Working paper
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.
Keywords: bequest motives, inheritances, intergenerational wealth, life-cycle model, wealth inequality, portfolio choice, subjective expectations.
In brief
Using three decades of survey data, the paper documents five facts about how people think about leaving an inheritance.
People with heirs care more about bequests; the importance of bequests follows a U-shape over the life cycle; it rises sharply among the wealthiest fifth of households; stock owners, especially those who have enjoyed high market returns, care more about bequests; and people systematically overestimate how likely and how large their bequests will be. These facts give economic models new benchmarks and suggest that bequest motives change over time rather than staying fixed. The paper also works through what the facts imply for wealth accumulation and portfolio choice in a life-cycle model.
| Panel A. Design | ||
|---|---|---|
| Question | What do people’s preferences and expectations about leaving bequests look like? | |
| Data | Survey data spanning three decades | |
| Method | Stylized facts, with implications examined in a life-cycle model with precautionary saving | |
| Panel B. The five facts | ||
| Fact 1 | Households with heirs have stronger bequest preferences | |
| Fact 2 | Bequest motives follow a U-shape over the life cycle | |
| Fact 3 | The importance of bequests rises sharply in the top two wealth deciles | |
| Fact 4 | Stock owners, especially after high returns, have stronger bequest preferences | |
| Fact 5 | People overestimate how likely and how large their bequests will be | |
Summarized from the paper. See the paper for exact estimates and specifications.
Read and cite
- Working paper, SSRN
Heimer, Rawley Z., and Xiang Li. “Five Facts about Bequest Motives.” Working paper.
@unpublished{heimer2025bequest,
author = {Heimer, Rawley Z. and Li, Xiang},
title = {Five Facts about Bequest Motives},
note = {Working paper},
year = {2025},
url = {https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5331388}
}
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