Bequest Motives

The study of bequests is crucial to distinguishing between different models of intertemporal choice. Various explanations of individual attitudes toward bequests have been proposed. In addition to altruism, the literature has considered strategic bequests, in which intergenerational transfers are a reward for services provided by the heir, and models in which bequests, like any other good, directly influence utility. We first clarify the distinction between altruistic and strategic bequest motives. Next we consider the choice between bequests and gifts. Then we derive the Euler equation when bequests are an argument of the utility function (a model with “joy of giving”). In the second part of the chapter we address the difficult issues of how to measure bequests and how to tell the different bequest motives apart empirically, and discuss the link between transfer taxes and the accumulation of wealth.