How Strong are Bequest Motives? Evidence Based on Estimates of the Demand for Life Insurance and Annuities

62 Pages Posted: 15 Jan 2007 Last revised: 18 Jul 2010

See all articles by B. Douglas Bernheim

B. Douglas Bernheim

Stanford University - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: April 1989

Abstract

This paper presents new empirical evidence in support of the view that a significant fraction of total saving is motivated solely by the desire to leave bequests. Specifically, I find that Social Security annuity benefits significantly raise life insurance holdings and depress private annuity holdings among elderly individuals. These patterns indicate that the typical household would choose to maintain a positive fraction of its resources in bequeathable forms, even if insurance markets were perfect. Evidence on the relationship between insurance purchases and total resources reinforces this conclusion.

Suggested Citation

Bernheim, B. Douglas, How Strong are Bequest Motives? Evidence Based on Estimates of the Demand for Life Insurance and Annuities (April 1989). NBER Working Paper No. w2942. Available at SSRN: https://ssrn.com/abstract=461380

B. Douglas Bernheim (Contact Author)

Stanford University - Department of Economics ( email )

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