How Strong are Bequest Motives? Evidence Based on Estimates of the Demand for Life Insurance and Annuities

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This paper presents new empirical evidence in support of the view that a significant fraction of total saving is motivated solely by the desire to leave bequests. Specifically, I find that Social Security annuity benefits significantly raise life insurance holdings and depress private annuity holdings among elderly individuals. These patterns indicate that the typical household would choose to maintain a positive fraction of its resources in bequeathable forms, even if insurance markets were perfect. Evidence on the relationship between insurance purchases and total resources reinforces this conclusion.

Published: Journal of Political Economy, Vol. 99, No. 5, pp. 899-927, (October) 1991.

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