Subjective Mortality Risk and Bequests

Li Gan (), Guan Gong, Michael Hurd () and Daniel McFadden

No 10789, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper investigates whether subjective expectations about future mortality affect consumption and bequests motives. We estimate a dynamic life-cycle model based on subjective survival rates and wealth from the panel dataset Asset and Health Dynamics among Oldest Old. We find that bequest motives are small on average, which indicates that most bequests are involuntary or accidental. Moreover, parameter estimates using subjective mortality risk perform better in predicting out-of-sample wealth levels than estimates using life table mortality risks, suggesting that decisions about consumption and saving are influenced more strongly by individual-level beliefs about mortality risk than by group level mortality risk.

JEL-codes: C81 D91 (search for similar items in EconPapers)
Date: 2004-09
New Economics Papers: this item is included in nep-hea
Note: AG
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Citations: View citations in EconPapers (45)

Published as Gan, Li & Gong, Guan & Hurd, Michael & McFadden, Daniel, 2015. "Subjective mortality risk and bequests," Journal of Econometrics, Elsevier, vol. 188(2), pages 514-525.

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Related works:
Journal Article: Subjective mortality risk and bequests (2015)
Working Paper: Subjective Morality Risks and Bequests (2005)
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