the likelihood of receiving 1. any inheritances or gifts; 2. any inheritances; 3. any gifts.
The third part of the regression analysis follows Lawless & Lynch (2017) and Fessler and Schürz (2015) where the relationship between inheritances and gifts, the income position and the net wealth position of households is examined.
Using an Ordinary Least Squares (OLS) model, households’ position in the net wealth distribution (using the cumulative distribution function) is regressed on an inheritance or gift dummy, households’ position in the income distribution and other household characteristics.
The regression results from the 5 implicate dataset are combine and presented in Table 5.3. These results show correlation between variables and not causal relationships.
The dependent variable is household’s Net Wealth Position. Where the household sits in the net wealth distribution using the cumulative distribution function.
Independent variables included:
A second regression with Net Wealth Position as the dependent variable includes the log value of inheritances and gift instead of the receipt of an inheritance or gift dummy variable.
Independent variables included:
The Central Statistics Office wishes to thank the participating households for their co-operation in agreeing to take part in the HFCS survey and for facilitating the collection of the relevant data.
For further information on this release:
E-mail ICW@CSO.ie or contact Brian Cahill (+353) 21 453 5173
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