Piggy bank

Sixty per cent of people die leaving less than £5,000, according to new research from the London School of Economics and Political Science. It is a situation that has not changed in relative terms since 1950, despite declining wealth inequality and the rise of the middle class, the paper discovered.

Neil Cummins, Associate Professor in LSE’s Department of Economic History, analysed 60 million English death and probate records from 1892-2016. The probate rate, which captures the proportion of people leaving any significant wealth at death rose from 10 per cent in the 1890s to 40 per cent by 1950, but has stagnated ever since. The threshold for probate was £100 in 1950 and has stayed at £5,000 since 1984, meaning that 60 per cent of people currently die leaving less than £5,000. The average cost of a funeral is over £4,000.

Despite the large declines in the wealth share of the top one per cent, from 73 per cent to 20 per cent, all changes in wealth inequality after 1950 are confined to the reshuffling of wealth within the top 30 per cent, the research finds. This result is “surprising”, says Dr Cummins, given the increase in home ownership rates over the 20th century, but could possibly be explained by mortgage and other debt.

Although the proportion of probates that are female rises from under 40 per cent in 1892 to over 50 per cent by 1992, Dr Cummins also finds an increasing underrepresentation of women among the top percentiles. “The higher the wealth cut-off, the top ten per cent, top one per cent and so on, the less women are observed,” his paper says.

Where is the Middle Class? Inequality, Gender and the Share of the Upper Tail from 60 million English Death and Probate Records, 1892-2016 is an LSE working paper.

It lists the ten richest people, all men, who died in England from 1892-1992. Top was Sir John Reeves Ellerman, the shipping magnate, who died in 1933 leaving £1,257,371,575. He was so reclusive that even the newspapers he owned could not find a photograph for his obituary. Nine of the ten richest people died before 1935.

The research concludes: “This paper shows that for Britain, it was not the rise of a broad ‘middle’ class which characterized the changes in the 20th century wealth distribution but a reshuffling of wealth away from the top one per cent to the rest of the top 20-30 per cent. The vast majority die with nothing.” The figures were based on a probate threshold ranging from £10 up to 1900, to £5,000 from 1984 to 2016.

Dr Cummins commented: “This ‘missing’ middle class left the English social and political fabric vulnerable to the protest vote of many in 2016 to leave the EU, following the austerity induced by the financial crisis.”