Intended and Accidental Bequests in a Life-Cycle Economy
Arizona State University Economics Working Paper No. 5/2002
24 Pages Posted: 28 Mar 2002
Date Written: March 2002
This paper studies quantitative importance of accidental versus intended bequests. Bequests are decomposed into accidental and intended components by comparing the implications of a standard life-cycle model under alternative assumptions about bequest motives. The main finding is that accidental bequests account for at least half, and perhaps for all of observed bequests. The paper then examines how assumptions about bequest motives affect the effects of income tax changes. In contrast to previous research, I find that bequest motives are not important for the analysis of capital income taxation. The effects of labor income taxes are reduced by altruistic bequests, but the role played by bequests is much weaker than suggested by previous models.
Keywords: Bequests, altruism
JEL Classification: D64, D91, E21
Suggested Citation: Suggested Citation