Dissaving by the Elderly, Transfer Motives and Liquidity Constraints / Albert Ando, Luigi Guiso, Daniele Terlizzese.

Format:

Book

Author/Creator:

Ando, Albert.

Contributor:

National Bureau of Economic Research.

Guiso, Luigi.

Terlizzese, Daniele.

Series:

Working Paper Series (National Bureau of Economic Research) no. w4569.

NBER working paper series no. w4569

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1993.

Summary:

Two explanations have been proposed for the observed slowness of wealth decumulation by the elderly in the literature: the precautionary saving induced by (uninsurable) uncertainty about the time of death or by the possibility of major catastrophes in old age that require large outlays; the desire to pass part of the accumulated assets on to one's heirs. We reconsider the issue of wealth decumulation by the elderly and assess the presence of a transfer motive, drawing on Italian data. We show that if intergenerational transfer of assets takes place well before the time of death, induced for instance by existence of liquidity constraints on younger families, then tests for the presence of a transfer motive based on the relative speed of decumulation of elderly households with and without a potential bequest motive might have little discriminatory power. We suggest that in this case one should look at the whole pattern of asset accumulation and decumulation. We also offer an alternative test of the bequest motive based on life insurance purchases.

Notes:

Print version record

December 1993.