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DISCUSSION PAPER PI-0007

Modelling the Composition of Personal Sector Wealth in the
United Kingdom

David Blake

ABSTRACT

The allocation of UK personal sector wealth across five broad asset categories
(net financial wealth, housing (and durable assets) wealth, state pension wealth,
private pension wealth, and human capital) is investigated using the FAIDS
(financial AIDS) model. Apart from total wealth and returns, additional variables
relating to capital market imperfections, and demographic, labour market and
cross-sector spillover effects turn out to be significant. The adjustment of portfolio
weights to shocks is very slow, taking up to 21 years for some asset categories.

Keywords. FAIDS model, personal sector, financial wealth, housing wealth,
pension wealth, human capital

JEL.G11

ISSN 1367-580x.