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Retirement Distributions and the Bequest Motive

G. Victor Hallman

in Recalibrating Retirement Spending and Saving

Managing retirement payouts generally revolves primarily around securing adequate retirement income and assuring the continuity of such income for as long as the retirees live. Many commentators have ... More

Managing retirement payouts generally revolves primarily around securing adequate retirement income and assuring the continuity of such income for as long as the retirees live. Many commentators have suggested that the most efficient strategy to deal with these issues for risk-averse retirees is to annuitize retirement benefits. However, these commentators recognize that relatively few retirees actually choose life annuitization (the so-called ‘annuity puzzle’). One reason for this is the bequest or inheritance motive which involves using income-tax-favored retirement plans to pass wealth to the heirs (probably children) of the retiree or to charity. This chapter discusses the concepts, strategies, and constraints on using tax-favored retirement plans as wealth transfer devices.Less

Evidence on the workings of annuity markets

Edmund Cannon and Ian Tonks

in Annuity Markets

This chapter reports the evidence of how annuities function. It discusses the evidence on selection effects and the factors that determine whether people purchase annuities.

Annuity Valuation, Long‐Term Care, and Bequest Motives

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

in Recalibrating Retirement Spending and Saving

Financial security in retirement has traditionally meant having a steady flow of annuity income as long as one lives — a definition enshrined in the Social Security system. Earlier research has ... More

Financial security in retirement has traditionally meant having a steady flow of annuity income as long as one lives — a definition enshrined in the Social Security system. Earlier research has stressed a more holistic approach, which focuses on the match between resources and spending needs. Using this formulation this chapter estimates annuity values given long-term care concerns and bequest motives, where these estimated values are consistent with low observed demand for standard annuities. The chapter extends this model to value non-standard annuities with various security-enhancing features that may be of value to retirees.Less

The Place of Economic Values in Environmental Valuation

R. Kerry Turner

in Valuing Environmental Preferences: Theory and Practice of the Contingent Valuation Method in the US, EU , and developing Countries

Various aspects of the environmental values debate are first examined within the wider context of the sustainable economic development strategy and goal. Next, an expanded values classification is ... More

Various aspects of the environmental values debate are first examined within the wider context of the sustainable economic development strategy and goal. Next, an expanded values classification is set out in order to define the limits of the conventional environmental economics concept of total economic value (use plus non‐use values). Particular attention is paid to the definition and measurement of bequest and existence values, as well as to some recent findings in the newly emerging ‘ecological economics’ literature that have implications for resource systems valuation. The chapter concludes with some environmental conservation policy implications.Less

Consumption Taxation in the Presence of Bequests

Raymond G. Batina and Toshihiro Ihori

in Consumption Tax Policy and the Taxation of Capital Income

This chapter talks about the simple life cycle model. There are several models which are concerning with bequeathing and the results of policy analysis depend on the motive for bequeathing. In a ... More

This chapter talks about the simple life cycle model. There are several models which are concerning with bequeathing and the results of policy analysis depend on the motive for bequeathing. In a situation where the giving parent cares about the size of the bequest, the bequest acts like parental consumption and should be taxed under a consumption tax policy. On the contrary, if the giving parent cares about the full income of the offspring, then the bequest is more like an asset and should not be taxed under a consumption tax. This could maintain neutrality. However, if the population is made up of different people with different motives for bequeathing, it will be impossible to impose a consumption tax. Therefore, a proportional consumption tax will not be completely neutral with respect to decision-making in the existence of bequest.Less

The Consolations of Memory

Pat Jalland

in Death in the Victorian Family

This chapter focuses on the role of memories in the grieving process of Christians and unbelievers in the 19th century. Memories in the 19th century were seen as playing a significant role in the ... More

This chapter focuses on the role of memories in the grieving process of Christians and unbelievers in the 19th century. Memories in the 19th century were seen as playing a significant role in the dynamics of grief as they aided in mourning, provided consolation, and served as a positive power that influenced the survivors for good. The memories of the dead in earlier times were not constrained alone to talking and discussing the goodness of the deceased with families and friends but also included writings, testimonies, and memoirs. Aside from briefly discussing written memoirs, the chapter also discusses the emergence of external symbols that served as memories. Such external symbols came in the forms of photographs, drawings, portraits, and death masks. The chapter also discusses the act of grave-visiting wherein the gave became a site for remembrance and meditation for the bereaved. The chapter also looks at the commemorative bequests and the increasing legal rights of the women to write wills and bestow inheritance.Less

