Organizer: Behavioral Economics
Location: Online via Zoom and at Economicum, Seminar room 2, Arkadiankatu 7, Helsinki
(Not) Anticipating Predictable Inheritances
We study whether people spend in anticipation of predictable inheritances from elderly parents or act as if inheritances are unpredictable windfalls. Implying low anticipation, we document a large expenditure increase after parental death using car-purchase data. Yet, consistent with some anticipation, individuals receiving higher (future) inheritances buy somewhat more cars before parental death. Standard life-cycle explanations (liquidity constraints, uncertainty, news, mortality beliefs) do not seem to explain the expenditure increase after inheritance, suggesting behavioral or strategic explanations (mental accounting, norms, inheritance division). Our results challenge the life-cycle hypothesis in a high-stakes setting and imply a reduced value of parental bequests.