GCOE Discussion Paper Series
Global COE Program

Human Behavior and Socioeconomic Dynamics
Discussion Paper No. 335

ARE AMERICANS AND INDIANS MORE ALTRUISTIC
THAN THE JAPANESE AND CHINESE?
EVIDENCE FROM A NEW INTERNATIONAL SURVEY OF
BEQUEST PLANSCharles Yuji Horioka

May 2014

GCOE Secretariat
Graduate School of Economics

OSAKA UNIVERSITY

1-7 Machikaneyama, Toyonaka, Osaka, 560-0043, Japan

ARE AMERICANS AND INDIANS MORE ALTRUISTIC THAN THE JAPANESE AND
CHINESE? EVIDENCE FROM A NEW INTERNATIONAL SURVEY OF BEQUESTPLANS*
By Charles Yuji Horioka**
School of Economics, University of the Philippines, Diliman, Quezon City, Philippines;
National Bureau of Economic Research, Inc., Cambridge, MA, USA; andInstitute of Social and Economic Research, Osaka University, Ibaraki, Osaka, JapanMay 28, 2014
Abstract:

This paper discusses three alternative assumptions concerning household

preferences (altruism, self-interest, and a desire for dynasty building) and shows thatthese assumptions have very different implications for bequest motives and bequest
division.

After reviewing some of the literature on actual bequests, bequest motives,and bequest division, the paper presents data on the strength of bequest motives, statedbequest motives, and bequest division plans from a new international survey conducted
in China, India, Japan, and the United States.

It finds striking inter-country

differences in bequest plans, with the bequest plans of Americans and Indians
appearing to be much more consistent with altruistic preferences than those of theJapanese and Chinese and the bequest plans of the Japanese and Chinese appearing to
be much more consistent with selfish preferences than those of Americans and Indians.
These findings have important implications for the efficacy and desirability ofstimulative fiscal policies, public pensions, and inheritance taxes.

JEL Classification Numbers: D12, D14, D64, D91, E21, H31, J14, P52, Z12
Key words: Bequests; inheritances; estates; inter vivos transfers; intergenerationaltransfers; bequest motives; bequest division; bequest plans; equal division; household
preferences; altruism; selfishness; self-interest; selfish life cycle model; altruism model;
dynasty model; dynasty building; primogeniture; selfish exchange model; strategic
bequest motive; inheritance laws; estate taxes; social safety nets; social norms; culture;religiosity; religion; China; India; Japan; and United States*I am indebted to Krishnendu Dastidar, Emin Gahramanov, Shoshana Grossbard, Jose
Albert Molina, Abdul Aziz Hayat Muhammad, Wataru Kureishi, Shizuka Sekita, Xueli

Tang, Midori Wakabayashi, Yoko Niimi, Oded Stark, Tien Manh Vu, Ken Yamada,three anonymous referees, and the participants of the International Conference on
Econometrics and the World Economy, Fukuoka University, Fukuoka, Japan; theEighth Biennial Conference of the Asian Consumer and Family Economics Association(ACFEA), Yamaguchi University, Yamaguchi, Japan; the International Workshop on“Social Inequality in Transferring Resources across Generations,” University of Tokyo,
Tokyo, Japan; the Fifteenth Annual Conference on “Dynamics, Economic Growth andInternational Trade (DEGIT),” Goethe University, Frankfurt, Germany: the Annual
Meeting of the Japan Society of Family Sociology, Konan University, Kobe, Japan;
ESAM12: The Econometric Society Australasian Meeting, Langham Hotel, Melbourne,
Australia; and seminars at the Asian Development Bank, Deakin University, theFederal Reserve Bank of San Francisco, Goethe University, Hong Kong University,
Hunter College, Keio University, Melbourne University, Monash University, theNational Graduate Research Institute of Policy Studies (GRIPS), the National
University of Singapore, the University of Auckland, the University of Michigan, theUniversity of the Philippines, Diliman, the University of Queensland, and the
University of Tokyo for their valuable comments, to Tien Manh Vu for his superb
research assistance, and to the Philippine Center for Economic Development (PCED),
Ministry of Education, Culture, Sports, Science, and Technology of the Japanese
Government for Grant-in-Aid for Scientific Research Category B (topic number
22330083) and Category S (topic number 20223004), and to the Osaka University
Global Center of Excellence (GCOE) Program “Human Behavior and Socioeconomic
Dynamics,” all of which supported this research.

