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T he lively debate between Laurence J. Kotlikoff and Franco Modigliani presented in the Spring 1988 issue of this journal concerns an old question:what is the main motivation for saving and therefore for the accumulation of wealth? More specifically, what are the respective contributions to aggregate wealth of (1) saving for retirement (also known as "hump" saving); (2) precautionary savings (and "unintended" bequests) due to uncertainty about the length of life; and (3) planned bequests? Of course, other wealth holding motives are possible, but let us follow Kotlikoff and Modigliani in setting them aside for now. If Modigliani's life cycle hypothesis is to be viewed as a close to approximation of reality, then the bulk of existing wealth should have resulted from some combination of hump and precautionary saving.Our comment on this dispute attempts to advance two issues. First, the controversy involves an enormous gap between empirical estimates of the share of "inherited wealth" in total accumulation, even though the estimates are often based on the same data. We hope to clarify why the estimates vary so widely. Second, the Kotlikoff/Modigliani dispute is presented as an American issue, with little extension abroad. We will present some results from other countries that bear on the controversy. (Some of the estimates from Kotlikoff's paper originated in a 1981 paper he wrote with Lawrence Summers, which is why we sometimes refer to his position as the "Kotlikoff-Summers" argument in this comment.)The problem of conceptualizing the contribution of bequest to aggregate savings can be summarized with a thought experiment. Assume all bequests were confiscated.

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We find that household wealth is distributed more unequally in the U.S. in 1983 than France in 1986. The Gini coefficient is 0.77 for the U.S. and 0.71 for France. There are also significant differences in the composition of wealth. Owner-occupied housing accounted for half of total assets in France, and only 30 percent in the U.S., while corporate stock and financial securities amounted to 19 percent in the U.S. and 8 percent in France. The debt-equity ratio was 0.13 in France and 0.20 in the U.S. The age-wealth profile in the two countries had the characteristic hump-shape predicted by the life-cycle model, but the profile was much flatter in France and peaked for families aged 50-59 in France, compared to 60-69 in the U S .

The traditional model of (re)insurance lacks the elements that make a financial institution systemically important: risks are effectively pulverized; liabilities tend to be prefunded, which eliminates most of the leverage in the traditional sense; and active asset‐liability management reduces most of the liquidity mismatch that traditionally propagates systemic risk. (Re)insurers that have stuck to this traditional business model have successfully weathered the crisis, even playing a stabilizing role. Unfortunately, this is not sufficiently recognized in the current IAIS/FSB1 debate on assessing systemic risk in the (re)insurance sector.