Expected Bequests and Their Distribution

Hurd, Michael D.; Smith, James P.

doi:10.3386/w9142

Cited by 70 publications

(52 citation statements)

References 20 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…This is a shortcut for taking into account the agent's altruism, and measuring how the agent cares for his heir. Such a modeling choice for bequests has already been made in the literature, for example by Hurd andSmith (2002), De Nardi (2004), Kopczuk and Lupton (2007), De Nardi, French and Jones (2010), Ameriks, Caplin, Laufer, andVan Nieuwerburgh (2011), Lockwood (2010) and (2011).…”

Section: Preferencesmentioning

confidence: 99%

Too Risk Averse to Purchase Insurance? A Theoretical Glance at the Annuity Puzzle

Bommier

Grand

2012

SSRN Journal

View full text Add to dashboard Cite

show abstract

Section: Preferencesmentioning

confidence: 99%

Too Risk Averse to Purchase Insurance? A Theoretical Glance at the Annuity Puzzle

Bommier

Grand

2012

SSRN Journal

View full text Add to dashboard Cite

show abstract

“…A second possibility concerns the role of accumulated assets and intended bequests. Many American households in the age range we are considering have accumulated substantial amounts of wealth (Hurd and Smith, 2002). Bequest motives and avoidance of medical cost risk are two complimentary reasons for the size of this wealth accumulation.…”

mentioning

confidence: 99%

Life-Cycle Consumption Patterns at Older Ages in the US and the UK: Can Medical Expenditures Explain the Difference?

Banks¹,

Blundell²,

Levell³

et al. 2016

Self Cite

View full text Add to dashboard Cite

In this paper we document significantly steeper declines in nondurable expenditures in the UK compared to the US, in spite of income paths being similar. We explore several possible causes, including different employment paths, housing ownership and expenses, levels and paths of health status, number of household members, and out-of -pocket medical expenditures. Among all the potential explanations considered, we find that those to do with healthcare-differences in levels and age paths in medical expenses-can fully account for the steeper declines in nondurable consumption in the UK compared to the US. What can explain a difference of this magnitude? An obvious starting point is to examine age paths of income to access the extent to which consumption expenditures are tracking age paths in household income. But the second panel in Figure 1, which plots cohort averaged paths of household income at older ages in the two countries, demonstrates that, if anything, incomes decline at a slightly faster rate in the US than the UK. This therefore seems unlikely to be the major reason for a flatter spending profile in the US. In this paper we investigate other possible reasons that may explain the dramatically different patterns of nondurable consumption of older ages in the two countries by investigating differences in both inter and intra-temporal consumption for households around and beyond retirement age. The set of factors that we explore in this paper include: differential cohort effects in the two countries that may distort average life-cycle age profiles, differences in timing of retirement in the presence of separabilities with employment, differential paths of housing expenditures possibly driven by institutional differences in housing markets between countries, level and path differences in health status and mortality, and finally levels and volatility of medical spending in the US as deteriorating health with age leads to higher spending there while this is not true in the UK because of the National Health Service (NHS). Our empirical strategy is to first quantify cross-country differences in three potential factors-employment, housing status and health-and look for any immediate differences that might explain the differential consumption paths observed in Figure 1. We find,however, that most of these variables evolve in a similar way in both countries although there are some notable differences in tenure status. But even in the absence of differences in profiles, these three factors could play a role in explaining the different shape of spending profiles if there are differences in the nature of non-separabilities between these variables and consumption expenditures across the two countries. Hence, we move on to look for evidence of such non-separabilities by examining their effect on within-period budget allocations in a simple demand system estimated in each of the two countries. We find evidence that the relationship between health expenditures and mortality and employment is much stronger in the U...

show abstract

“…We use four questions about subjective probabilities, which are virtually unchanged over the years: the probabilities of receiving an inheritance, of leaving a bequest of USD 10,000 or more, of working full-time past age 62, and of having a work-limiting health condition within the next 10 years. The questions on inheritances and bequests have been used in investigations of the effects of wealth shocks on retirement (Brown, Coile and Weisbenner, 2010), on bequests (Hurd and Smith, 2002), optimal savings (Scholz, Seshadri and Khitatrakun, 2006), bequest motives and precautionary savings (Mok, 2010) and longterm insurance purchasing behavior (Cramer and Jensen, 2006). The work related questions have been used to analyze the effects of old age social security reforms (Michaud and van Soest, 2008), reverse retirement (Maestas, 2010) and to forecast labor force participation (Michaud and Rohwedder, 2008).…”

Section: Introductionmentioning

confidence: 99%

Nonresponse and Focal Point Answers to Subjective Probability Questions

Kleinjans

Soest

2010

SSRN Journal

View full text Add to dashboard Cite

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E SIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author.IZA Discussion Paper No. 5272 October 2010 ABSTRACT Nonresponse and Focal Point Answers to Subjective Probability Questions *We develop and estimate a panel data model explaining the answers to questions about subjective probabilities, using data from the US Health and Retirement Study. We explicitly account for nonresponse, rounding, and focal point "50 percent" answers. Our results indicate that for three of the four questions considered, almost all 50 percent answers can be explained by rounding. We also find observed and unobserved heterogeneity in the tendencies to report rounded values or a focal answer, explaining persistency in 50 percentanswers over time. Incorporating rounding and focal answers changes some of the conclusions about the socio-economic factors that determine expectations.JEL Classification: C81, D84

show abstract

Expected Bequests and Their Distribution

Cited by 70 publications

References 20 publications

Too Risk Averse to Purchase Insurance? A Theoretical Glance at the Annuity Puzzle

Too Risk Averse to Purchase Insurance? A Theoretical Glance at the Annuity Puzzle

Life-Cycle Consumption Patterns at Older Ages in the US and the UK: Can Medical Expenditures Explain the Difference?

Nonresponse and Focal Point Answers to Subjective Probability Questions

Contact Info

Product

Resources

About