This research uses micro data fromthe Preference Parameters Study of Osaka University’s 21st Century COE Program“Behavioral Macrodynamics Based on Surveys and Experiments” and its Global COE
project “Human Behavior and Socioeconomic Dynamics.”**School of Economics, University of the Philippines, Diliman, Quezon City 1101,
Philippines.

Telephone: (63) 2-927-9686, ext. 222.

Email: horioka@iser.osaka-u.ac.jp

Forthcoming in Review of Economics of the Household, vol. 12, issue 3 (September 2014)(Special Issue on Altruism).

11. Introduction
There are at least three competing assumptions concerning household preferences in
economics: that individuals are selfish, that they are altruistic, and that they have adesire for dynasty building.

The three assumptions have very different implications

for bequest motives and bequest division, so examining survey data on stated bequest
motives and bequest division plans is a promising way of shedding light on whichassumption holds in the real world, and comparing bequest plans in different countries
is a promising way of shedding light on whether different assumptions apply in
different countries.
In this paper, we discuss the three alternative assumptions concerning household
preferences and show that these assumptions have very different implications forbequest motives and bequest division.

After reviewing some of the literature on actual

bequests, bequest motives, and bequest division, we present data on the strength ofbequest motives, stated bequest motives, and bequest division plans from a newinternational survey on bequest plans conducted in the People’s Republic of China(hereafter China), India, Japan, and the United States.

We then speculate about

possible reasons for inter-country differences in bequest plans and consider the policy
implications of our findings.
As shown in subsection 2.1, positive bequests are consistent with all three assumptions
concerning household preferences, and thus it is not possible to draw inferences about
which assumption holds in the real world unless we have information on households’
motives for leaving bequests.

Most previous studies try to infer households’

preferences from their actual behavior because they do not have any direct information
on households’ bequest motives, but there are many econometric and other difficulties
in making such inferences.

The current paper makes a significant originalcontribution to this literature not only by presenting direct information on households’
stated bequest motives and bequest division plans but also by presenting suchinformation on four countries (China, India, Japan, and the United States) with very
different levels of economic development, cultures, etc., allowing us to see whether or
not household preferences vary from country to country.
To summarize the main findings of this paper, it shows using data from a newinternational survey on bequest plans that there are striking inter-country differences2

in bequest plans, with the bequest plans of Americans and Indians appearing to bemuch more consistent with selfish preferences than those of the Japanese and Chinese
and the bequest plans of the Japanese and Chinese appearing to be much moreconsistent with selfish preferences than those of Americans and Indians.

These

inter-country differences in bequest plans may partly reflect inter-country differences insocial safety nets and social norms and partly reflect inter-country differences inhousehold preferences.
These findings have important implications for the efficacy and desirability ofstimulative fiscal policies, public pensions, and inheritance taxes, with stimulative
fiscal policies being more effective, public pensions being more effective in raising theliving standards of the aged, and inheritance taxes being less necessary in countries
such as Japan and China in which households are selfishly motivated and conversely incountries such as the United States and India in which households are altruisticallymotivated.
The remainder of this paper is organized as follows: In section 2, we discuss alternative
assumptions concerning household preferences, show that these assumptions have very
different implications for bequest motives and bequest division, and review some of theliterature on actual bequests, bequest motives, and bequest division.

In section 3, we

describe the international survey on bequest plans used in this paper, and in section 4,
we present evidence from this survey on bequest plans in China, India, Japan, and theUnited States.

In section 5, we explore possible reasons for inter-country differences inbequest plans, and finally, section 6 summarizes, concludes, and explores the policy
implications of our findings.

