Savings and Bequests

Michael D. Hurd

NBER Working Paper No. 1826 (Also Reprint No. r1314)
Issued in 1986
NBER Program(s):Aging

Empirical studies have indicated that the elderly seem to accumulate wealth after retirement, and that the desire to leave bequests is an important determinent of saving behavior, both kinds of results have cast doubt on the validity of the life cycle hypothesis of consumption. In the first part of this paper, a model of bequests is specified, and the implications for consumption and wealth trajectories are derived. The main result is that, even with a bequest motive, consumption generally decreases with age after retirement, and that wealth will also decrease for all but wealthy households. In the empirical part of the paper, wealth changes of retired households are reported over 10 years of panel data. Contrary to many results from cross-section data, the elderly do dissave: over 10 years the wealth of the elderly in the sample decreases by about 27 real. A test for a bequest motive is proposed. There is no evidence whatsoever for abequest motive.

download in pdf format
   (550 K)

download in djvu format
   (352 K)

email paper

The NBER Bulletin on Aging and Health provides summaries of publications like this.  You can sign up to receive the NBER Bulletin on Aging and Health by email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w1826


  • NOTE: WP1826 is also the basis for reprint 905 (08/01/87), "Saving of the Elderly and Desired Bequests." From The American Economic Review, Vol. 77, No. 3, pp. 298-312, (June 1987).
  • "Mortality Risk and Bequests." From Econometrica, Vol. 57, No. 4, pp. 779- 813, (July 1989).

Users who downloaded this paper also downloaded* these:
Ando, Guiso, and Terlizzese w4569 Dissaving by the Elderly, Transfer Motives and Liquidity Constraints
Kotlikoff w2237 Intergenerational Transfers and Savings
Hurd and Smith w7380 Anticipated and Actual Bequests
De Nardi, French, and Jones w14653 Life Expectancy and Old Age Savings
Gan, Gong, Hurd, and McFadden w10789 Subjective Mortality Risk and Bequests
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us