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

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  • Wojciech Kopczuk
  • Joseph P. Lupton

Abstract

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 abequest motive. 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% 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. Copyright 2007, Wiley-Blackwell.

Suggested Citation

  • Wojciech Kopczuk & Joseph P. Lupton, 2007. "To Leave or Not to Leave: The Distribution of Bequest Motives," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 74(1), pages 207-235.
    • Handle: RePEc:oup:restud:v:74:y:2007:i:1:p:207-235
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    File URL: http://hdl.handle.net/10.1111/j.1467-937X.2007.00419.x
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    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • 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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