Working Paper: NBER ID: w11767
Authors: Wojciech Kopczuk; Joseph P. Lupton
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.
Keywords: bequest motive; consumption; elderly; wealth distribution
JEL Codes: D11; D12; D91; E21
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| presence of children (J13) | bequest motive (D64) |
| bequest motive (D64) | consumption (E21) |
| bequest motive (D64) | wealth (D14) |
| bequest motive + other factors (D64) | consumption (E21) |