Subjective Mortality Risk and Bequests / Li Gan, Guan Gong, Michael Hurd, Daniel McFadden.

Format:

Book

Author/Creator:

Gan, Li.

Contributor:

National Bureau of Economic Research.

Gong, Guan.

Hurd, Michael.

McFadden, Daniel.

Series:

Working Paper Series (National Bureau of Economic Research) no. w10789.

NBER working paper series no. w10789

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2004.

Summary:

This paper investigates whether subjective expectations about future mortality affect consumption and bequests motives. We estimate a dynamic life-cycle model based on subjective survival rates and wealth from the panel dataset Asset and Health Dynamics among Oldest Old. We find that bequest motives are small on average, which indicates that most bequests are involuntary or accidental. Moreover, parameter estimates using subjective mortality risk perform better in predicting out-of-sample wealth levels than estimates using life table mortality risks, suggesting that decisions about consumption and saving are influenced more strongly by individual-level beliefs about mortality risk than by group level mortality risk.

Notes:

Print version record

September 2004.