Working Paper: NBER ID: w1496
Authors: Daniel S. Hamermesh; Paul L. Menchik
Abstract: We make the distinction between bequests that are planned as part of some lifetime optimization stemming from a bequest motive, and those that are unplanned and result when the date of death differs from what the consumer might forecast. Lifetime optimization should lead to a negative effect or no effect of the expected horizon on the size of the bequest, and to a negative relation between unexpectedly long life and the bequest. Using data on wealthy decedents and their parents, we form measures of the expected horizon based on parents' longevity. There is no relation between unexpectedly early or late death and the bequest, but a significant positive relation between the bequest and the length of the horizon. Several explanations for this unforeseen result are offered, including the inference that uncertainty about length of life is important in studying bequest behavior.
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Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increase in expected planning horizon (D84) | decrease in bequest size (D15) |
| unexpected longevity (C41) | decrease in unplanned bequest size (D14) |
| increase in expected planning horizon (D84) | bequest size (D14) |
| unexpected longevity (C41) | bequest size (D14) |