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Altruistic bequests with inherited tastes

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  • Jellal, Mohamed
  • wolff, François charles

Abstract

This paper examines the altruistic model of bequest when a child inherits life standard aspirations from his parents. We prove that the impact of the aspiration effect on transfers can be positive or negative, depending on both the strength of inherited tastes and the coefficients of risk aversion for the parent and the child. However, numerical illustrations indicate that the case for a negative effect is rather weak. Using a French data set on transfers within the family,we investigate how transmission habits affect the level of private assistance. We show that parents are more likely to help their children when they have themselves received money from their own parents. Hence, any public program that affects current transfers also influences family transfers in the future

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 38447.

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Date of creation: 2002
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Handle: RePEc:pra:mprapa:38447

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Keywords: altruism; bequest; inherited tastes; risk aversion;

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References

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  1. Jellal, Mohamed & Wolff, Francois-Charles, 2002. "Cultural evolutionary altruism: theory and evidence," European Journal of Political Economy, Elsevier, vol. 18(2), pages 241-262, June.
  2. Joseph G. Altonji & Fumio Hayashi & Laurence Kotlikoff, 1995. "Parental Altruism and Inter Vivos Transfers: Theory and Evidence," NBER Working Papers 5378, National Bureau of Economic Research, Inc.
  3. Cigno, Alessandro & C. Giannelli, Gianna & Rosati, Furio C., 1998. "Voluntary transfers among Italian households: altruistic and non-altruistic explanations," Structural Change and Economic Dynamics, Elsevier, vol. 9(4), pages 435-451, December.
  4. Becker, Gary S, 1993. "Nobel Lecture: The Economic Way of Looking at Behavior," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 385-409, June.
  5. Arrondel, L. & Laferrere, A., 1998. "Taxation and Wealth Transmission in France," DELTA Working Papers 98-13, DELTA (Ecole normale supérieure).
  6. Arrondel, Luc & Masson, Andre, 2001. " Family Transfers Involving Three Generations," Scandinavian Journal of Economics, Wiley Blackwell, vol. 103(3), pages 415-43, September.
  7. de la Croix, David, 1996. "The dynamics of bequeathed tastes," Economics Letters, Elsevier, vol. 53(1), pages 89-96, October.
  8. Jellal, Mohamed & Wolff, Francois-Charles, 2000. "Shaping intergenerational relationships: the demonstration effect," Economics Letters, Elsevier, vol. 68(3), pages 255-261, September.
  9. Masson, A. & Pestieau, P., 1996. "Bequests motives and models of inheritance: a survey of the literature," DELTA Working Papers 96-20, DELTA (Ecole normale supérieure).
  10. François-Charles Wolff & Luc Arrondel, 1998. "La nature des transferts inter vivos en France : investissements humains, aides financières et transmission du patrimoine," Économie et Prévision, Programme National Persée, vol. 135(4), pages 1-27.
  11. de la Croix, David, 2000. "Standard-of-Living Aspirations and Economic Cycles," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2000008, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  12. Cox, Donald, 1987. "Motives for Private Income Transfers," Journal of Political Economy, University of Chicago Press, vol. 95(3), pages 508-46, June.
  13. Wolff, Francois-Charles, 2006. "Microeconomic models of family transfers," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier.
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Cited by:
  1. Jordi Caballé & Ana Moro-Egido, 2008. "The Effect of Aspirations, Habits, and Social Security on the Distribution of Wealth," UFAE and IAE Working Papers 761.08, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  2. Schwarze, Johannes, 2004. "Living Conditions of Children and Parental Well-Being – Evidence from German Data on Life Satisfaction," IZA Discussion Papers 1200, Institute for the Study of Labor (IZA).
  3. Jaime Alonso-Carrera & Jordi Caballé & Xavier Raurich, 2004. "Aspirations, Habit Formation, and Bequest Motive," UFAE and IAE Working Papers 641.04, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  4. Alberto Bisin & Thierry Verdier, 2010. "The Economics of Cultural Transmission and Socialization," NBER Working Papers 16512, National Bureau of Economic Research, Inc.

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