Social and Behavioral Sciences Commons^™

The Importance Of Bequests And Life-Cycle Saving In Capital Accumulation: A New Answer, Karen E. Dynan, Jonathan Skinner, Stephen P. Zeldes

Dartmouth Scholarship

As the workhorse of consumption and saving research for the past four decades, the life-cycle model has proved flexible and useful for exam- ining a variety of questions. In a classic paper, Albert Ando and Franco Modigliani (1963 p. 56) stated a key assumption of the basic model: “[t]he individual neither expects to receive nor desires to leave any inheritance.” Although the authors contended that the absence of a bequest motive was not critical to the heart of their results, the assumption set off a long-standing battle over the relative importance of different motives for saving. In an influential study, …