2. Bequests: Assumptions, Models, and Empirical Evidence
2.1. Theoretical Considerations
In this subsection, we discuss three assumptions concerning household preferences thatare made in the theoretical literature and explore the implications of these assumptions
for bequest motives and bequest division (see Cremer, Kessler, and Pestieau (1992),
Masson and Pestieau (1996), and Laferrere and Wolff (2006) for more extensive
expositions and Horioka, et al. (2014) for an illustrative model).
3

Three examples of assumptions concerning household preferences that underlie
theoretical models of parental consumption and saving are as follows:１(1) The household is selfish and derives utility only from its own consumption (asassumed in the selfish life cycle model of Modigliani and Brumberg (1954))(2) The household is altruistic and derives utility not only from its own consumption
but also from the consumption of others, especially that of its children, parents, andother family members (as assumed in the altruism model of Barro (1974), Becker(1974, 1981, 1991), and Stark (1995))(3) The household cares not about itself or its children but about the perpetuation of thefamily line and/or the family business and tries to minimize the probability ofextinction of the family line and/or the family business (as assumed in the dynasty
or primogeniture model of Chu (1991))２
We now explore the implications of each of these assumptions concerning household
preferences for bequest motives and bequest division.

We will use the term “bequest”

throughout this paper for brevity, but the reader should bear in mind that our analysis
applies to all intergenerational transfers including inter vivos transfers and in-kindtransfers such as care, attention, and co-residence (see Molina (2013) and the papers
cited therein for more on in-kind transfers). Note, however, that the determinants ofinter vivos transfers and bequests may differ (see, for example, Dunn and Phillips(1997), McGarry (1999), and Slavik and Wiseman; see Arrondel and Masson (2006) for a
useful survey).

Most of these studies find, for example, that inter vivos transfers tend

to be divided unequally whereas bequests tend to be divided equally.
Looking first at selfish preferences, the implication of such preferences for bequest
motives is that households will leave no bequests to their children, leave only
unintended bequests arising from lifespan uncertainty (see, for example, Davies (1981)),or leave bequests only if their children provide care, attention and/or financial support
during old age.

One variant of the third case (the so-called “selfish exchange model”) is

Bernheim, Shleifer, and Summers’s (1985) “strategic bequest motive,” wherein parents
use the threat of disinheritance to induce their children to provide care and/or attention
during old age, and another variant of this case is Kotlikoff and Spivak’s (1981) “implicit
intra-family annuity contract,” wherein parents receive an annuity from their children
until death in exchange for giving their children an ex post premium in the form of a4

bequest.３

The implication of selfish preferences for bequest division is that households

will leave more or all of their bequest to the child who provides more care, attention
and/or financial support during old age.

Thus, equal division is inconsistent with theselfish life cycle model unless all children provide exactly the same amount of care,attention and/or financial support, which is unlikely (Menchik (1988) and Bernheim
and Severinov (2003)).
Looking next at altruistic preferences, the implication of such preferences for bequest
motives is that households will leave a bequest to their children even if they do notprovide care, attention, and/or financial support during old age and do not carry on thefamily line and/or the family business, and the implication of this model for bequest
division is that households will leave more or all of their bequest to the child who has
greater needs and/or less earnings capacity (that is, bequests will be compensatory)(Becker (1981, 1991)).

Thus, equal division is not consistent with the simplest versionof the altruism model unless all children have the same needs and the same earnings
capacities (which is very, very unlikely), but if it is assumed that children derive
disutility from receiving a smaller share of their parents’ inheritance than their siblings(what Stark (1998) calls “relative deprivation”), altruistic parents may choose to divide
their bequests equally even if their children’s needs or earnings capacities differ (seealso Bernheim and Severinov (2003)).

By contrast, Wilhelm (1996) argues that it is theparents rather than the children who derive disutility from unequal division, perhaps
because unequal division necessitates financial costs such as the cost of drawing up awill and/or psychic costs arising from the parents’ aversion to the inequality of bequests.
In a similar vein, Laitner (1997) and Lundholm and Ohlsson (2000) attribute equal
division to parents’ desire to insure post-mortem reputation, to preserve familysolidarity, and to avoid conflicts among their children.
Turning finally to dynastic preferences, the implication of such preferences for bequest
motives is that households will leave a bequest to their children only if they carry on thefamily line and/or the family business, and the implication of this model for bequest
division is that households will leave more or all of their bequest to the child who carries
on the family line and/or the family business.
Thus, the various assumptions concerning household preferences have very different
implications for bequest motives and bequest division, and thus we can shed light onwhich assumption concerning household preferences holds in the real world by looking
5at empirical evidence on bequest motives and bequest division.
It should be noted, however, that bequest motives and bequest division depend not only
on household preferences but also on outside influences on household bequest behavior
such as income levels, income growth, inheritance laws, tax policies, social safety nets,
social norms, and other institutions and government policies.

