Working Paper: NBER ID: w15595
Authors: Louis Kaplow
Abstract: The possibility that individuals may derive utility from the mere fact of holding wealth has long been recognized. A simple intertemporal model featuring utility from accumulation is used here to examine consumption and savings, the choice between inter vivos gifts and bequests (both to descendants and to charities), and levels of annuitization. Introducing utility from accumulation helps to explain a number of empirical regularities that otherwise seem inconsistent with optimizing behavior. Moreover, because individuals who derive significant utility from accumulation will tend to save more and, in the long run, give more than others do, this source of utility may be especially important in analyzing savings behavior, gifts and bequests, and charitable contributions.
Keywords: No keywords provided
JEL Codes: D11; D14; D91; H31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| utility from accumulation (L97) | savings (D14) |
| utility from accumulation (L97) | consumption (E21) |
| utility from accumulation (L97) | inter vivos gifts (D64) |
| utility from accumulation (L97) | bequests (D64) |
| utility from accumulation (L97) | annuitization (G52) |