Utility from Accumulation

11 Pages Posted: 20 Dec 2009

See all articles by Louis Kaplow

Louis Kaplow

Harvard Law School; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: December 18, 2009


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.

Keywords: annuities, behavioral public finance, bequests, consumption, charitable giving, gifts, savings, wealth

JEL Classification: D11, D14, D91, H31

Suggested Citation

Kaplow, Louis, Utility from Accumulation (December 18, 2009). Harvard Law and Economics Discussion Paper No. 654. Available at SSRN: https://ssrn.com/abstract=1525624 or http://dx.doi.org/10.2139/ssrn.1525624

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