For example, altruistic

households may not necessarily leave a bequest to their children even if they want to if
they are too poor to do so, if income growth is high (meaning that the lifetime incomes ofchildren exceed the lifetime incomes of parents), inheritance taxes are too high, and/or if
the social norm is for parents to invest heavily in their children’s human capital, which
renders them incapable of leaving large bequests to their children.

Alternatively,

selfish households may not need to use bequests as a way of inducing or coercing theirchildren to provide care and/or attention during old age if social safety nets for theelderly (public old-age pensions, long-term care insurance, health insurance, etc.) are
adequate.

Furthermore, households may be more likely to divide their bequests

unequally if the social norm is for parents to leave everything to the eldest son in
exchange for the eldest son living with, and taking care of, the parents in old age.
Finally, selfish households may not be able to leave more to the child who took bettercare of them even if they want to if inheritance laws require them to divide theirbequest equally among their children.
2.2 Empirical Evidence on Bequests
There have been many empirical studies that try to determine which assumption
concerning household preferences holds in the real world by looking at actual bequests,
bequest motives, and bequest division.

In this subsection, we review some of thisliterature to see how much light it can shed on the issue of which assumption
concerning household preferences holds in the real world. This review is selective due
to space limitations and the large size of the existing literature.

It focuses on studies

that shed light on the issue of which assumption concerning household preferences
holds in the real world and on studies that use data for the United States and Japan.
For more comprehensive surveys, see Arrondel and Masson (2006) and Laferrere andWolf (2006).

6

2.2.1. Empirical Evidence on Actual Bequests
We look first at empirical studies that have attempted to measure the importance ofactual bequests.

In a seminal study, Kotlikoff and Summers (1981) calculate the shareof bequests and other intergenerational transfers in total household wealth in the
United States and obtain the surprising finding that this share is 46-81% depending on
the calculation method used.

Modigliani (1988) criticizes Kotlikoff and Summers’(1981) calculations on a number of grounds and claims that the true value of this shareis 17-20%, but Kotlikoff (1988) argues that some of Modigliani’s adjustments areexcessive or unwarranted.

Barthold and Ito (1992) calculate this share for both Japanand the United States and find that it is 25-40% in both countries, that it is higher inJapan under certain assumptions, and that it is higher in the United States under otherassumptions.

Turning to studies for Japan, Hayashi (1986) finds that this share is atleast 9.6%, Dekle (1989) finds that it is 3-48.7%, Campbell (1997) finds that it is at most23.4-28.1%, Horioka, et al. (2002) finds that it is 23.9%, and Horioka (2009) finds that it
is 15.2-17.9% (see Horioka (1993) for a review of this literature).

The range of theseestimates is quite broad, but the consensus seems to be that bequests and otherintergenerational transfers are quantitatively more important in the United States
than in Japan.
2.2.2. Empirical Evidence on Bequest Motives
Turning next to the issue of what motivates bequests, since few household surveys ask
respondents directly about their attitudes towards bequests, most previous studies have
tried to infer respondents’ bequest motives from the impact of bequests on the amount ofcare, attention, and/or financial assistance that aged parents receive from their children.
If bequests are altruistically motivated (and altruism is one-sided), there should not be
any correlation between bequests from parents to children and care, attention, and/or
financial assistance from children to aged parents, whereas if bequests are motivated byselfish exchange, there should be a positive correlation between bequests from parents
to children and care, attention, and/or financial assistance from children to aged
parents.
Looking first at studies that use U.S. data, one study of this genre is Menchik, et al.
(1988), which obtains a positive correlation between the parents’ intention to bequeathand the frequency of their children’s telephone calls and visits, a result which appears
7

to support the selfish exchange model.

However, this study fails to distinguishbetween single-child families and multiple-child families, as done by later studies.
The reference study on the impact of bequests on the amount of attention from one’s
children is Bernheim, Shleifer, and Summers (1985), which finds, using data from theLongitudinal Retirement History Survey (LRHS), that bequeathable wealth has apositive and significant impact on the frequency of phone calls and visits from one’s
children in the case of families with two or more children, even after controlling for theparents’ age, health, and employment status, but that it has a negative andinsignificant impact on the frequency of phone calls and visits in the case of families
with only one child and that non-bequeathable wealth does not have a significant
impact on the frequency of phone calls and visits in either sample.

