Capital in the FRS and WAS

December 11, 2024

Over the summer I built a microsimulation of Legal Aid for the Scottish Legal Aid Board (SLAB)- note on that to follow.

My SLAB contact asked a lot of good questions, especially about data.

One thing that came up is how different capital data is in the FRS and Wealth and Assets Survey.

I don’t really know why this is.

The FRS docs state:

Savings and investments: The data relating to savings and investments should be treated with caution. A high proportion of respondents do not know the interest received on their assets and therefore around one in ten cases are imputed. It is thought that there is some under- reporting of capital by respondents, in terms of both the actual values of the assets and the investment income. The FRS does not capture information on non-liquid assets. Therefore property, physical wealth and pensions accruing are not included in estimates of savings and investments. ¹

So it’s not likely as accurate as WAS and only includes financial assets, but in practice it’s way off.

How Far Off?

This is a comparison on WAS Round 7 Net Financial Wealth with the recorded wealth from FRS.

FRS financial wealth summed totcapb3 from the benunit record, aggregated to household level. The script for this is wealth.jl in STBScratch repository.

WAS is hfinwntr7_sum.

Neither is uprated.

FRS Financial Wealth

Summary Stats:
Length:         16108
Missing Count:  0
Mean:           35_423.728518
Std. Deviation: 103429.012582
Minimum:        0.000000
1st Quartile:   0.000000
Median:         3_481.669613
3rd Quartile:   20000.000000
Maximum:        1109802.991556

WAS Financial Wealth (positives only)

julia> summarystats( washf.financial_wealth )

Summary Stats:
Length:         14306
Missing Count:  0
Mean:           105_456.663263
Std. Deviation: 164508.676369
Minimum:        1.000000
1st Quartile:   7000.000000
Median:         36_130.500000
3rd Quartile:   128000.000000
Maximum:        996000.000000

So the FRS financial wealth Median is 1/10th the WAS median.

Techie Note

This script was my 1st experiment with Tidier, Julia’s R Tidyverse clone. I’m impressed, though there’s less call for this in Julia than in R since julia’s loops are so efficient, so all the piping isn’t needed in quite the same way.)

Tidier lets you do things like:

fhw = @chain buf begin
    @group_by sernum
    @filter totcapb3 < 1_000_000
    @summarise hhwealth = sum(totcapb3)
end

washf = @chain wash begin
    @rename financial_wealth=hfinwntr7_sum
    @filter  financial_wealth > 0 && financial_wealth < 1_000_000 
end