The Joy of Giving or Assisted Living? Using Strategic Surveys to Separate Bequest and Precautionary Motives

58 Pages Posted: 27 Jun 2007 Last revised: 24 Apr 2022

See all articles by John Ameriks

John Ameriks

The Vanguard Group, Inc.

Andrew Caplin

New York University (NYU) - Department of Economics; National Bureau of Economic Research (NBER)

Steven Laufer

Board of Governors of the Federal Reserve System

Stijn Van Nieuwerburgh

Columbia University Graduate School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); ABFER

Multiple version iconThere are 2 versions of this paper

Date Written: May 2007

Abstract

Strong bequest motives can explain low retirement spending, but so equally can strong precautionary motives. Given this identification problem, the recent tradition has been largely to ignore bequest motives. We develop a rich model of spending in retirement that allows for both motives, and introduce a "Medicaid aversion" parameter that plays a key role in determining precautionary savings. We implement a "strategic" survey to resolve the identification problem between bequest and precautionary motives. We find that strong bequest motives are too prevalent to be ignored. Moreover, Medicaid aversion is widespread, and helps explain the low spending of many middle class retirees.

Suggested Citation

Ameriks, John and Caplin, Andrew and Laufer, Steven and Van Nieuwerburgh, Stijn, The Joy of Giving or Assisted Living? Using Strategic Surveys to Separate Bequest and Precautionary Motives (May 2007). NBER Working Paper No. w13105, Available at SSRN: https://ssrn.com/abstract=986955

John Ameriks

The Vanguard Group, Inc. ( email )

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Stijn Van Nieuwerburgh

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