This project will investigate the role of inheritances and bequests in shaping household decisions on wealth accumulation. Inheritances from parents and bequests to children are two complementary ways of gaining insight into the role of bequests in household decisions. The project will develop and estimate a behavioral model of bequests that will incorporate the effects on bequests of mortality risk, the level of bequeathable wealth, annuity incomes, characteristics of inheritors, and tastes. This model will be estimated using panel data for a post-retired population. In addition to this formal model, the investigators will estimate two complementary but more data descriptive models of bequests-leaving behavior. Using characteristics of donors, recipients and potential rivals, these models will include the patterns of actual bequests received and inheritances given, as well as levels and changes in intentions to leave bequests. Data limitations have severely restricted our ability to provide informative tests about the role of bequests in shaping the extent of wealth inequality in the population, as well as the relative importance of bequests as a motive for households' savings. This research will use newly available and innovative data on wealth accumulation, planned and actual bequests, and inheritances received from four high-quality household surveys. Combined, these surveys not only focus on the mature and older ages in the life-cycle that are most relevant for bequest behavior, they also provide information about the role of bequests and inheritances throughout the life-cycle.