Parental Transfers and Child Feedbacks

C. Y. Cyrus Chu and Ruoh‐Rong Yu

in Understanding Chinese Families: A Comparative Study of Taiwan and Southeast China

Since the type of intergenerational transfers in the mainstream literature was from parents to children, the discussion focused on parents' strategies of how to use such transfers to lure a desired ... More

Since the type of intergenerational transfers in the mainstream literature was from parents to children, the discussion focused on parents' strategies of how to use such transfers to lure a desired behavior on the part of their children. The prevalent norm of filial piety in Chinese societies suggests that parents may well think otherwise. It is shown that many Chinese parents give up their “final say” by transferring all their assets inter vivos, and their children still pay visits, sometimes more frequently, after such transfers. It is hypothesized that a kinship network may play the role of disciplining the children concerning their filial attitude. The empirical evidence for Taiwan is consistent with the above conjecture, but no significant results prevail for the China sample. The latter finding may be due to the weakening of kinship structure that China has experienced since the Cultural Revolution, and the restrictions on property ownership which limit the parental control of assets.Less

• The Genesis of the Leipzig Conservatorium

Clive Brown

in A Portrait of Mendelssohn

Heinrich Blümner, a Leipzig lawyer who died on February 13, 1839, left a bequest of 20,000 thalers for “the founding of a new, or the support of an existing all-purpose national institution for the ... More

Heinrich Blümner, a Leipzig lawyer who died on February 13, 1839, left a bequest of 20,000 thalers for “the founding of a new, or the support of an existing all-purpose national institution for the arts or science.” The bequest was to be disposed of by the king of Saxony, who was petitioned by Felix Mendelssohn through his minister Baron Johann Paul von Falkenstein, to use the money for a music school. Mendelssohn argued that such a school would allow gifted young musicians from poor backgrounds to obtain training. Although the king was in favor of the suggestion, it took another three years for the plan to become a reality. Blümner's vision came in the form of the Leipzig Conservatorium.Less

They Lived and Saved: Examining the Savings Motives of Shopkeepers in Late Nineteenth-Century Britain

Mary Beth Combs

in Men, Women, and Money: Perspectives on Gender, Wealth, and Investment 1850-1930

The chapter examines the saving and investment decisions of nineteenth-century British shopkeepers using data on 332 census-linked probated decedents dying between 1859 and 1891. Previous research ... More

The chapter examines the saving and investment decisions of nineteenth-century British shopkeepers using data on 332 census-linked probated decedents dying between 1859 and 1891. Previous research indicates that the nineteenth-century US agricultural sector experienced a transition from bequest saving to life-cycle saving. The chapter tests the potential impact of bequest, life-cycle, and deferred compensation motives on wealth-holding to determine whether late nineteenth-century British shopkeepers reached the transition stage between bequest and/or deferred compensation to life-cycle saving, as shown by Roger Ransom and Richard Sutch for the case of the US agricultural sector. The results reveal evidence of an altruistic bequest motive.Less

Land

John Hudson

in The Oxford History of the Laws of England: 871-1216

Throughout the period covered by this book, control of land underlay the exercise of royal and aristocratic power. This chapter discusses types of land; landholding, lordship, and dependent tenure; ... More

Throughout the period covered by this book, control of land underlay the exercise of royal and aristocratic power. This chapter discusses types of land; landholding, lordship, and dependent tenure; security of possession, inheritance, bequests of land and the Anglo-Saxon will, alienability, and church lands. Much remains obscure in the history of late Anglo-Saxon land law, particularly outside the best-documented aspects of bookland and loanland. The degree of regional or, particularly at lower social levels, more local variation in custom is impossible to establish. It seems certain that the origins of northern tenures such as drengage are pre-Conquest. However, it is far from clear, for example, that folkland existed throughout England or even outside Wessex and Kent. The terms on which Scandinavian settlers distributed lands amongst themselves remain obscure.Less

Movables

John Hudson

in The Oxford History of the Laws of England: 871-1216

Anglo-Saxons made a distinction between movables and land. Both, in differing ways, were clearly very important in the economy and in social relations. Narrative material for law regarding movables ... More

Anglo-Saxons made a distinction between movables and land. Both, in differing ways, were clearly very important in the economy and in social relations. Narrative material for law regarding movables is extremely limited. The laws themselves largely concentrate on sales and theft. This chapter discusses ownership, control of movables; alienability, succession, and bequest; and sale. Although perhaps in some ways simpler than matters concerning land, those concerning movables take up much more space within the laws and probably constituted much more of the business of courts. When considering the role of kings and the procedures of courts, dealing with theft of movables was central to ideas of the maintenance of order in Anglo-Saxon England.Less

