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When to Give? A Note on the Timing of Gifts and Bequests

Published online by Cambridge University Press:  26 March 2020

Alain Jousten
Alain Jousten*
Affiliation:
HEC–ULG, Boulevard du Rectorat 7, Bat B31, 4000Liège, Belgium
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Abstract

We generalise the standard joy-of-giving bequest motive by including inter vivos gifts. Within a life-cycle framework, we analyse the implications of the choice of different discount factors for the utility of gifts and bequests. For a linear utility of giving, we characterise the gift and bequest pattern of a liquidity constrained individual over the life-cycle. We find that discounting at the interest rate is very convenient as the linear utility parameter can be interpreted as a summary measure for the strength of the motive of giving, net of all gift and bequest timing issues over the life-cycle.

Keywords

Consumer economics theorysocial security and public pensionsD11H55
Type
Articles
Information
National Institute Economic Review , Volume 198 , October 2006 , pp. 112 - 120
Copyright
Copyright © 2006 National Institute of Economic and Social Research

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Footnotes

I am grateful for financial support within the ARC Health and Retirement. A previous incomplete version of this paper was circulated unde the title “On the timing of gifts and bequests”. All remaining errors are entirely my own. Comments welcome at [email protected]

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