All of these resultsappear to support the selfish exchange model because only bequeathable wealth should
influence the behavior of children and because parents’ threat of disinheritance is notcredible if they have only one child.
However, Perozek (1998) replicates Bernheim, Shleifer, and Summers’ (1985) test using
a richer data set (the 1987 National Survey of Families and Households (NSFH)) andfinds that bequeathable wealth no longer has a significant impact on attention fromone’s children when additional child and family characteristics are taken into accountand/or a more comprehensive measure of attention is used.
Moreover, Altonji, Hayashi, and Kotlikoff (2000) analyze inter vivos time and moneytransfers from parents to children as well as those from children to parents, using datafrom the 1988 wave of the Panel Study of Income Dynamics (PSID), and find little
evidence that parental income or wealth raises time transfers from children or that timetransfers from children to parents are exchanged for money transfers from parents tochildren or conversely.

Similarly, Ioannides and Kan (2000) analyze two-directional

inter vivos transfers of time and money between parents and children and find thatthey are motivated by mutual altruism rather than by selfish exchange motives.
Furthermore, Horioka, et al. (2000) analyze data from the “Comparative Survey of
Savings in Japan and the United States,” conducted in 1996 by the former Ministry of
Posts and Telecommunications of the Japanese Government, and find that parent-childco-residence rates are much higher for parents with a weak bequest motive (12.02%)
than they are for parents with a strong bequest motive (6.7 to 7.5%) and that they are, if
8anything, lower for parents with a strong bequest motive (6.7 to 7.5%) than they are forparents with no bequest motive at all (7.7%) in the case of the United States.

All ofthese results are inconsistent with the selfish exchange model.
Thus, the most careful studies of the impact of bequests on the amount of care, attention,
and/or financial assistance from children that use U.S. data find little evidence insupport of the selfish exchange model, which suggests that bequests are largely
altruistically motivated in the United States.

To cite a few examples on the other sideof the ledger, Cox (1987) and Cox and Rank (1992) find that the recipient’s income has apositive impact on the amount of intra-family inter vivos transfers conditional ontransfers being made and interpret this as evidence that inter vivos transfers are
motivated by selfish exchange motives.

In a similar vein, Altonji, Hayashi, andKotlikoff (1997) find that inter vivos transfers are weakly compensatory but far fromfully compensatory.

According to Laferrere and Wolff ’s (2006) more comprehensive

review of the literature, about two-thirds of the studies using U.S. data find support for
the altruism model or reject the selfish exchange model, but the majority of studies
using French data support the selfish exchange model or reject the altruism model.

Turning to studies that use Japanese data, Noguchi, Uemura, and Kitou (1989) analyze
data from their own survey and find that children are more likely to receive a bequestfrom their parents if they live with their parents, especially if they are the eldest son,and that their probability of receiving a bequest is higher, the higher is the amount offinancial support they give to their parents.
Turning to studies that examine the opposite direction of causality (the impact ofparents’ bequeathable wealth or bequest motives on children’s behavior), Ohtake andHorioka (1994) analyze the determinants of financial support from children to parents
and parent-child co-residence using data from the 1986 Comprehensive Survey of
Living Conditions, conducted by the Ministry of Health, Labour and Welfare of theJapanese Government.

They find that parents’ financial net worth (a component ofbequeathable wealth) has a positive and significant impact on the amount of financial
support from children to parents (given that the child provides financial support to his
or her parents) and that housing wealth (also a component of bequeathable wealth) has
a positive and significant impact on the probability of parent-child co-residence but that
non-bequeathable wealth does not have a significant impact on either (see also Ohtake(1991)).
9

