Aspirations, habit formation, and bequest motive

Jaime Alonso-Carrera, Jordi Caballé, Xavier Raurich

Research output: Contribution to journalArticleResearchpeer-review

23 Citations (Scopus)

Abstract

We consider an economy where individuals use their standard of living based on past consumption in order to evaluate the utility arising from current consumption. We analyse how this process of preference formation affects the bequest motive. We show that habits (based on one's own past consumption) reduce the willingness of individuals to leave bequests, while aspirations (based on the standard of living of parents) make the existence of positive bequests easier. The long-run effects of both habits and aspirations on capital stock and on the amount of bequests depend on whether or not the bequest motive is operative. © 2007 The Author(s). Journal compilation © Royal Economic Society 2007.
Original languageEnglish
Pages (from-to)813-836
JournalEconomic Journal
Volume117
DOIs
Publication statusPublished - 1 Apr 2007

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