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Bequests as Signals: An Explanation for the Equal Division Puzzle

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  • B. Douglas Bernheim
  • Sergei Severinov

Abstract

In the United States, more than two-thirds of decedents with multichild families divide their estates exactly equally among their children. In contrast, gifts given before death 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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  • B. Douglas Bernheim & Sergei Severinov, 2003. "Bequests as Signals: An Explanation for the Equal Division Puzzle," Journal of Political Economy, University of Chicago Press, vol. 111(4), pages 733-764, August.
    • Handle: RePEc:ucp:jpolec:v:111:y:2003:i:4:p:733-764
    DOI: 10.1086/375383
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    References listed on IDEAS

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    More about this item

    JEL classification:

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

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