Gifts, Lies and Bequests
Recent empirical work on intergenerational transfers has shown that: i) parents prefer to transfer resources to their children using bequests rather than inter vivos transfers (gifts), and ii) bequests tend to be divided equally, while gifts tend to be directed towards the less well-off children. In this note, we present a theoretical model of the altruistic family with heterogeneous children which does not contradict either i) or ii). In our setting, i) follows because bequests are more e¢cient than gifts: these are negatively related to the children’s reported income (true income cannot be observed) and therefore distort the effort supply decisions as well as inducing underreporting. As for ii), we propose two arguments. First, market imperfections make bequests, which come late in life, a rather ineffective redistributive tool, so that it may be pointless to differentiate them. Second, imposing the constraint that bequest have to be equal is not necessarily costly in welfare terms and permits to avoid the the psychic costs or the loss of reputation associated with unequal giving.
|Date of creation:||Oct 2000|
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- CREMER, Helmuth & PESTIAU, Pierre, 1993.
"Bequests as a heir : "Discipline device","
CORE Discussion Papers
1993041, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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- Cremer, Helmuth & Pestieau, Pierre, 1996. "Bequests as a Heir "Discipline Device."," Journal of Population Economics, Springer, vol. 9(4), pages 405-14, November.
- Stefan Hochguertel & Henry Ohlsson, 2001.
"Compensatory Inter Vivos Gifts,"
- Stefan Hochguertel & Henry Ohlsson, 2000. "Compensatory inter vivos gifts," Economics Working Paper Archive wp_319, Levy Economics Institute.
- Stefan Hochguertal & Henry Ohlsson, 2000. "Inter Vivos Gifts: Compensatory or Equal Sharing?," Econometric Society World Congress 2000 Contributed Papers 0699, Econometric Society.
- Hochguertel , Stefan & Ohlsson, Henry, 2000. "Compensatory inter vivos gifts," Working Papers in Economics 31, University of Gothenburg, Department of Economics.
- Bernheim, B Douglas & Shleifer, Andrei & Summers, Lawrence H, 1985.
"The Strategic Bequest Motive,"
Journal of Political Economy,
University of Chicago Press, vol. 93(6), pages 1045-76, December.
- Lundholm, M. & Ohlsson, H., 1999.
"Post Mortem Reputation, Compensatory Gifts and Equal Bequests,"
1999:3, Uppsala - Working Paper Series.
- Lundholm, Michael & Ohlsson, Henry, 2000. "Post mortem reputation, compensatory gifts and equal bequests," Economics Letters, Elsevier, vol. 68(2), pages 165-171, August.
- Lundholm, Michael & Ohlsson, Henry, 1999. "Post Mortem Reputation, Compensatory Gifts and Equal Bequests," Working Paper Series 1999:3, Uppsala University, Department of Economics.
- Lundholm, Michael & Ohlsson, Henry, 1999. "Post Mortem Reputation, Compensatory Gifts and Equal Bequests," Research Papers in Economics 1999:1, Stockholm University, Department of Economics.
- Cremer, H. & Kessler, D. & Pestieau, P., 1989.
"Intergenerational Transfers Within The Family,"
CORE Discussion Papers
1989018, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Cigno, Alessandro & C. Giannelli, Gianna & Rosati, Furio C., 1998. "Voluntary transfers among Italian households: altruistic and non-altruistic explanations," Structural Change and Economic Dynamics, Elsevier, vol. 9(4), pages 435-451, December.
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