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To leave or not to leave: the distribution of bequest motives

  • Wojciech Kopczuk
  • Joseph P. Lupton

In this paper, 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 70 percent of the elderly single population has a bequest motive that may or may not be active depending on the level of resources at a given age. Both the presence and the magnitude of the bequest motive are statistically and economically significant. All else being equal, households with an operative bequest motive spend between $4,000 and $9,000 a year less on consumption expenditures on average. We conclude that, among the elderly single households in our sample, approximately half of bequeathed wealth will be due to a bequest motive.

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Paper provided by Board of Governors of the Federal Reserve System (U.S.) in its series Finance and Economics Discussion Series with number 2004-33.

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Date of creation: 2004
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Handle: RePEc:fip:fedgfe:2004-33
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