The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Inheritance and Bequests

  • Kathleen McGarry
Reference work entry


The importance of bequests, their role in capital accumulation, and the motivation behind these transfers has long been the subject of debate among economists. Various models of intergenerational transfers yield different predictions about the responsiveness of bequests to changes in incomes of the donors and recipients and thus to the impact public policy. Yet, despite the intuitive appeal of these models, none has proved to be consistent with empirical patterns. This article discusses the alternative theories of transfer behaviour, examines the empirical work testing their predictions, and discusses the role of estate and gift taxes in affecting bequest behaviour.


Accidental-bequest motive Altruism Annuities Bequest motive Bequests Charitable contributions Consumption smoothing Estate taxation Exchange motive Gift taxation Health insurance Inheritance taxation Inheritances Inter vivos transfers Intergenerational transfers Life insurance Marginal utility of consumption National Longitudinal Surveys (NLS) Pensions Savings behaviour Social Security (USA) Succession laws Tax avoidance Transfer taxation Wills 

JEL Classifications

This is a preview of subscription content, log in to check access.


  1. Altonji, J., F. Hayashi, and L. Kotlikoff. 1997. Parental altruism and inter vivos transfers: Theory and evidence. Journal of Political Economy 105: 1121–1166.CrossRefGoogle Scholar
  2. Andreoni, J. 1989. Giving with impure altruism: Applications to charity and Ricardian equivalence. Journal of Political Economy 97: 1447–1458.CrossRefGoogle Scholar
  3. Barro, R. 1974. Are government bonds net wealth? Journal of Political Economy 82: 1063–1094.CrossRefGoogle Scholar
  4. Becker, G. 1974. A theory of social interactions. Journal of Political Economy 82: 1063–1094.CrossRefGoogle Scholar
  5. Behrman, J., R. Pollak, and P. Taubman. 1982. Parental preferences and provision for progeny. Journal of Political Economy 90: 52–73.CrossRefGoogle Scholar
  6. Bernheim, B. 1991. How strong are bequest motives? Evidence based on estimates of the demand for life insurance and annuities. Journal of Political Economy 99: 899–927.CrossRefGoogle Scholar
  7. Bernheim, B., R. Lemke, and J. Scholz. 2004. Do estate and gift taxes affect the timing of private transfers? Journal of Public Economics 88: 2617–2634.CrossRefGoogle Scholar
  8. Bernheim, B., and S. Severinov. 2003. Bequests as signals: An explanation for the equal division puzzle. Journal of Political Economy 111: 733–764.CrossRefGoogle Scholar
  9. Bernheim, B., A. Schleifer, and L. Summers. 1985. The strategic bequest motive. Journal of Political Economy 93: 1045–1076.CrossRefGoogle Scholar
  10. Carnegie, A. 1962. The advantages of poverty. In The gospel of wealth and other timely essays, ed. E. Kirkland. Cambridge, MA: Harvard University Press.CrossRefGoogle Scholar
  11. Cooper, G. 1979. Voluntary tax? New perspectives on sophisticated estate tax avoidance. Washington, DC: Brookings Institution Press.Google Scholar
  12. Cox, D. 1987. Motives for private income transfers. Journal of Political Economy 95: 508–546.CrossRefGoogle Scholar
  13. Davies, J. 1981. Uncertain lifetime, consumption, and dissaving in retirement. Journal of Political Economy 89: 561–577.CrossRefGoogle Scholar
  14. Gale, W., and M. Perozek. 2001. Do estate taxes reduce savings? In Rethinking estate and gift taxation, ed. W. Gale, J. Hines, and J. Slemrod. Washington, DC: Brookings Institution Press.CrossRefGoogle Scholar
  15. Holtz-Eakin, D., D. Joulfaian, and H. Rosen. 1993. The Carnegie conjecture: Some empirical evidence. Quarterly Journal of Economics 108: 413–435.CrossRefGoogle Scholar
  16. Hurd, M. 1987. Savings of the elderly and desired bequests. American Economic Review 77: 298–312.Google Scholar
  17. Johnson, B. and Eller, M. 2001. Federal taxation of inheritance and wealth transfers. Washington, DC: Statistics of Income Division, Internal Revenue Service. Online. Available at Accessed 7 Mar 2006.
  18. Joulfaian, D. 1998. The federal estate and gift tax: Description, profile of taxpayers, and economic consequences. Office of Tax Analysis Paper 80. Washington, DC: US Department of Treasury.Google Scholar
  19. Joulfaian, D. 2005. Choosing between gifts and bequests: How taxes affect the timing of wealth transfers. Journal of Public Economics 89: 2069–2091.CrossRefGoogle Scholar
  20. Joulfaian, D., and M. Wilhelm. 1994. Inheritance and labor supply. Journal of Human Resources 29: 1205–1234.CrossRefGoogle Scholar
  21. Kopczuk, W., and J. Slemrod. 2001. The impact of the estate tax on the wealth accumulation and avoidance behavior of donors. In Rethinking estate and gift taxation, ed. W. Gale, J. Hines, and J. Slemrod. Washington, DC: Brookings Institution Press.Google Scholar
  22. Kotlikoff, L., and L. Summers. 1981. The role of intergenerational transfers in aggregate capital accumulation. Journal of Political Economy 89: 706–732.CrossRefGoogle Scholar
  23. Light, A., and K. McGarry. 2003. Why parents play favorite: Explanations for unequal bequests. American Economic Review 94: 1669–1681.CrossRefGoogle Scholar
  24. McGarry, K. 1999. Inter vivos transfers and intended bequests. Journal of Public Economics 73: 321–351.CrossRefGoogle Scholar
  25. Menchik, P. 1980. Primogeniture, equal sharing, and the U.S. distribution of wealth. Quarterly Journal of Economics 94: 299–316.CrossRefGoogle Scholar
  26. Modigliani, F. 1988. The role of intergenerational transfers and life cycle saving in the accumulation of wealth. Journal of Economic Perspectives 2(2): 15–40.CrossRefGoogle Scholar
  27. Perozek, M. 1998. A reexamination of the strategic bequest motive. Journal of Political Economy 106: 423–445.CrossRefGoogle Scholar
  28. Pollak, R. 2003. Gary Becker’s contributions to family and household economics. Review of Economics of the Household 1: 111–141.CrossRefGoogle Scholar
  29. Poterba, J. 1998. Estate and gift taxes and incentives for inter vivos giving in the U. S. Journal of Public Economics 79: 237–264.CrossRefGoogle Scholar
  30. Tomes, N. 1981. The family, inheritance, and the intergenerational transmission of inequality. Journal of Political Economy 89: 928–958.CrossRefGoogle Scholar
  31. U.S. Congressional Budget Office. 2004. The estate tax and charitable giving. Washington, DC: Congressional Budget Office.Google Scholar
  32. Wilhelm, M. 1996. Bequest behavior and the effect of heirs’ earnings: Testing the altrusitic model of bequests. American Economic Review 86: 874–892.Google Scholar

Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Kathleen McGarry
    • 1
  1. 1.