To Leave or Not to Leave: The Distribution of Bequest Motives

34 Pages Posted: 13 Nov 2004

See all articles by Wojciech Kopczuk

Wojciech Kopczuk

Columbia University - Graduate School of Arts and Sciences - Department of Economics; Columbia University - School of International & Public Affairs (SIPA); National Bureau of Economic Research (NBER)

Joseph Lupton

University of Michigan at Ann Arbor - Department of Economics; Board of Governors of the Federal Reserve - Division of Research and Statistics

Multiple version iconThere are 2 versions of this paper

Date Written: May 19, 2004

Abstract

In this paper, we examine the effect of observed and unobserved heterogeneity in the desire to die with positive net worth. Using a structural life-cycle model nested in a switching regression with unknown sample separation, we find that roughly 70 percent of the elderly single population has a bequest motive that may or may not be active depending on the level of resources at a given age. Both the presence and the magnitude of the bequest motive are statistically and economically significant. All else being equal, households with an operative bequest motive spend between $4,000 and $9,000 a year less on consumption expenditures on average. We conclude that, among the elderly single households in our sample, approximately half of bequeathed wealth will be due to a bequest motive.

Keywords: Bequest, bequest motive, heterogeneous preferences, wealth, saving

JEL Classification: D11, D12, D91, E21

Suggested Citation

Kopczuk, Wojciech and Lupton, Joseph P., To Leave or Not to Leave: The Distribution of Bequest Motives (May 19, 2004). FEDS Discussion Paper No. 2004-33. Available at SSRN: https://ssrn.com/abstract=594822 or http://dx.doi.org/10.2139/ssrn.594822

Wojciech Kopczuk

Columbia University - Graduate School of Arts and Sciences - Department of Economics ( email )

420 W. 118th Street
New York, NY 10027
United States

Columbia University - School of International & Public Affairs (SIPA)

420 West 118th Street
New York, NY 10027
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Joseph P. Lupton (Contact Author)

University of Michigan at Ann Arbor - Department of Economics ( email )

611 Tappan Street
Ann Arbor, MI 48109-1220
United States

Board of Governors of the Federal Reserve - Division of Research and Statistics

20th and C Streets, NW
Washington, DC 20551
United States

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