Bequest Motives

Tullio Jappelli and Luigi Pistaferri

in The Economics of Consumption: Theory and Evidence

The study of bequests is crucial to distinguishing between different models of intertemporal choice. Various explanations of individual attitudes toward bequests have been proposed. In addition to ... More

The study of bequests is crucial to distinguishing between different models of intertemporal choice. Various explanations of individual attitudes toward bequests have been proposed. In addition to altruism, the literature has considered strategic bequests, in which intergenerational transfers are a reward for services provided by the heir, and models in which bequests, like any other good, directly influence utility. We first clarify the distinction between altruistic and strategic bequest motives. Next we consider the choice between bequests and gifts. Then we derive the Euler equation when bequests are an argument of the utility function (a model with “joy of giving”). In the second part of the chapter we address the difficult issues of how to measure bequests and how to tell the different bequest motives apart empirically, and discuss the link between transfer taxes and the accumulation of wealth.Less

Extending the OLG model

Hans Fehr and Fabian Kindermann

in Introduction to Computational Economics Using Fortran

In Chapter 6 we used our basic OLG model to discuss the welfare and efficiency effects of various policy reforms. Of course, we have to be cautious in ... More

In Chapter 6 we used our basic OLG model to discuss the welfare and efficiency effects of various policy reforms. Of course, we have to be cautious in drawing robust conclusions fromsuch a policy analysis. In the basic model households only decide on their intertemporal consumption allocation. Hence, public policy solely distorts the savings decision and, consequently, most of the policy reforms hardly impact on economic efficiency but only redistribute across cohorts. Our analysis could be much more instructive when decisions of economic agents are multidimensional, so that various distortions induced by public policy interact. In this chapter we therefore introduce an extended individual decision process. Households not only decide on their savings, but also on their time use. Given a specific time endowment (say a day or a year), agents can either work in the market (and earn income), go to school (and acquire human capital for future income generation), or consume leisure. Public policy may distort all of these decisions. A good policy thus has to create a balance between intertemporal and intratemporal distortions. Finally, we study the implications of lifespan uncertainty and missing annuity markets, asking how public policy can improve the allocation of resources by providing insurance against longevity risk. In this section we allow households to decide how many hours to work in each period. The remaining time is used for leisure consumption which now features in household utility. Leisure demand in each period of the life cycle strongly depends on the respective value of human capital hj, which measures the value of the time endowment in terms of labour market productivity. Hence agents may work the same number of hours, but they may be differently productive, so that they earn a different wage per time unit. Whenever the wage a household earns in the labour market is very small, the household might want to consume more leisure than the actual time endowment. In order to guarantee that the time endowment is met, we calculate a so-called shadow wage μj,s. The shadow wage is added to the regular wage of the household and calculated such that the household’s optimal decision consists in consuming the household’s total endowment of time as leisure. Less

Hospital Patrons and Social Networks

Adam J. Davis

in The Medieval Economy of Salvation: Charity, Commerce, and the Rise of the Hospital

This chapter argues that the highly commercial environment of thirteenth-century Champagne infused pious giving with even greater meaning, particularly bequests made to a charitable institution like ... More

This chapter argues that the highly commercial environment of thirteenth-century Champagne infused pious giving with even greater meaning, particularly bequests made to a charitable institution like a hospital, which had as its central mission the performance of the works of mercy. During the course of the thirteenth century, during which the number of bequests to traditional Benedictine monastic houses declined, the scale of giving to hospitals actually increased. The range of people from different social classes making charitable bequests also expanded, reflective of what one might term the growing democratization of charity. As compared with donors to monastic houses, however, lay donors to hospitals placed less emphasis on intercessory prayer and requested anniversary masses in exchange for donations less often than donors to monasteries. Instead, hospital donors focused on the performance of the works of mercy, which, in the economy of salvation, they viewed as the most efficacious form of currency. Those making bequests to hospitals were also frequently guided by pragmatic considerations. Some donors had a family connection to a hospital, with a relative working there whom they wished to help. Others made bequests as an entry gift to a hospital, or with the expectation that they might one day wish to join the hospital's religious community. The chapter then focuses on the patrons of Champagne's hospitals and interrogates what these hospitals meant to them.Less