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Altruistic Bequests with Inherited Tastes

Author

Listed:
  • Mohamed Jellal

    (Toulouse Business School, France)

  • Francois-Charles Wolff

    (Universite de Nantes, France; Cnav and Ined, France)

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.

Suggested Citation

  • Mohamed Jellal & Francois-Charles Wolff, 2002. "Altruistic Bequests with Inherited Tastes," International Journal of Business and Economics, College of Business and College of Finance, Feng Chia University, Taichung, Taiwan, vol. 1(2), pages 95-113, August.
  • Handle: RePEc:ijb:journl:v:1:y:2002:i:2:p:95-113
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    References listed on IDEAS

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    1. Arrondel, Luc & Laferrere, Anne, 2001. "Taxation and wealth transmission in France," Journal of Public Economics, Elsevier, vol. 79(1), pages 3-33, January.
    2. 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).
    3. 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).
    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, Luc & Masson, Andre, 2001. " Family Transfers Involving Three Generations," Scandinavian Journal of Economics, Wiley Blackwell, vol. 103(3), pages 415-443, September.
    6. Jellal, Mohamed & Wolff, Francois-Charles, 2000. "Shaping intergenerational relationships: the demonstration effect," Economics Letters, Elsevier, vol. 68(3), pages 255-261, September.
    7. Wolff, Francois-Charles, 2006. "Microeconomic models of family transfers," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier.
    8. de la Croix, David, 1996. "The dynamics of bequeathed tastes," Economics Letters, Elsevier, vol. 53(1), pages 89-96, October.
    9. 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.
    10. Altonji, Joseph G & Hayashi, Fumio & Kotlikoff, Laurence J, 1997. "Parental Altruism and Inter Vivos Transfers: Theory and Evidence," Journal of Political Economy, University of Chicago Press, vol. 105(6), pages 1121-1166, December.
    11. Cox, Donald, 1987. "Motives for Private Income Transfers," Journal of Political Economy, University of Chicago Press, vol. 95(3), pages 508-546, June.
    12. 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.
    13. Luc Arrondel & François-Charles Wolff, 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.
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    Citations

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    Cited by:

    1. Wolff, Francois-Charles, 2006. "Microeconomic models of family transfers," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier.
    2. Jordi Caballé & Ana I. Moro Egido, 2008. "The Effect of Aspirations, Habits, and Social Security on the Distribution of Wealth," ThE Papers 08/02, Department of Economic Theory and Economic History of the University of Granada..
    3. Jaime Alonso-Carrera & Jordi Caballé & Xavier Raurich, 2007. "Aspirations, Habit Formation, and Bequest Motive," Economic Journal, Royal Economic Society, vol. 117(520), pages 813-836, April.
    4. Alberto Bisin & Thierry Verdier, 2010. "The Economics of Cultural Transmission and Socialization," NBER Working Papers 16512, National Bureau of Economic Research, Inc.
    5. 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).
    6. Luc Arrondel & Cyril Grange, 2014. "Bequests and family traditions: the case of nineteenth century France," Review of Economics of the Household, Springer, vol. 12(3), pages 439-459, September.
    7. Jordi Caballé & Ana I. Moro-Egido, 2015. "On the Accumulation of Wealth under Aspirations," Working Papers 826, Barcelona Graduate School of Economics.
    8. Peter Mooslechner & Martin Schürz & 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

    Keywords

    altruism; bequest; inherited tastes; risk aversion;

    JEL classification:

    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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