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Subjective Morality Risks and Bequests

  • Li Gan
  • Guan Gong

    ()

    (Economics University of Texas Austin)

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This paper investigates whether subjective expectations about future mortality affect consumption and bequests motives. We estimate a dynamic life-cycle model based on subjective survival rates and wealth from the panel dataset Asset and Health Dynamics among Oldest Old. We find that bequest motives are small on average, which indicates that most bequests are involuntary or accidental. Moreover, parameter estimates using subjective mortality risk perform better in predicting out-of-sample wealth levels than estimates using life table mortality risks, suggesting that decisions about consumption and saving are influenced more strongly by individual-level beliefs about mortality risk than by group level mortality risk.

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Paper provided by Society for Economic Dynamics in its series 2005 Meeting Papers with number 900.

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Date of creation: 2005
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Handle: RePEc:red:sed005:900
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Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA

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