Altruistic Bequests with Inherited Tastes

Abstract

This paper examines the altruistic model of bequest when a child inherits life standard_x000D_ aspirations from his parents. We prove that the impact of the aspiration effect on transfers can_x000D_ be positive or negative, depending on both the strength of inherited tastes and the coefficients_x000D_ of risk aversion for the parent and the child. However, numerical illustrations indicate that the_x000D_ case for a negative effect is rather weak. Using a French data set on transfers within the family,_x000D_ we investigate how transmission habits affect the level of private assistance. We show that parents are more likely to help their children when they have themselves received money from their own parents. Hence, any public program that affects current transfers also influences family transfers in the future.