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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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File URL: http://repec.org/sed2005/up.12772.1107230282.pdf
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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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  3. Michael D. Hurd & Daniel L. McFadden & Li Gan, 1998. "Subjective Survival Curves and Life Cycle Behavior," NBER Chapters, in: Inquiries in the Economics of Aging, pages 259-309 National Bureau of Economic Research, Inc.
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  17. Adams, Peter & Hurd, Michael D. & McFadden, Daniel & Merrill, Angela & Ribeiro, Tiago, 2003. "Healthy, wealthy, and wise? Tests for direct causal paths between health and socioeconomic status," Journal of Econometrics, Elsevier, vol. 112(1), pages 3-56, January.
  18. David A. Wise, 2004. "Perspectives on the Economics of Aging," NBER Books, National Bureau of Economic Research, Inc, number wise04-1, October.
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