The Professor will present the paper "The Motives for Bequests: Empirical Facts and Life-cycle Implications"
Abstract: Bequest motives are essential to models of inter-temporal economic choice but their empirical characteristics are largely undocumented. Using multiple sources of survey data that trace back as far as thirty years, we catalog four crucial findings on peoples' expectations of leaving inheritances and their subjective preferences toward bequests. (1) People overestimate the likelihood of leaving an inheritance and its size. (2) People's subjective preference toward leaving bequests is U-shaped over the life-cycle and (3) is larger for stock owners particularly those who experience high returns. (4) Bequests are subjectively more important for wealthier individuals, which is consistent with theories of bequests as a luxury good. Finally, we explore the implications of these stylized facts on wealth accumulation and portfolio choice in the context of a canonical life-cycle model with precautionary savings.