Similarly, Komamura (1994) analyzes data from the Survey of Retirement Assets,
conducted in 1990 by the former Management and Coordination Agency of the Japanese
Government, and finds that housing wealth has a positive and significant impact on theprobability of parent-child co-residence.
Moreover, the aforementioned study by Horioka, et al. (2000) finds that parent-childco-residence rates are highest for parents with a strong bequest motive (63-64%), much
lower for parents with a weak bequest motive (49%), and even lower for parents with nobequest motive at all (25%) in the case of Japan.
Furthermore, Yamada (2006) analyzes the determinants of parent-child co-residence,
parent-child distance, and the frequency of parent-child contact using data from theSurvey on Life Planning in the Age of Long Life, conducted in 1992 by the Japan
Institute of Life Insurance, and finds that inheritance expectations have a significant
impact on all three dependent variables, at least in the case of the husband’s parents,
and that inheritance experience has a significant impact on the second and third
dependent variables in the case of all parents as well as in the case of the husband’sparents.
Thus, studies relating the probability of leaving bequests with the amount of care,attention, and/or financial assistance from children that use Japanese data find support
for the selfish exchange model, which suggests that bequests are selfishly motivated inJapan, unlike in the case of the United States.
Turning finally to attitudinal data on bequest motives, Horioka, et al. (2000) andHorioka (2002) analyze data from the aforementioned “Comparative Survey of Savingsin Japan and the United States” and find that 42.53% of Americans plan to leave abequest to their children no matter what, that 3.40% of Americans plan to leave abequest to their children only if their children take care of them, that 51.13% ofAmericans do not plan to make any special efforts to leave a bequest to their children,and that 2.93% of Americans do not feel that it is necessary to leave a bequest to theirchildren under any circumstances. Since the first way of thinking is consistent withthe altruism model and the second through fourth ways of thinking are consistent withthe selfish life cycle model, these results imply that 42.53% of Americans are altruistic
and that 57.47% are selfish.
10

By contrast, Horioka, et al. (2000) and Horioka (2002) find, using data from the same
survey, that 19.28% of the Japanese plan to leave a bequest to their children no matter
what, that 6.39% of the Japanese plan to leave a bequest to their children only if theirchildren take care of them, that 69.33% of the Japanese do not plan to make any special
efforts to leave a bequest to their children, and that 5.00% of the Japanese do not feelthat it is necessary to leave a bequest to their children under any circumstances, which
implies that 19.28% of the Japanese are altruistic and that 80.72% are selfish (seeHorioka (2002, 2008, and 2009) for similar data from other surveys).
Thus, the conclusion based on attitudinal data on bequest motives is consistent with theconclusion based on studies of the impact of bequests on the amount of care, attention,
and/or financial assistance from children, with both suggesting that Americans aremuch more altruistic than the Japanese.
2.2.3. Empirical Evidence on Bequest Division
Turning next to the issue of bequest division, the available evidence suggests that theequal division of bequests among one’s children is by far the dominant practice in the
United States.

For example, Menchik (1980) finds that bequests are divided roughly

equally among one’s children and, in particular, that males or first-born or earlier-born
children do not receive larger bequests than other siblings.

Similarly, Wilhelm (1996)

finds that 68.6% of multi-child decedents divided their estates exactly equally among
their children, that 76.6% of multi-child decedents divided their estates so that eachchild received within plus or minus 2% of the average inheritance among children in thefamily, and that 88% of multi-child decedents divided their estates approximately
equally among their children.

Dunn and Phillips (1997) find that 90% of Americanhouseholds bequeath at least some assets to all of their children even though inter vivos
transfers such as cash gifts and co-residence are made preferentially to poorer children.
McGarry (1999) finds that 83% of respondents in the Asset and Health Dynamics(AHEAD) Study report that their wills treat all of their children approximately equally,
while Light and McGarry (2004) find that 92.1% of respondents in the 1999 National
Longitudinal Surveys (NLS) of Mature Women and Young Women who have children
and who have a will say that their estate will be divided equally among their children.
Finally, Horioka, et al. (2000) and Horioka (2002) analyze data from the aforementioned“Comparative Survey of Savings in Japan and the United States” and find that 84.10%
11

of Americans with two or more children plan to divide their estates equally among theirchildren.
By contrast, Horioka, et al. (2000) and Horioka (2002) find, using data from the same
survey, that only 44.17% of Japanese with two or more children plan to divide theirestates equally among their children (see Horioka (2002, 2008, and 2009) for similar
data from other surveys).
Thus, the tendency to divide estates equally among one’s children is much stronger(nearly twice as strong) in the United States than it is in Japan, and moreover, at least
one study (Tomes, 1981) finds that bequest division is compensatory in the U.S., with
low-income children inheriting more (ceteris paribus) than their advantaged siblings,
and Dunn and Phillips (1997), McGarry (1999), and Slavik and Wiseman (2013) findthat inter vivos transfers are unequal and compensatory in the U.S.

