Do Germans Save to Leave an Estate? An Examination of the Bequest Motive

I investigate whether a bequest motive for savings influences the post-retirement wealth trajectories of German households. Two measures of the bequest motive are studied: the existence of children as the main group of potential heirs and the respondents' declared intention to bequeath. While having children has no significant impact on households' wealth trajectories, stated bequest intentions are associated with considerable heterogeneity in wealth holdings. The main conclusion from this study is that both the pure life-cycle model and the life-cycle model with bequest motives provide a valid basis for a theory of household wealth accumulation once the heterogeneity of preferences is acknowledged.
JEL classification : D 91; J 14     

Income inequality, consumption, and social-status seeking

Using the Chinese Urban Household Survey data between 1997 and 2006, we find that income inequality has a negative (positive) effect on household consumption net of education expenditures (savings) even after we control for household income. We argue that people save to improve their social status when social status is associated with pecuniary and non-pecuniary benefits. Rising income inequality can strengthen the incentives of status-seeking savings by increasing the benefit of improving status, and by enlarging the wealth level required for status upgrading. We also find that the negative effect of income inequality on consumption is stronger for poorer and younger people and that income inequality stimulates more education investment, which are consistent with the status-seeking hypothesis.     

Social status pursuit,distribution of bequests and inequality

The quest for social status modifies lifetime decisions and as a consequence, the trajectory of the overall economy. Focusing on the relative wealth dimension of social status, we build a two-period overlapping generations model with heterogeneous agents to investigate the effects of status quest on the evolution of bequest distribution and household inequality. We show that the bequest motive and the concern for social status not only increase the stationary level of capital but also enhance the household equality.     

Precautionary motivation and consumption insurance: Empirical analysis of household consumption behavior in rural China

Based on a household survey in rural China, this paper discusses parameters such as precautionary motive, excess sensitivity, consumption insurance, and inter-temporal substitution in the household consumption function in rural China. The conclusions of the paper indicate that there is a significant precautionary motive in household consumption in rural China, but the function of consumption insurance is very limited, and the consumption is also excessively sensitive to the income change. Such parameters are different among consumers within different groups. __________ Translated from Zhongguo Nongcun Jingji 中国农村经济 (Chinese Rural Economy), 2006, (4): 12–19     

Understanding the Motivation of College Students to Volunteer: An Integrated Consumption/Investment Analysis

This study examines the specific motivation of college students to volunteer, based on the interpretation of volunteering as entailing both consumption and investment. Analysis of micro-level data, collected in an online survey from non-volunteers and volunteers on the RenDa Economics Forum, one of the main social networking sites in China, and from volunteers at the Shanghai World Expo 2010 in China, provides strong support for consumption-related motivation. However, we find no clear statistical evidence for the validity of the investment motive. Volunteering activities are found to play no significant role in determining future income when compared to other factors, such as test scores, gender, age, parents’ education, job location, and the type of employer.     

House Prices,Wealth and Consumption: New Evidence from Australia and Canada

Over the past two decades, a number of countries have experienced appreciation in house prices at the same time that aggregate consumption has increased. This paper tests alternative hypotheses for this phenomenon by using repeated household surveys from Australia and Canada to identify the transmission mechanism that links consumption and household wealth. The empirical analysis suggests that neither a direct wealth effect nor a common causal factor likely accounts for the observed correlation between wealth and consumption in these two countries. Rather, indirect factors such as collateral effects arising from relaxation of credit constraints are a more likely explanation.     

Consumption tilting and the current account: Evidence from Canada

This paper estimates the consumption tilting motive in Canada. A common empirical technique (vector-error correction model) is applied to a well-established theory (the small-open economy present-value model) in order to estimate the long-run behavior of the current account. The results suggest that households are patient. They modify intertemporal consumption profiles in order to tilt consumption toward the future through the accumulation of wealth, which improves the current account in the long run.     

家庭金融视角下人力资本与家庭消费关系的实证研究——来自CFPS的调查

人力资本投资作为家庭金融活动中的非生产性投资,其最终形成的人力资本水平与家庭消费行为之间存在紧密联系。研究表明,人力资本水平高的居民家庭,往往具有较高的边际消费倾向和更强的财富效应,特别是在衣着支出和娱乐支出方面。提高人力资本水平更主要是通过改变消费者的客观环境以及主观消费观念等来改变其消费行为,从而促进消费。     

Social security,saving, and macroeconomics

Arguing within the framework of a life-cycle hypothesis of consumption of the individual household, Martin Feldstein has claimed that a pay-as-you-go, unfunded social-security system implies a private-sector perception of wealth which both depresses private saving and raises aggregate consumption. But the effects in a macro-economic context are not the same. With less than full employment, perceived increments to private wealth in social security or any other government obligations should increase current and planned future consumption and saving, raising employment and output. With full employment, as long as monetary policy is appropriately accommodating, such increments to wealth should raise prices but leave all real variables, including capital accumulation, unaffected. Increases in social-security wealth would merely substitute for real private wealth in the form of explicit government bonds. Econometric estimates from corrected U.S. data on social security, public debt, income, and employment are consistent with these hypotheses.     

