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Finance and Economics Discussion Series
Finance and Economics Discussion Series logo links to FEDS home page To Leave or Not to Leave: The Distribution of Bequest Motives
Wojciech Kopczuk and Joseph P. Lupton

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

Full paper (421 KB PDF)

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Last update: June 7, 2004