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

47 Pages Posted: 20 Nov 2006 Last revised: 28 Aug 2010

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

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Date Written: November 2005

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 three-fourths of the elderly single population has a bequest motive that may or may not have an appreciable effect on spending depending on the level of resources. Both the presence and the magnitude of the bequest motive are statistically and economically significant. On average, households with a bequest motive spend about 25 percent less on consumption expenditures. We conclude that, among the elderly single households in our sample, about four-fifths of their net wealth will be bequeathed and approximately half of this is due to a bequest motive.

Suggested Citation

Kopczuk, Wojciech and Lupton, Joseph P., To Leave or Not to Leave: The Distribution of Bequest Motives (November 2005). NBER Working Paper No. w11767. Available at SSRN: https://ssrn.com/abstract=847039

Wojciech Kopczuk (Contact Author)

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

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

420 West 118th Street
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National Bureau of Economic Research (NBER) ( email )

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Joseph P. Lupton

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

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Ann Arbor, MI 48109-1220
United States

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

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Washington, DC 20551
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