By studying to link between bequest expectations and savings, this research seeks to increase of intergenerational transfers and their impact on economic behavior. The proper design of public programs such as social security will depend on a full understanding of intergenerational transfers. The main dataset studied will be the Panel Study of Income Dynamics (PSID) which contains detailed financial information on parents and their children in 1984 and 1989. Assuming that increases in parental wealth increase expectations of a bequest by the children, the implications for various theories for correlations between parental and child wealth and savings will be derived. Then PSID will be used to determine which theories are consistent with the empirical results. Since much of the aggregate wealth is held by a small proportion of the population median regressions will likely be the primary method to test the theories since median regressions are less sensitive to outliers. Methods such as instrumental variables (IV) will also be needed to deal with measurement error and other difficulties which may lead to biased results and incorrect inferences.
