The Joy of Giving or Assisted Living? Using Strategic Surveys to Separate Bequest and Precautionary Motives

58 Pages Posted: 10 Sep 2013

See all articles by Stijn Van Nieuwerburgh

Stijn Van Nieuwerburgh

Columbia University Graduate School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); ABFER

Date Written: January 2012

Abstract

Strong bequest motives can explain low retirement spending, but so equally can strong precautionary motives. Given this identification problem, the recent tradition has been largely to ignore bequest motives. We develop a rich model of spending in retirement that allows for both motives, and introduce a "Medicaid aversion" parameter that plays a key role in determining precautionary savings. We implement a "strategic" survey to resolve the identification problem between bequest and precautionary motives. We find that strong bequest motives are too prevalent to be ignored. Moreover, Medicaid aversion is widespread, and helps explain the low spending of many middle class retirees.

Suggested Citation

Van Nieuwerburgh, Stijn, The Joy of Giving or Assisted Living? Using Strategic Surveys to Separate Bequest and Precautionary Motives (January 2012). NYU Working Paper No. 2451/31428, Available at SSRN: https://ssrn.com/abstract=2323478

Stijn Van Nieuwerburgh (Contact Author)

Columbia University Graduate School of Business ( email )

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HOME PAGE: http://https://www0.gsb.columbia.edu/faculty/svannieuwerburgh/

National Bureau of Economic Research (NBER)

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Centre for Economic Policy Research (CEPR)

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