Bequest motives revisited: Evidence from a randomized choice experiment Valerie Mueller¹ and Ayala Wineman² ¹International Food Policy Research Institute,

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Presentation transcript:

Bequest motives revisited: Evidence from a randomized choice experiment Valerie Mueller¹ and Ayala Wineman² ¹International Food Policy Research Institute, USA ²Department of Agricultural, Food, and Resource Economics, Michigan State University, USA March 24, World Bank Conference on Land and Poverty

Rules of bequest EGALITARIAN Equal division of resources, accounting for both inter-vivos (pre- mortem) and post- mortem transfers EVOLUTIONARY Resources are directed toward individuals that share one’s genes (Cox 2003). ALTRUISM Parents allocate bequests to equalize the marginal value of the transfer for each child (Becker 1974). EXCHANGE Parents exchange bequests for child-provided services, like remittances, care, or insurance (Bernheim et al. 1985).

ALTRUISM Parent’s problem: Max U(C oj, y 1j, y 2j, …, y Nj ) Lifetime wealth of child 1 s.t. y ij = h ij + b ij Endowment of child i Bequest for child i Family wealth Rules of bequest

EXCHANGE And if a parent needs help: P Q Child’s supply Parent’s new demand Parent’s problem: Max U(C j, S) Child-provided service Rules of bequest

Kagera, Tanzania

Summary statistics MenWomen No. respondents8951,673 Born in current village45.1%19.9% Avg. no. work hours in previous week Brought land to own marriage55.2%6.0% Brought non-land assets to own marriage60.0%17.2% A randomized choice experiment “Imagine that you are married and have 4 adult children [Children’s sex and marital status assigned randomly]. Your spouse and all four children are still alive. If (GOD FORBID) you were to die... What share of LAND would your spouse, each of the children and anyone else inherit? What share of MONEY and NON-LAND ASSETS would your spouse, each of the children and anyone else inherit?”

Patterns of land bequests (experiment) Men (heads) (a) Women (wives) (b) Women (heads) (c) Test a ≠ b Test b ≠ c Equal division of estate among children 0.55 (0.50) 0.61 (0.49) 0.76 (0.42) **** Boy-girl gap8.51 (14.10) 5.93 (13.08) 3.30 (10.46) *** Inequality index8.52 (12.12) 7.35 (11.88) 4.16 (9.27) **** % for children66.54 (18.60) (21.48) (24.46) *** % for spouse32.98 (18.56) (21.52) (24.60) *** Among those with unequal division of estate among children: Boy-girl gap17.74 (15.83) (17.24) (17.77) * Inequality index18.77 (11.46) (12.08) (11.25)

Average % of children’s bequest by gender and marital status

Determinants of bequest by gender and marital status (1)(2)(3)(4) % Children's land bequest % Children's asset bequest Explanatory variablesOLS Married boy **-1.383** (0.521)(0.883)(0.458)(0.622) Married girl-8.187***-9.167***-6.904***-8.437*** (0.651)(0.779)(0.569)(0.760) Unmarried girl-6.686***-7.535***-5.707***-7.211*** (0.504)(0.751)(0.501)(0.686) Female respondent *** (0.816) (0.516) Female respondent*Married boy (1.128) (0.699) Female respondent*Married girl1.831* 2.850*** (0.944) (0.774) Female respondent*Unmarried girl *** (1.231) (0.784) Constant28.955***29.364***28.452***29.295*** (0.348)(0.544)(0.323)(0.454) Observations9,964 9,876 R-squared P>F(Married girl = Unmarried girl) Robust standard errors in parentheses *** p<0.01, ** p<0.05, * p<0.1

Determinants of bequest by respondent characteristics (1) (1)(2) % Children's land bequest % Children's asset bequest Explanatory variablesOLS Married boy (0.527)(0.464) Married girl-8.270***-6.973*** (0.664)(0.583) Unmarried girl-6.736***-5.760*** (0.513)(0.512) Respondent is too old/sick to work (1.021) (0.864) Old/Sick*Married boy (0.994) (0.906) Old/Sick*Married girl 3.666** 2.987** (1.618) (1.428) Old/Sick*Unmarried girl (1.554) (1.442) Constant28.987***29.487*** (0.353)(0.329) Observations9,9649,876 R-squared P>F(Married girl = Unmarried girl) Robust standard errors in parentheses *** p<0.01, ** p<0.05, * p<0.1

Determinants of bequest by respondent characteristics (2) (1)(2) % Children's land bequest % Children's asset bequest Explanatory variablesOLS Married boy (1.151)(1.004) Married girl-9.734***-9.881*** (1.009)(1.117) Unmarried girl-8.362***-8.483*** (1.040)(1.001) Work hours in past week *** (0.013) (0.010) Work hours*Married boy (0.021) (0.017) Work hours*Married girl 0.033* 0.064*** (0.017) Work hours*Unmarried girl 0.036* 0.060*** (0.020) (0.015) Constant29.559***29.764*** (0.671)(0.657) Observations9,9649,876 R-squared P>F(Married girl = Unmarried girl) Robust standard errors in parentheses *** p<0.01, ** p<0.05, * p<0.1

Final Thoughts Multiple motives are involved in bequests. These differ according to the parent’s gender and needs. We find support for the egalitarian model (for boys only); strategic bequest; evolutionary motives; and maybe altruism, too. We will exploit exogenous variation in access to an equity awareness service. Does this shift exchange motives to more egalitarian practices? We hope to collect additional information on heirs at endline. Thank you!