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Life-Cycle and Altruistic Theories of Saving with Lifetime Uncertainty

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  • Kuehlwein, Michael

Abstract

This paper examines testable implications of the life-cycle theory of saving with lifetime uncertainty. Theory sugges ts that persons facing lower mortality rates should exhibit greater consumption growth. Nonparametric tests, using the Retirement Histor y Survey, provide mixed support for the theory. A parameterized model allowing for altruism provides more support. Estimates of a bequest parameter indicate that elderly households value contributions to bequests as highly as contributions to their own consumption. This i s equally true for households with and without children. Such a beques t motive would curtail the impact of lifetime uncertainty on consumpti on growth. Copyright 1993 by MIT Press.

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  • Kuehlwein, Michael, 1993. "Life-Cycle and Altruistic Theories of Saving with Lifetime Uncertainty," The Review of Economics and Statistics, MIT Press, vol. 75(1), pages 38-47, February.
  • Handle: RePEc:tpr:restat:v:75:y:1993:i:1:p:38-47
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    Cited by:

    1. Wojciech Kopczuk & Joseph P. Lupton, 2007. "To Leave or Not to Leave: The Distribution of Bequest Motives," Review of Economic Studies, Oxford University Press, vol. 74(1), pages 207-235.
    2. Andrew Mason & Tomoko Kinugasa, 2005. "Why Nations Become Wealthy: The Effects of Adult Longevity on Saving," Working Papers 200514, University of Hawaii at Manoa, Department of Economics.
    3. Nicolini, Esteban A., 2004. "Mortality, interest rates, investment, and agricultural production in 18th century England," Explorations in Economic History, Elsevier, vol. 41(2), pages 130-155, April.
    4. Michael Perry, 2006. "On the Covariance Structure of Changes in Consumption in the Health and Retirement Study," Working Papers wp112, University of Michigan, Michigan Retirement Research Center.
    5. Nicolini, Esteban A., 2001. "Adult mortality and investment: a new explanation of the English agricultural productivity in the 18th century," IFCS - Working Papers in Economic History.WH wh016301, Universidad Carlos III de Madrid. Instituto Figuerola.
    6. Michael Perry, 2005. "Estimating Life Cycle Effects of Survival Probabilities in the Health and Retirement Study," Working Papers wp103, University of Michigan, Michigan Retirement Research Center.
    7. Lopez, Fernando Lera, 1999. "Recent decline in family savings rate: possible Explanations," ERSA conference papers ersa99pa098, European Regional Science Association.
    8. Rebelein, Robert P., 2005. "Intergenerational Strategic Behavior and Crowding Out in a General Equilibrium Model," Vassar College Department of Economics Working Paper Series 74, Vassar College Department of Economics.
    9. Sandra Freire, 2004. "Funeral Costs, Saving Behaviour and HIV/AIDS," Cahiers de la Maison des Sciences Economiques bla04092, Université Panthéon-Sorbonne (Paris 1).
    10. Kinugasa, Tomoko & Mason, Andrew, 2007. "Why Countries Become Wealthy: The Effects of Adult Longevity on Saving," World Development, Elsevier, vol. 35(1), pages 1-23, January.
    11. Andrew Mason & Ronald Lee & Sang-Hyop Lee, 2010. "The Demographic Transition and Economic Growth in the Pacific Rim," NBER Chapters,in: The Economic Consequences of Demographic Change in East Asia, NBER-EASE Volume 19, pages 19-55 National Bureau of Economic Research, Inc.
    12. Luigi Ventura & Joseph Eisenhauer, 2006. "Prudence and precautionary saving," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 30(2), pages 155-168, June.

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