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

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  • Wojciech Kopczuk
  • Joseph 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.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 11767.

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Date of creation: Nov 2005
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Publication status: Published in The Review of Economic Studies, 2007, 74(1), 207-235.
Handle: RePEc:nbr:nberwo:11767

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