The Joy of Giving or Assisted Living? Using Strategic Surveys to Separate Bequest and Precautionary Motives

John Ameriks (), Andrew Caplin (), Steven Laufer and Stijn Van Nieuwerburgh

No 13105, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Strong bequest motives can explain low retirement spending, but so equally can strong precautionary motives. Given this identification problem, the recent tradition has been largely to ignore bequest motives. We develop a rich model of spending in retirement that allows for both motives, and introduce a "Medicaid aversion" parameter that plays a key role in determining precautionary savings. We implement a "strategic" survey to resolve the identification problem between bequest and precautionary motives. We find that strong bequest motives are too prevalent to be ignored. Moreover, Medicaid aversion is widespread, and helps explain the low spending of many middle class retirees.

JEL-codes: D1 D91 E21 I0 J14 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-age and nep-mac
Date: 2007-05
Note: AG AP CH EFG HC LS PE
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