Utility from Accumulation
Harvard Law School; National Bureau of Economic Research (NBER)
December 18, 2009
Harvard Law and Economics Discussion Paper No. 654
The possibility that individuals may derive utility from the mere fact of holding wealth has long been recognized. A simple intertemporal model featuring utility from accumulation is used here to examine consumption and savings, the choice between inter vivos gifts and bequests (both to descendants and to charities), and levels of annuitization. Introducing utility from accumulation helps to explain a number of empirical regularities that otherwise seem inconsistent with optimizing behavior. Moreover, because individuals who derive significant utility from accumulation will tend to save more and, in the long run, give more than others do, this source of utility may be especially important in analyzing savings behavior, gifts and bequests, and charitable contributions.
Number of Pages in PDF File: 11
Keywords: annuities, behavioral public finance, bequests, consumption, charitable giving, gifts, savings, wealth
JEL Classification: D11, D14, D91, H31working papers series
Date posted: December 20, 2009
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