Intended and Accidental Bequests in a Life-Cycle Economy

Arizona State University Economics Working Paper No. 5/2002

24 Pages Posted: 28 Mar 2002

See all articles by Lutz Hendricks

Lutz Hendricks

UNC Chapel Hill; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: March 2002

Abstract

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

Hendricks, Lutz, Intended and Accidental Bequests in a Life-Cycle Economy (March 2002). Arizona State University Economics Working Paper No. 5/2002, Available at SSRN: https://ssrn.com/abstract=304721 or http://dx.doi.org/10.2139/ssrn.304721

Lutz Hendricks (Contact Author)

UNC Chapel Hill ( email )

Chapel Hill, NC 27599
United States

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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