THE RISK‐FREE RATE IN A FINITE HORIZON MODEL WITH BEQUESTS

This paper studies the risk‐free rate in an overlapping generations economy with bequests. It is shown that the risk‐free rate depends on risk aversion, the elasticity of intertemporal substitution, the share of wealth invested in human wealth, life expectancy, and the preference for bequests. In a standard life‐cycle context, mortality increases the subjective time rate of discount, and thus increases the compensation required to postpone consumption. This latter effect is offset in a bequest‐driven model of the type considered here, leading to much more powerful income effects. In this sense, the model provides a bequest‐motive explanation for the risk‐free rate puzzle put forward by Weil in 1989.     

THE SIZE DISTRIBUTION OF HOUSEHOLD DISPOSABLE WEALTH IN THE UNITED STATES

In this study, new estimates are presented of the size distribution of household wealth in the U.S. in 1969. Compared to previous studies, its major advance is the inclusion of all marketable or discretionary household assets and liabilities and their alignment with national balance sheet totals. Household disposable wealth (HDW) is defined as the sum of all marketable or fungible assets held by households less liabilities. The Gini coefficient for HDW is 0.72, the share held by the richest one percent of households is 31 percent, and the share held by the top five percent is 49 percent. There is, however, a large variation in the concentration of different household assets. The Gini coefficient is 0.30 for household durables and inventories, 0.69 for equity in owner-occupied housing, 0.94 for bonds and securities, and 0.98 for corporate stock. HDW is then divided into two mutually exclusive components. The first, called "life-cycle wealth," is defined as the sum of equity in owner-occupied housing, durables, household inventory, demand deposits and currency, and the cash value of life insurance and pensions less consumer debt. This form of wealth tends to be accumulated over the life-cycle for either consumption, liquidity, or retirement purposes. The second, called "capital wealth," is the sum of time and savings deposits, bonds and securities, corporate stock, business and investment real estate equity, and trust fund equity. Life-cycle wealth is substantially less concentrated than capital wealth. The Gini coefficient for it is 0.59, while that for capital wealth is 0.88. Moreover, among the lower wealth groups, over 80 percent of household wealth takes the form of life-cycle wealth, whereas among the top wealth groups the proportion is under 20 percent. The results suggest substantially different savings motivations between the two groups.     

中国城镇居民储蓄的影响因素研究:基于三类储蓄动机的实证分析

本文用中国城镇居民1980-2007年的数据,检验了影响居民储蓄行为的三类动机,即生命周期动机、遗赠动机和预防性动机。结果发现这三类储蓄动机都对中国城镇居民的储蓄行为产生影响,其中生命周期储蓄动机是解释中国居民高储蓄率的重要原因,但收入分配差距扩大导致整个社会的遗赠储蓄增加,引起总消费不振。此外,由于居民面临的不确定性增加,中国城镇居民的预防性储蓄动机也随之提高。     

How much does schooling disutility matter?

Studies on structural education choice models are often inconsistent in choosing whether and how to include a disutility of education, especially in an environment with risk and wealth inequality. We show that adding a disutility term to the education decision, a human capital investment option, is equivalent to assuming a relationship between wealth, risk, and education. Utility gain from education is increasing in the riskiness of future consumption. A riskier environment further propels an agent to choose the human capital investment option that maximizes future income. If the degree of risk increases heterogeneously across multiple human capital investment options, risk aversion and the precautionary savings motive can compound or negate each other depending on which option has a greater increase in risk.     

A model of collateral, investment, and adverse selection

This paper characterizes the relationship between entrepreneurial wealth and aggregate investment under adverse selection. Its main finding is that such a relationship need not be monotonic. In particular, three results emerge from the analysis: (i) pooling equilibria, in which investment is independent of entrepreneurial wealth, are more likely to arise when entrepreneurial wealth is relatively low; (ii) separating equilibria, in which investment is increasing in entrepreneurial wealth, are most likely to arise when entrepreneurial wealth is relatively high and; (iii) for a given interest rate, an increase in entrepreneurial wealth may generate a discontinuous fall in investment.     

