Patterns of share ownership in the UK
In keeping with the US, the overwhelming majority of UK households – more than 75 per cent – do not own shares direcdy. Given the substantial excess returns to shares (see Table 1), this is a puzzle (see Haliassos and Bertault, 1995, for a discussion of possible explanations). Furthermore, levels of share ownership greater than 20 per cent are a recent phenomenon.
Levels of direct share ownership have changed dramatically in the UK over the past twenty years — more than trebling over the period 1985-1988.6 Recent patterns in share ownership are shown in Figure 1 using data from the Family Expenditure Survey (FES). Although the FES contains little information on the amounts of assets held by households, data on dividend and interest income can be used to infer ownership of different assets, including stocks and shares (for a recent study see Banks and Tanner, 1996). These levels of ownership are very similar to those found in other data sources for individual years.
The trends in aggregate ownership rates seen in Figure 1 mask significant differences in the experiences of different date-of-birth cohorts. In Figure 2 we present evidence on the share ownership of different cohorts. Each cohort’s experience is plotted as a separate line, with the youngest appearing at the left hand side. The figure shows that the growth in share ownership happened throughout the age distribution (whilst being more pronounced for older households), implying that the life-time profiles for ownership for the younger cohorts have been shifted up at a much earlier age than their older counterparts.