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Intended and Accidental Bequests in a Life-cycle Economy

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Abstract

This paper studies quantitative importance of accidental versus intended bequests. Bequests are decomposed into accidental and intended components by comparing the implications of a standard life-cycle model under alternative assumptions about bequest motives. The main finding is that accidental bequests account for at least half, and perhaps for all of observed bequests. The paper then examines how assumptions about bequest motives affect the effects of income tax changes. In contrast to previous research, I find that bequest motives are not important for the analysis of capital income taxation. The effects of labor income taxes are reduced by altruistic bequests, but the role played by bequests is much weaker than suggested by previous models.

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  • Lutz Hendricks, "undated". "Intended and Accidental Bequests in a Life-cycle Economy," Working Papers 2133407, Department of Economics, W. P. Carey School of Business, Arizona State University.
    • Handle: RePEc:asu:wpaper:2133407
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    Cited by:

    1. Günther Fink & Silvia Redaelli, 2005. "Understanding Bequest Motives An Empirical Analysis of Intergenerational Transfers," DNB Working Papers 042, Netherlands Central Bank, Research Department.
    2. Francis, Johanna L., 2009. "Wealth and the capitalist spirit," Journal of Macroeconomics, Elsevier, vol. 31(3), pages 394-408, September.
    3. Ivo Bischoff & Nataliya Kusa, 2015. "Policy preferences for inheritance taxation," MAGKS Papers on Economics 201531, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    4. Ivo Bischoff & Nataliya Kusa, 2016. "Should wealth transfers be taxed? Citizens’ view on a fundamental question," MAGKS Papers on Economics 201636, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    5. Felix Reichling & Kent Smetters, 2015. "Optimal Annuitization with Stochastic Mortality and Correlated Medical Costs," American Economic Review, American Economic Association, vol. 105(11), pages 3273-3320, November.
    6. Akın, Ş. Nuray & Leukhina, Oksana, 2015. "Risk-sharing within families: Evidence from the Health and Retirement Study," Journal of Economic Dynamics and Control, Elsevier, vol. 52(C), pages 270-284.
    7. Peter Mooslechner & Martin Sch rz & Pirmin Fessler, 2008. "How Inheritances Relate to Wealth Distribution? Theoretical Reasoning and Empirical Evidence on the Basis of LWS Data," LWS Working papers 6, LIS Cross-National Data Center in Luxembourg.

    More about this item

    JEL classification:

    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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