Finance Seminar with Rawley Heimer, W.P. Carey School of Business, Arizona State University

The Department of Finance is proud to announce the upcoming seminar with Rawley Heimer, W.P. Carey School of Business, Arizona State University.

Rawley Heimer will present: Five Facts about Bequest Motives

Abstract:
Rising differences in generational wealth and the economic effects of inheritances make it increasingly important to understand individuals’ bequest motives. We document five novel empirical facts about individuals’ preferences and expectations toward bequests using survey data spanning three decades. (1) Households with heirs exhibit stronger bequest preferences. (2) Bequest motives follow a U-shaped pattern over the life cycle. (3) The perceived importance of bequests rises sharply among the top two deciles of the wealth distribution. (4) Stock owners, particularly those who experience high market returns, report stronger bequest preferences. (5) Individuals systematically overestimate their bequests’ likelihood and size. These stylized facts provide new benchmarks for evaluating economic models and suggest that alternatives to the static treatment of bequest motives may better reflect observed behavior. Finally, we examine the implications of these findings for wealth accumulation and portfolio choice within a canonical life-cycle model with precautionary savings.

Location:
Solbjerg Plads 3
2000 Frederiksberg
Room: SPs03