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

By W. Kopczuk, Joseph P. Lupton. 2004

315 citations recorded by the source corpus.

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.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/65e09d624d8d665141315ba18858bacbc99ea6af

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In Economics and Econometrics

Citations in the corpus

The Welfare Cost of Asymmetric Information: Evidence from the U.K. Annuity Market (2007, unknown): “When individuals di¤er in both their preferences and their (privately known) risk types, mandates may involve a trade-o¤ between the allocative ine¢ ciency produced by adverse selection and the allocative ine¢ ciency produced by the elimination of self-selection.”
Financial Satisfaction in Old Age: A Satisfaction Paradox or a Result of Accumulated Wealth? (2008, background): “For example, most elders wish to leave bequests and to financially support younger generations (Hermalin et al., 2002; Kopczuk & Lupton, 2007).”
Sustainable Social Security: Four Options (2014, unknown): “The utility from bequest is assumed to be linear as in Kopczuk and Lupton (2007) and defined as uB(b) = φBb.”
Understanding Tax Policy: How Do People Reason? (2020, background): “Kuziemko et al. (2015) find only moderate effects stemming from providing this increased information in the U.”
Incidental Bequests: Bequest Motives and the Choice to Self-Insure Late-Life Risks (2014, background): “, 2011), which nests as special cases nearly all of the functional forms used in the literature, including linear (e.g., Hurd, 1989; Kopczuk and Lupton, 2007) and constant relative risk aversion (e.”
Capital is Back: Wealth-Income Ratios in Rich Countries 1700–2010 (2014, unknown): “20For estimates of the distribution of bequest motives between individuals, see, e.g., Kopczuk and Lupton (2007).”
Savings After Retirement: A Survey (2016, unknown): “However, most models allow for very little heterogeneity in other dimensions, such as the desire to leave bequests (Laitner & Juster 1996, Kopczuk & Lupton 2007) and beliefs about life expectancy and medical expenses (Gan et al. 2003).”
On the Long-Run Evolution of Inheritance: France 1820–2050 (2011, background): “For simplicity, we assume that individuals start consuming only when they become adult, and start caring about their children’s consumption levels only after they die (so there is no inter 55 On the distribution of bequest motives, see e.g. Kopczuk and Lupton (2007).”
Bequest and Tax Planning: Evidence from Estate Tax Returns (2007, unknown): “Kopczuk and Lupton (2007) model wealth distribution as a mixture of life-cycle savers and bequeathers and find support for the presence of a bequest motive.”
Saving and Wealth Inequality (2017, unknown): “12 we now know that people without children also want to leave bequests (Kopczuk and Lupton (2007)).”