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"My Father was right": The transmission of values between generations

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  • Luc Arrondel

    (PJSE - Paris-Jourdan Sciences Economiques - ENS Paris - École normale supérieure - Paris - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics)

Abstract

The influence of parents' savings behaviour on that of their children has often been remarked. This paper attempts to explain this "poids d'Anchise" via a unique French dataset collected by DELTA and TNSSofres in 2002, which contains both savings and subjective information for two or three generations of the same family. Parents' and children's risk and discounting preferences are significantly positively intergenerationally correlated. The correlation coefficients are around 0.25, so that the two preferences are nonetheless far from identical. In addition, the elasticity of children's wealth with respect to that of their parents is around 0.22. This correlation is corrected for the influence of age on wealth, and concerns only co-existing generations, that is before the most significant intergenerational transfers have taken place. The analysis of the raw correlations with a series of explanatory variables reveals that over 40% of this elasticity can be explained by the permanent incomes of the two generations. Each of education and preferences separately account for about 20%, and previous intergenerational transfers for about 13%. When permanent income is controlled for, the contribution of savings preferences is around 13%. The transmission of preferences therefore plays a non-negligible role in the intergenerational transmission of wealth inequalities, but is far from being the most important factor.

Suggested Citation

  • Luc Arrondel, 2009. ""My Father was right": The transmission of values between generations," PSE Working Papers halshs-00566808, HAL.
  • Handle: RePEc:hal:psewpa:halshs-00566808 Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00566808
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    References listed on IDEAS

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    1. Patricia M. Danzon & Jonathan D. Ketcham, 2004. "Reference Pricing of Pharmaceuticals for Medicare: Evidence from Germany, the Netherlands, and New Zealand," NBER Chapters,in: Frontiers in Health Policy Research, Volume 7, pages 1-54 National Bureau of Economic Research, Inc.
    2. Fosfuri, Andrea, 2004. "Determinants of international activity: evidence from the chemical processing industry," Research Policy, Elsevier, vol. 33(10), pages 1599-1614, December.
    3. Kyle Margaret, 2011. "Strategic Responses to Parallel Trade," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(2), pages 1-34, January.
    4. Maskus, Keith E. & Penubarti, Mohan, 1995. "How trade-related are intellectual property rights?," Journal of International Economics, Elsevier, vol. 39(3-4), pages 227-248, November.
    5. Margaret K. Kyle, 2006. "The role of firm characteristics in pharmaceutical product launches," RAND Journal of Economics, RAND Corporation, vol. 37(3), pages 602-618, September.
    6. Margaret K. Kyle, 2007. "Pharmaceutical Price Controls and Entry Strategies," The Review of Economics and Statistics, MIT Press, vol. 89(1), pages 88-99, February.
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    Cited by:

    1. Oded Galor & Ömer Özak, 2016. "The Agricultural Origins of Time Preference," American Economic Review, American Economic Association, pages 3064-3103.
    2. Black, Sandra E. & Devereux, Paul J., 2011. "Recent Developments in Intergenerational Mobility," Handbook of Labor Economics, Elsevier.
    3. Buechel, Berno & Hellmann, Tim & Pichler, Michael M., 2014. "The dynamics of continuous cultural traits in social networks," Journal of Economic Theory, Elsevier, vol. 154(C), pages 274-309.
    4. Alberto Bisin & Thierry Verdier, 2010. "The Economics of Cultural Transmission and Socialization," NBER Working Papers 16512, National Bureau of Economic Research, Inc.
    5. Kunze, Lars, 2012. "Like Father, Like Son: Inheriting and Bequeathing," Ruhr Economic Papers 318, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    6. Leuermann, Andrea & Necker, Sarah, 2011. "Intergenerational transmission of risk attitudes: A revealed preference approach," Freiburg Discussion Papers on Constitutional Economics 11/4, Walter Eucken Institut e.V..
    7. Andrea Leuermann & Sarah Necker, 2011. "Intergenerational Transmission of Risk Attitudes: A Revealed Preference Approach," SOEPpapers on Multidisciplinary Panel Data Research 412, DIW Berlin, The German Socio-Economic Panel (SOEP).
    8. Sarah Brown & Karl Taylor, 2012. "Expectations and the Saving Behaviour of Children: Analysis of the U.S. Panel Study of Income Dynamics," Working Papers 2012015, The University of Sheffield, Department of Economics.

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