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Aspirations, Habit Formation, and Bequest Motive

Jaime Alonso-Carrera (), Jordi Caballe () and Xavier Raurich ()

No 136, Working Papers from Barcelona School of Economics

Abstract: We analyze how the presence of endogenous preferences affects the altruistic bequest motive from parents to children. We will show that the existence of habits raises the threshold value of the intergenerational discount factor above which altruistic bequests are positive, while aspiration formation could push this value down. Therefore, the dynamic inefficiency of the economy with no altruism is not sufficient to prevent the bequest motive from being operative under aspiration formation. We also discuss the implications of public debt when the bequest motive is inoperative and preferences exhibit habit and aspiration formation.

Keywords: aspirations; Habits; bequests (search for similar items in EconPapers)
JEL-codes: E13 E21 E62 (search for similar items in EconPapers)
Date: 2004-07
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Related works:
Journal Article: Aspirations, Habit Formation, and Bequest Motive (2007)
Working Paper: Aspirations, Habit Formation, and Bequest Motive (2004) Downloads
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