Similarly,
sophisticated folk overindulge a little at present because they believe
that, if they don't, they will overindulge a lot in future. Both types
believe that they will survive to experience the outcomes of their
misdeeds and decisions.
The denial of the inevitable extends to gifts and bequests. Many
economists regard inheritance as an accident. Had people accepted their
mortality, they would have consumed much more and saved much less. A
series of working papers published by the NBER in the last 5 years
reveals a counter-intuitive pattern of intergenerational shifting of
wealth.
Parents gift their off-spring unequally. The richer the child, the
larger his or her share of such largesse. The older the parent, the
more pronounced the asymmetry. Post-mortem bequests, on the other hand,
are usually divided equally among one's progeny.
The avoidance of estate taxes fails to fully account for these patterns
of behavior. A parental assumption of immortality does a better job.
The parent behaves as though it is deathless. Rich children are better
able to care for ageing and burdensome parents. Hence the uneven
distribution of munificence. Unequal gifts - tantamount to insurance
premiums - safeguard the rich scions' sustained affection and
treatment.
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