The Joy of Giving or Assisted Living? Using Strategic Surveys to Separate Bequest and Precautionary Motives

58 Pages Posted: 27 Jun 2007 Last revised: 19 Jul 2007

See all articles by John Ameriks

John Ameriks

The Vanguard Group, Inc.

Andrew Caplin

New York University (NYU) - Department of Economics; National Bureau of Economic Research (NBER)

Steven Laufer

Board of Governors of the Federal Reserve System

Stijn Van Nieuwerburgh

Columbia University Graduate School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); New York University Stern School of Business, Department of Finance

Multiple version iconThere are 2 versions of this paper

Date Written: May 2007

Abstract

Strong bequest motives can explain low retirement spending, but so equally can strong precautionary motives. Given this identification problem, the recent tradition has been largely to ignore bequest motives. We develop a rich model of spending in retirement that allows for both motives, and introduce a "Medicaid aversion" parameter that plays a key role in determining precautionary savings. We implement a "strategic" survey to resolve the identification problem between bequest and precautionary motives. We find that strong bequest motives are too prevalent to be ignored. Moreover, Medicaid aversion is widespread, and helps explain the low spending of many middle class retirees.

Suggested Citation

Ameriks, John and Caplin, Andrew and Laufer, Steven and Van Nieuwerburgh, Stijn, The Joy of Giving or Assisted Living? Using Strategic Surveys to Separate Bequest and Precautionary Motives (May 2007). NBER Working Paper No. w13105. Available at SSRN: https://ssrn.com/abstract=986955

John Ameriks

The Vanguard Group, Inc. ( email )

P.O. Box 2600
MS V36
Valley Forge, PA 19482-2600
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610-503-5676 (Phone)

Andrew Caplin (Contact Author)

New York University (NYU) - Department of Economics ( email )

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New York, NY 10003
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HOME PAGE: http://www.econ.nyu.edu/user/caplina/

National Bureau of Economic Research (NBER)

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Steven Laufer

Board of Governors of the Federal Reserve System ( email )

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202-728-5889 (Fax)

Stijn Van Nieuwerburgh

Columbia University Graduate School of Business ( email )

3022 Broadway
Uris Hall 809
New York, NY New York 10027
United States

HOME PAGE: http://https://www0.gsb.columbia.edu/faculty/svannieuwerburgh/

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

New York University Stern School of Business, Department of Finance ( email )

44 West 4th Street
Suite 9-190
New York, NY 10012-1126
United States

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