Abstract
Empirical computation of expected wealth is hampered by two problems: mortality risks vary in the population and over time; and observation of net estates for most cohorts is truncated, as some individuals in a cohort survive the calendar date on which observation is terminated. These two problems are solved in estimating cohort wealth for a sample of Wisconsin taxpayers. Hazard rate models of differential occupational mortality risks were estimated from the occupational information on the tax records. Values of net estate are simulated for individuals in each birth cohort who survived. Survivors have characteristics that imply greater wealth holdings than the deceased in every birth year covered by the study (1890–1924). Because of this, estimates of wealth-age relationships produced by the estate multiplier method for any given year will have a serious downward bias. Longitudinal data imply that dissaving does not occur after age 65.
Birth Cohort, Differential Mortality, Occupation Group, Intergenerational Transfer, Mortality Experience
The text of this article is only available as a PDF.
References
Becker, G. S., & Tomes, N. (
1979
). An equilibrium theory of the distribution of income and intergenerational mobility
. Journal of Political Economy
, 87
, 1153
–1189
. 10.1086/260831Blinder, A. S. (
1974
). Toward an Economic Theory of Income Distribution
. Cambridge, Mass.
: MIT Press
.Breslow, N. E. (
1974
). Covariance analysis of censored survival data
. Biometrics
, 30
, 89
–100
. 10.2307/2529620Cox, D. R., & Oakes, D. (
1984
). Analysis of Survival Data
. New York
: Chapman and Hall
.Cox, D., & Raines, F. (
1985
). Interfamily transfers and income redistribution
. In M. David, & T. Smeeding (Eds.), Horizontal Equity, Uncertainty, and Measures of Well-Being
(pp. 393
–426
). Chicago
: University of Chicago Press
.Curtin, R., F. T. Juster, and J. Morgan. In press. Survey estimates of net worth: Quality, comparability, and potential. In R. E. Lipsey and H. S. Tice (eds.), Measurement of Saving, Investment, and Wealth. Chicago: University of Chicago Press.
David, M. H., & Menchik, P. L. (
1982
). Distribution of estate wealth and its relationship to intergenerational transfers
Proceedings of the Social Statistics Section, American Statistical Association
(pp. 484
–489
). Alexandria, Va.
: American Statistical Association
.David, M. H., & Miller, R. F. (
1970
). A naive history of individual incomes in Wisconsin, 1947–59
. Review of Income and Wealth
, 16
, 79
–116
. 10.1111/j.1475-4991.1970.tb00697.xEfron, B. (
1977
). The efficiency of Cox’s likelihood function for censored data
. Journal of the American Statistical Association
, 72
, 557
–565
. 10.2307/2286217Hamermesh, D. S. (
1984
). Consumption during retirement: The missing link in the life cycle
. Review of Economics and Statistics
, 66
, 1
–7
. 10.2307/1924689Heckman, I. J. (
1979
). Sample selection bias as a specification error
. Econometrica
, 47
, 153
–161
. 10.2307/1912352Jianakoplos, N. A., P. L. Menchik, and F. O. Irvine. In press. Using panel data to assess the bias in cross-sectional inferences of life-cycle changes in the level and composition of household wealth. In R. E. Lipsey and H. S. Tice (eds.), Measurement of Saving, Investment, and Wealth. Chicago: University of Chicago Press.
Kalbfleisch, J. D., & Prentice, R. L. (
1980
). The Statistical Analysis of Failure Time Data
. New York
: Wiley
.Kay, R. (
1977
). Proportional hazard regression models and the analysis of censored survival data
. Applied Statistics
, 26
, 227
–237
. 10.2307/2346962Kitagawa, E. M., & Hauser, P. M. (
1973
). Differential Mortality in the United States
. Cambridge, Mass
: Harvard University Press
.Kotlikoff, L., & Summers, L. (
1981
). The role of intergenerational transfers in aggregate capital accumulation
. Journal of Political Economy
, 89
, 706
–732
. 10.1086/260999Lee, J. S. 1986. Taxation, Bequest and Lifetime Portfolio Selection. Unpublished Ph.D. dissertation, University of Wisconsin-Madison, Dept. of Economics.
Menchik, P. L., & David, M. H. (
1983
). The effect of income distribution on lifetime savings and bequests
. American Economic Review
, 73
, 672
–690
.Mirer, T. (
1980
). The dissaving behavior of the aged
. Southern Economic Journal
, 46
, 1197
–1205
. 10.2307/1057254Modigliani, F., & Brumberg, R. (
1955
). Utility analysis and the consumption function: An interpretation of cross-section data
. In K. K. Kurihara (Ed.), Postkeynsian Economics
. London
: Allen & Unwin
.Shorrocks, A. F. (
1975
). The age-wealth relationship: A cross-section and cohort analysis
. Review of Economics and Statistics
, 57
, 159
–163
. 10.2307/1923996Sider, H. (
1981
). Work-Related Accidents and the Production Process
. Washington, D.C.
: U.S. Bureau of Labor Statistics
.Life Tables for the United States, 1900–2050 (Pub. No. 11-11534)
. (1982
). Washington, D.C.
: U.S. Dept. of Health and Human Services
.Thaler, R., & Rosen, S. (
1976
). The value of saving a life: Evidence from the labor market
. In N. Terlecki (Ed.), Household Production and Consumption (Vol. 40): Conference on Income and Wealth
(pp. 265
–304
). New York
: National Bureau for Economic Research
.Yaari, M. E. (
1965
). Uncertain lifetime, life insurance and the theory of the consumer
. Review of Economic Studies
, 32
, 137
–150
. 10.2307/2296058© Population Association of America 1988
1988
