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Bequests as Signals: An Explanation for the Equal Division Puzzle

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B. Douglas Bernheim
Sergei Severinov

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Abstract

In the United States, more than two-thirds of decedents with multichild families divide their estates exactly equally among their children. In contrast, intra vivos gifts are usually unequal. These findings challenge the validity of existing theories regarding the determination of intergenerational transfers. In this paper, we develop a theory that accounts for this puzzle, based on the notion that the division of bequests provides a signal about a parent's altruistic preferences. The theory can also explain the norm of unigeniture, which prevails in other societies.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7791.

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Date of creation: Jul 2000
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Publication status: published as Bernheim, B. Douglas and Sergei Severinov. "Bequests As Signals: An Explanation For The Equal Division Puzzle," Journal of Political Economy, 2003, v111(4,Aug), 733-764.
Handle: RePEc:nbr:nberwo:7791

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D10 - Microeconomics - - Household Behavior - - - General
H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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  1. Abel, Andrew B & Bernheim, B Douglas, 1991. "Fiscal Policy with Impure Intergenerational Altruism," Econometrica, Econometric Society, vol. 59(6), pages 1687-1711, November. [Downloadable!] (restricted)
    Other versions:
  2. Andreoni, James, 1989. "Giving with Impure Altruism: Applications to Charity and Ricardian Equivalence," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1447-58, December. [Downloadable!] (restricted)
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  1. Audrey Light & Kathleen McGarry, 2003. "Why Parents Play Favorites: Explanations for Unequal Bequests," NBER Working Papers 9745, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. James Andreoni, 2007. "Social Image and the 50-50 Norm: A Theoretical and Experimental Analysis of Audience Effects," Levine's Bibliography 122247000000001459, UCLA Department of Economics. [Downloadable!]
  3. Matteo Triossi, 2006. "Reliability and Responsibility: A Theory of Endogenous Commitment," Carlo Alberto Notebooks 21, Collegio Carlo Alberto. [Downloadable!]
  4. Francois-Charles Wolff & Seymour Spilerman & Claudine Attias-Donfut, 2005. "Do Parents Help More their Less Well-Off Children? Evidence from a Sample of Migrants to France," Microeconomics 0504001, EconWPA. [Downloadable!]
  5. Stefan Hochguertel & Henry Ohlsson, 2007. "Compensatory Inter Vivos Gifts," Tinbergen Institute Discussion Papers 07-074/3, Tinbergen Institute. [Downloadable!]
    Other versions:
  6. Martin Feldstein & Elena Ranguelova, 1999. "The Economics of Bequests in Pensions and Social Security," NBER Working Papers 7065, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  7. Donald Cox & Beth J. Soldo, 2004. "Motivation for Money and Care that Adult Children Provide for Parents: Evidence from "Point-Blank" Survey Questions," Working Papers, Center for Retirement Research at Boston College 2004-17, Center for Retirement Research. [Downloadable!]
  8. Shinichi Nishiyama & Kent Smetters, 2002. "Ricardian Equivalence with Incomplete Household Risk Sharing," NBER Working Papers 8851, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  9. Ohlsson, Henry, 2007. "The equal division puzzle – empirical evidence on intergenerational transfers in Sweden," Working Paper Series 2007:10, Uppsala University, Department of Economics. [Downloadable!]
  10. Emrah Arbak & Laurence Kranich, 2005. "Can Wages Signal Kindness?," Working Papers 0511, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure. [Downloadable!]
  11. Gradstein, Mark, 2008. "Endogenous Reversals of Fortune," IZA Discussion Papers 3469, Institute for the Study of Labor (IZA). [Downloadable!]
  12. Luc Arrondel & André Masson, 2002. "Altruism, Exchange or Indirect Reciprocity: What do the Data on Family Transfers Show?," DELTA Working Papers 2002-18, DELTA (Ecole normale supérieure). [Downloadable!]
    Other versions:
  13. Audrey Light & Kathleen McGarry, 2004. "Why Parents Play Favorites: Explanations for Unequal Bequests," American Economic Review, American Economic Association, vol. 94(5), pages 1669-1681, December. [Downloadable!] (restricted)
  14. La Ferrara, Eliana, 2007. "Descent Rules and Strategic Transfers. Evidence from Matrilineal Groups in Ghana," CEPR Discussion Papers 6111, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  15. Audrey Light & Kathleen McGarry, 2003. "Why Parents Play Favorites: Explanations for Unequal Bequests," Working Papers 03-01, Ohio State University, Department of Economics. [Downloadable!]
  16. Antonio Jiménez-Martínez, 2006. "A model of interim information sharing under incomplete information," International Journal of Game Theory, Springer, vol. 34(3), pages 425-442, October. [Downloadable!] (restricted)
  17. Donald Cox, 2003. "Private Transfers within the Family: Mothers, Fathers, Sons and Daughters," Boston College Working Papers in Economics 605, Boston College Department of Economics. [Downloadable!]
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