What is this metric and why is it important?
The simplest and clearest picture of how wealth is distributed across a population is what portion those with the most have and what portion the majority of the population has. Here we compare the percentage of wealth held by the top 1% and the bottom 60%.
How is Canada doing?
- Canada exhibits substantial inequality in wealth. The richest 1% of the population in Canada hold 16.4% of all wealth, while the bottom 60% hold just 12.4%.
- While far less extreme than the United States, where the richest 1% hold 42.5% of all wealth while the bottom 60% hold just 2.4%, wealth inequality in Canada is much starker than in about half of all countries in the OECD, and a great distance from the less unequal distributions seen in Japan, Greece, and the Slovak Republic.
Wealth is measured as the sum of physical assets, cash, and investments minus debts. This exercise involves ordering households by their amount of wealth, then taking the top and bottom proportions and comparing what proportion of the wealth belongs to those households.
The main limitation here is that we don’t know what demographic characteristics different segments of the wealth distribution have. Unfortunately, in Canada the Survey of Financial Security (SFS), where wealth data is collected, doesn’t ask for demographic identification.