A century of wealth records for dead English people reveals that the rise of the middle class after World War II was a mirage — only the top 30% of people got richer, while the bottom 60% continued to die with virtually nothing.
According to the paper, published April 16 in the Journal of Economic History, the "great equalization" narrative of the 20th century obscured the reality. Probate records from the Principal Probate Registry, which captures every English person who died with any amount of wealth over a certain fairly low threshold, show that all the redistribution of wealth after 1950 happened between the absolute wealthiest and the somewhat less wealthy. Between 1892 and 1992, the bottom 60% of households in England never had more than 12% of the wealth.
"We never understood where all that wealth went, in terms of the share — we just had this vague idea," said Neil Cummins, an associate professor at the London School of Economics and Political Science and the author of the paper. The rise of the middle class, he found through analyzing millions of death records, was "illusory."
Probate, the process that allows a will to be executed and a decedent's assets to be transferred to heirs, is triggered when a person dies with a certain level of wealth. In 1900, people who died with more than GBP 10 were included in the Principal Probate Registry; by 1992, it was GBP 5,000.
From 1892 to 1992, the share of wealth held by the top 1% of people declined from 73% to 20%. There was some redistribution in the lower levels: In the 1890s, the probate rate was only 10%, while in 1950, it was 40%. But thereafter, the rate stagnated, meaning that since World War II, about 60% of people remained below the arbitrary low threshold that triggers probate. Even a crude interpretation of the data shows how unequally wealth was distributed: Had the middle class actually grown, the probate rate — the rate of people dying with at least a modest amount of wealth — would have increased.
Cummins said he's gotten "significant push-back" from academics, and wondered if it might be because of academics' typically privileged backgrounds. "They struggle to comprehend, even when presented with the data, just how wealth-holding looks," he told The Academic Times.
Cummins is an economic historian by training, and, he said, "I've somewhat stepped into the world of public economists, for better or worse. … I am mystified as to that literature. My impression from reading [Anthony] Atkinson and [Thomas] Piketty and reading all of that stuff is there's been an incredible focus on estimating the top 1% wealth share — that's it — then inferring everything else from that. And my point was that we don't have any detailed empirical work on the middle of the distribution."
If anything, Cummins' results probably understate the proportion of wealth held by the ultra rich: Very wealthy people have the knowledge and incentive to transfer assets to their heirs before death, which is not captured in the probate registry; and they also have the knowledge and incentive to hide wealth, Cummins said.
He argues that the same dynamics were likely at work in the U.S., which exhibits the same pattern of tax changes, going from a higher level after World War II to a much lower level in the 1980s.
"Thatcher, Reagan, the Gordon Gekko years of just trickle down economics," Cummins said, "that was the idea of unleashing the beast of capitalism and allowing these people to accumulate wealth at the top and drive the economy forward. You see the same process of tax history on both sides of the Atlantic. My proposition is ... that that tax history is determining what wealth you observe in official records."
Prior research suggests that the data source — dead people — wouldn't have affected the results. "All the best data that we have is that wealth at death distribution maps onto the wealth of living distribution perfectly," Cummins said. "Generally, people hold on to their money."
In 1892, the top 1% of people held 74% of wealth, with 36% of the wealth held by just the top 0.1%. The top 1% held 22% of wealth in 1975 — with 7% for the top 0.1% and 15% for the rest of the top 1%. That distribution remained about the same through 1992.
The study stopped in 1992 because of a 1993 change in format in the probate registry; subsequent iterations of the registry have had more and more opaque information about the wealth of people dying.
On a long flight to China, Cummins independently checked more than 4,000 millionaires against Ancestry.com and the probate website to make sure the data was accurate; he also checked all 40,074 members of the top 0.1% over the century to make sure there were no duplicates skewing the results.
People who die and are not probated have unclear wealth. Generally, Cummins assigned each person half the level of wealth below the threshold at the time of their death. He repeated the analysis assuming all non-probated people had no wealth at death and then assuming all non-probated people had exactly GBP 1 less than the probate threshold amount; the trends were still similar.
Cummins said he didn't have any particular hope for the outcome of the paper, except that the new empirical evidence would "inform policy. … Societies have to determine what they think the fair level of taxation is, what they think the fair level of distribution is." Additionally, he said, "One of the takeaways that's easy is that wealth taxation won't work on a national level. It has to be global."
The paper, "Where is the middle class? Evidence from 60 Million English death and probate records, 1892–1992," published April 16 in the Journal of Economic History, was authored by Neil Cummins, London School of Economics and Political Science.