“The Impact of Intended Bequests on the Saving Behavior of the Aged in Japan” by Charles Yuji HORIOKA
Charles Yuji HORIOKA
Osaka University and National Bureau of Economic Research, Inc.
In this paper, we use micro data from the 1996 and 1998 administrations of the Survey on the Financial Asset Choice of Households, conducted every two years since 1988 by the Institute for Posts and Telecommunications Policy of the Ministry of Posts and Telecommunications of the Government of Japan, to analyze (1) the strength and nature of bequest motives in Japan and (2) the impact of bequest motives on the economic behavior of parents and children in Japan (in particular, on the saving (dissaving) behavior of parents and on whether children coreside with, and/or provide nursing care and financial assistance to, their aged parents. Our findings suggest that bequest motives are weak in Japan both absolutely and relative to the U.S. and that bequests are, to a large extent, unintended bequests arising from lifespan uncertainty or a quid pro quo for care and financial assistance received from their children during old age. Moreover, we find that a large proportion of the aged dissave in Japan and that planned bequests have a significant negative impact on the rate of decumulation of the aged. Thus, our findings strongly suggest that the life cycle model is the dominant model of household behavior in Japan and that it is far more applicable in Japan than it is in the U.S.