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The Wealth Decumulation Behavior of the Retired Elderly in Italy: The Importance of Bequest Motives and Precautionary Saving

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  • Ventura, Luigi
  • Yuji Horioka, Charles
Abstract
In this paper, we analyze the wealth accumulation and saving behavior of the retired elderly in Italy using micro data from the “Survey of Italian Households' Income and Wealth,” a panel survey of households conducted every two years by the Bank of Italy. We find that, on average, the retired elderly in Italy are decumulating their wealth (dissaving) but that their wealth decumulation rates are much slower than expected.Moreover, we also find that more than 40 percent of the retired elderly in Italy are continuing to accumulate wealth and that more than 80 percent are doing positive amounts of saving. Thus, the Wealth Decumulation Puzzle (the tendency of the retired elderly to decumulate their wealth more slowly than expected) appears to apply in the case of Italy, as it does in most other countries, before as well as after the Global Financial Crisis.Moreover, our regression analysis of the determinants of the wealth accumulation and saving behavior of the retired elderly in Italy suggests that the lower than expected wealth decumulation rates and dissaving of the retired elderly in Italy is due largely to bequest motives and saving for precautionary purposes, especially the former.

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  • Ventura, Luigi & Yuji Horioka, Charles, 2020. "The Wealth Decumulation Behavior of the Retired Elderly in Italy: The Importance of Bequest Motives and Precautionary Saving," AGI Working Paper Series 2020-08, Asian Growth Research Institute.
    • Handle: RePEc:agi:wpaper:00000171
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    Cited by:

    1. Charles Yuji Horioka & Luigi Ventura, 2024. "Do the Retired Elderly in Europe Decumulate Their Wealth? The Importance of Bequest Motives, Precautionary Saving, Public Pensions, and Homeownership," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 70(1), pages 187-212, March.
    2. Miriam Beblo & Sven Schreiber, 2022. "Leisure and housing consumption after retirement: new evidence on the life-cycle hypothesis," Review of Economics of the Household, Springer, vol. 20(1), pages 305-330, March.
    3. Butt, Adam & Khemka, Gaurav & Warren, Geoffrey J., 2022. "Heterogeneity in optimal investment and drawdown strategies in retirement," Pacific-Basin Finance Journal, Elsevier, vol. 74(C).
    4. Horioka, Charles Yuji & Gahramanov, Emin & Hayat, Aziz & Tang, Xueli, 2021. "The impact of bequest motives on labor supply and retirement behavior in Japan: A theoretical and empirical analysis," Journal of the Japanese and International Economies, Elsevier, vol. 62(C).
    5. Charles Yuji Horioka, 2020. "Does the Selfish Life-Cycle Model Apply in the Case of Japan?," Discussion Paper Series DP2020-14, Research Institute for Economics & Business Administration, Kobe University.
    6. Charles Yuji Horioka, 2021. "Is the selfish life-cycle model more applicable in Japan and, if so, why? A literature survey," Review of Economics of the Household, Springer, vol. 19(1), pages 157-187, March.
    7. Glenn Abela & William Gatt, 2021. "Saving behaviour in Malta: Insights from the Household Budgetary Survey," CBM Working Papers WP/02/2021, Central Bank of Malta.
    8. Forsyth, Peter A., 2022. "Short term decumulation strategies for underspending retirees," Insurance: Mathematics and Economics, Elsevier, vol. 102(C), pages 56-74.
    9. Bonekamp, Johan & van Soest, Arthur, 2022. "Evidence of behavioural life-cycle features in spending patterns after retirement," The Journal of the Economics of Ageing, Elsevier, vol. 23(C).
    10. Camila Kolling & José Luis Duarte Ribeiro & Donato Morea & Gianpaolo Iazzolino, 2023. "Corporate social responsibility and circular economy from the perspective of consumers: A cross‐cultural analysis in the cosmetic industry," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(3), pages 1226-1243, May.

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    More about this item

    Keywords

    Aged; bequests; bequest intentions; bequest motive; elderly; household saving; Italy; inheritances; intergenerational transfers; life cycle hypothesis; life cycle model; precautionary saving; retired elderly; saving; wealth; wealth accumulation; wealth decumulation; wealth decumulation puzzle; D12; D14; D15; D64; E21; J14;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

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