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How Large Are Bequest Motives? Estimates Based on Health Shocks

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  • Jens Soerlie
  • Tarun Ramadorai

Abstract

I analyze the inter vivo transfers and bequest decisions of 700,000 individuals during a period when the decision maker receives negative news regarding their life expectancy. The event that initiates the news is a health outcome. Expected mortality increases both the likelihood of transferring wealth to the next generation and the amount transferred. The size of the inter vivo transfer and bequest are positively related to the wealth of the parent and the severity of the diagnosis, regardless of diagnosis-specific demand for informal care. Using a structural life cycle model, I estimate the bequest parameters that are consistent with the causal effect estimates.Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

Suggested Citation

  • Jens Soerlie & Tarun Ramadorai, 2023. "How Large Are Bequest Motives? Estimates Based on Health Shocks," The Review of Financial Studies, Society for Financial Studies, vol. 36(8), pages 3382-3422.
    • Handle: RePEc:oup:rfinst:v:36:y:2023:i:8:p:3382-3422.
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    File URL: http://hdl.handle.net/10.1093/rfs/hhac093
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    More about this item

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior

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