Jens Kværner: How Large Are Bequest Motives?
Job talk. Jens Kværner is a post-doctoral research fellow at BI Norwegian Business School. He will present a paper entitled "How Large Are Bequest Motives?".
This paper infers the importance of bequest motives using a unique panel of 45,000 households resulting from merging administrative data on individual cancer diagnoses with income, wealth, and family linkages. Identification comes from comparing the wealth trajectories of individuals diagnosed with cancer today to those of individuals diagnosed with cancer three years later. Estimates show that family structures are crucial for individual responses to mortality shocks. For couples, changes in life expectancy have no impact on consumption and saving choices. In contrast, widowed individuals respond to mortality shocks by decreasing their wealth by 30% to 50%. A major part of this decrease in wealth can be accounted for by an increase in their children’s wealth. Structural estimation indicates a bequest parameter equivalent to about 3 to 6 years of annual consumption expenditures of the decedent. Overall, the results provide empirical support for dynastic models of overlapping generations (Barro, 1974; Becker and Tomes, 1979).
Host: Kjetil Storesletten