Reportgreen2005

To Leave or Not To Leave: The Distribution of Bequest Motives

252 citations0/0 files storedNational Bureau of Economic Research

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Financial Literacy, Pension, Retirement Analysis Family and Matrimonial Law Insurance, Mortality, Demography, Risk Management

Abstract

In this paper, we examine the effect of observed and unobserved heterogeneity in the desire to die with positive net worth.Using a structural life-cycle model nested in a switching regression with unknown sample separation, we find that roughly three-fourths of the elderly single population has a bequest motive that may or may not have an appreciable effect on spending depending on the level of resources.Both the presence and the magnitude of the bequest motive are statistically and economically significant.On average, households with a bequest motive spend about 25 percent less on consumption expenditures.We conclude that, among the elderly single households in our sample, about four-fifths of their net wealth will be bequeathed and approximately half of this is due to a bequest motive.

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References

1965Uncertain Lifetime, Life Insurance, and the Theory of the Consumer 1999Healthy Bodies and Thick Wallets: The Dual Relation Between Health and Economic Status 2003Health, Inequality, and Economic Development 1986The Strategic Bequest Motive 1995Precautionary Saving and Social Insurance 2004Do the Rich Save More?1994Precautionary Saving and Social Insurance 1981The Role of Intergenerational Transfers in Aggregate Capital Accumulation

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