Remittances for economic development: The investment perspective

Based on the economic theory of the family, this paper constructs a model of remittances where the migrant, besides sending money to his family, also invests in his home country. The investment is looked after by a family member in return for some monetary compensation. The model focuses on two different cases: state-contingent transfers (transfers are tied to investment outcomes) and fixed transfers (transfers are mainly of altruistic motive). As the migrant derives utilities from consumption, his consumption-investment decision is driven by preferences and future investment prospects. The transfers are to increase with both business encouraging and income compensatory effects.     

Economic growth and the demand for education: is there a wealth effect?

Human capital investment in developing countries is thought to be significantly constrained by household resources. This paper studies the relationship between household resources and the demand for education using recent household survey data from Vietnam. The data cover a period, 1993–1998, of exceptional income growth in Vietnam, during which secondary school enrollment rose substantially. Using consumption expenditures to measure household wealth, we find a positive and significant relationship between changes in wealth and changes in the demand for education. This wealth effect persists even after controlling for locality-specific factors such as changes in education returns and the supply and quality of schools, and for the opportunity costs of schooling.     

Status, the Distribution of Wealth, and Growth

We analyze a simple model of endogenous growth in which individuals care about both consumption and their rank in the distribution of wealth. We show that the steady-growth rate of the economy increases with both the strength of the status-seeking motive and the initial equality of the wealth distribution. Contrary to the basic model of endogenous growth, the equilibrium growth rate is not necessarily smaller than in the social optimum, and we identify the circumstances under which the two coincide.     

Precautionary savings of agents with heterogeneous risk aversion

This article focuses on the estimation of the importance of the precautionary motive in the wealth accumulation decision. We use the micro data set of the De Nederlandsche Bank (DNB) Household Survey (DHS) (CentERdata, Tilburg University), a Dutch household survey containing information on wealth, a subjective measure of income uncertainty and subjective qualitative measures of risk aversion. We find that only a small share of wealth is accumulated for the precautionary motive by the Dutch households. This share of wealth is constant across assets with different degrees of liquidity. The economic downturn of the period 2008 to 2010 seems to affect risk attitudes and precautionary saving. Our findings also suggest that the more risk-averse individuals are those who hold less savings.     

房价对居民消费的跨空间影响——基于中国278个城市空间面板数据的实证研究

本文首先基于住房财富效应,构建了房价变动对居民消费的跨空间影响的分析框架。该框架阐释了住房财富效应的区域差异:不同地区间房价的空间传导、居民的异地消费以及消费的示范效应,使得本地房价变动可能引起周边地区居民消费的连锁反应。其后,本文利用中国278个地级市2000—2018年数据,通过空间面板杜宾模型,实证考察了不同地区住房财富效应的差异,以及房价变动对居民消费的跨空间影响。结果显示:(1)虽然中国整体上存在住房财富效应,但西部城市财富效应并不显著,并且核心城市还存在负财富效应。(2)不同城市间房价对消费存在跨区影响。东部城市和核心城市对周边城市消费的正向影响很显著,而边缘城市则对周边城市消费有显著的负向影响。(3)不同城市间的消费也具有空间上的示范效应。最后,本文从房价和居民消费空间联动的视角,为政府扩大内需、调控房地产市场提供了相关政策建议。     

房价对居民消费的跨空间影响*——基于中国278个城市空间面板数据的实证研究

本文首先基于住房财富效应，构建了房价变动对居民消费的跨空间影响的分析框架。该框架阐释了住房财富效应的区域差异：不同地区间房价的空间传导、居民的异地消费以及消费的示范效应，使得本地房价变动可能引起周边地区居民消费的连锁反应。其后，本文利用中国278个地级市2000—2018年数据，通过空间面板杜宾模型，实证考察了不同地区住房财富效应的差异，以及房价变动对居民消费的跨空间影响。结果显示：（1）虽然中国整体上存在住房财富效应，但西部城市财富效应并不显著，并且核心城市还存在负财富效应。（2）不同城市间房价对消费存在跨区影响。东部城市和核心城市对周边城市消费的正向影响很显著，而边缘城市则对周边城市消费有显著的负向影响。（3）不同城市间的消费也具有空间上的示范效应。最后，本文从房价和居民消费空间联动的视角，为政府扩大内需、调控房地产市场提供了相关政策建议。