Hostname: page-component-848d4c4894-x5gtn Total loading time: 0 Render date: 2024-05-17T11:50:44.233Z Has data issue: false hasContentIssue false
  • English
  • Français

When to Give? A Note on the Timing of Gifts and Bequests

Published online by Cambridge University Press:  26 March 2020

Alain Jousten
Alain Jousten*
Affiliation:
HEC–ULG, Boulevard du Rectorat 7, Bat B31, 4000Liège, Belgium
Get access Rights & Permissions [Opens in a new window]

Abstract

We generalise the standard joy-of-giving bequest motive by including inter vivos gifts. Within a life-cycle framework, we analyse the implications of the choice of different discount factors for the utility of gifts and bequests. For a linear utility of giving, we characterise the gift and bequest pattern of a liquidity constrained individual over the life-cycle. We find that discounting at the interest rate is very convenient as the linear utility parameter can be interpreted as a summary measure for the strength of the motive of giving, net of all gift and bequest timing issues over the life-cycle.

Keywords

Consumer economics theorysocial security and public pensionsD11H55
Type
Articles
Information
National Institute Economic Review , Volume 198 , October 2006 , pp. 112 - 120
Copyright
Copyright © 2006 National Institute of Economic and Social Research

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

I am grateful for financial support within the ARC Health and Retirement. A previous incomplete version of this paper was circulated unde the title “On the timing of gifts and bequests”. All remaining errors are entirely my own. Comments welcome at ajousten@ulg.ac.be

References

Barro, R.J. (1974), ‘Are government bonds net wealth?’, Journal of Political Economy, 82(6), pp. 1095–1117, November-December.CrossRefGoogle Scholar
Cox, D. (1987), ‘Motives for private income transfers’, Journal of Political Economy, 95(3), pp. 508–546, June.CrossRefGoogle Scholar
Cremer, H. and Pestieau, P. (2003), ‘Wealth transfer taxation: a survey’, CESifo Working Paper Series 1061.CrossRefGoogle Scholar
Drazen, A. (1978), ‘Government debt, human capital, and bequests in a life-cycle model’, Journal of Political Economy, 86(3), pp. 505–516, June.CrossRefGoogle Scholar
Fischer, S. (1973), ‘A life cycle model of life insurance purchases’, International Economic Review, 14(1), pp. 132–152, February.CrossRefGoogle Scholar
Friedman, B.M. and Warshawsky, M. (1988), ‘Annuity prices and savings behavior in the United States’, in Bodie, Z., Shoven, J.B. and Wise, D.A. (eds), Pensions in the US Economy, chapter 2, pp. 53–84, Chicago, NBER and University of Chicago Press.Google Scholar
Hendricks, L. (2002), ‘Intended and accidental bequests in a life-cycle economy’, mimeo, Arizona State University.CrossRefGoogle Scholar
Hurd, M.D. (1989), ‘Mortality risk and bequests’, Econometrica, 57(4), PP. 779–813, July.CrossRefGoogle Scholar
Kotlikoff, L.J. and Summers, L.H. (1981), ‘The role of intergenerational transfers in aggregate capital accumulation’, Journal of Political Economy, 89, pp. 706–732, August.CrossRefGoogle Scholar
Kuehlwein, M. (1994), ‘The non-equalization of true gift and estate tax rates’, Journal of Public Economics, 53(2), pp. 319–323, February.CrossRefGoogle Scholar
Kurz, M. (1984), ‘Capital accumulation and the characteristics of private intergenerational transfers’, Economica, 51, pp. 1–22, February.CrossRefGoogle Scholar
Rivers, R. and Crumbley, D.L. (1979), ‘The timing problem for the unified estate and gift tax’, The Journal of Risk and Insurance, 46(1), pp. 125–138, March.CrossRefGoogle Scholar