This suggeststhat Americans are much more altruistic than the Japanese, and this conclusion basedon evidence on bequest division is fully consistent with our earlier conclusion based onevidence on bequest motives, which is reassuring.

3.

New Survey on Bequest Plans

In this section, we describe the survey we use in this paper: the “Preference Parameters
Study of Osaka University,” a new international survey that collects detailed
information on bequest plans.

This survey was conducted annually during the 2003-13

period in Japan, annually during the 2005-13 period in the United States, in 2006 andannually during the 2009-13 period in urban China, in 2007, 2010, and 2013 in rural
China, annually during the 2009-13 period in urban India, and annually during the
2012-13 period in rural India by the Global Center of Excellence (GCOE) Program on“Human Behavior and Socioeconomic Dynamics” (2003-08) of the Graduate School of
Economics, the Institute of Social and Economic Research (Research Center for
Behavioral Economics) of Osaka University, etc., and its predecessor, the Twenty-first
Century Center of Excellence (COE) Program on “Behavior Macrodynamics Based on
Surveys and Experiments” (2008-13) of the same institutions.
In this paper, we use data from the 2012 waves of the Chinese, Indian, Japanese, andUnited States surveys except that we use data from the 2010 survey for rural China
12because this survey was not conducted in 2011 or 2012.
The survey for urban China is a panel survey and surveyed a random sample of males
and females who were aged 20 to 69 in 2009 and living in one of six major cities (Beijing,
Chengdu, Guangzhou, Shanghai, Shenyang, and Wuhan) using the interview method.
The survey for rural China is a repeated cross-section survey and surveyed a random
sample of males and females who were aged 20 to 69 and living in the rural areas of oneof four provinces (Hunan, Hubei, Sichuan, and Liaoning) using the interview method.
The survey for urban India is a panel survey and surveyed a random sample of males
and females who were aged 20 to 69 in 2009 and living in one of six major cities (Delhi,
Mumbai, Bangalore, Chennai, Kolkata, and Hyderabad) using the interview method.
The survey for rural India is a panel survey and surveyed a random sample of males
and females who were aged 20 to 69 in 2012 and living in the rural areas of one of four
cities (Delhi, Mumbai, Bangalore, and Kolkata) using the interview method.
The Japanese survey is a panel survey and surveyed a nationwide random sample ofmales and females who were aged 20 to 69 in 2003 using the drop-off, pick-up method.
Fresh respondents were selected and added to the sample in the 2004, 2006 and 2009
waves.
The United States survey is a panel survey and surveyed a nationwide representative
sample of males and females who were aged 18 to 99 in 2005 from the TNS Panel usinga mailed questionnaire.

Fresh respondents were selected and added to the sample inthe 2007, 2008, and 2009 waves.
The data from the urban and rural surveys for China were combined by weighting theobservations for urban and rural areas by the proportion of the population living inurban and rural areas in 2012 (52% and 48%, respectively) and likewise in India (32%
and 68%, respectively) (data on urban and rural populations were taken from the WorldBank ( 2013)).
Finally, respondents whose reported age was not within the range noted above were
dropped from the sample.

This problem arose only in the case of the United States13

survey.
Almost identical survey instruments were used in each country, making it possible to
make direct comparisons among the four countries.

For more detailed information on

the survey, see http://www.iser.osaka-u.ac.jp/coe/journal/eng_panelsummary.html.

4.

Evidence from the New Survey on Bequest Plans

In this section, we discuss our findings for China, India, Japan, and the United States
based on the new international survey on bequest plans.

We discuss our findings

pertaining to the strength of bequest motives, stated bequest motives, and bequest
division plans in subsections 4.1, 4.2, and 4.3, respectively.
4.1. Evidence on the Strength of Bequest Motives
In this subsection, we present evidence on the strength of bequest motives in China,
India, Japan, and the United States from the new survey on bequest plans.

As

explained in the next subsection, this survey asks respondents about how they feel
about leaving an inheritance to their child(ren), and the responses can be grouped
according to the strength of their bequest motives.

The response implying thestrongest bequest motive is “I plan to leave an inheritance to my child(ren) no matter
what” (to be referred to as an “unconditional bequest motive”), the responses implying
the second strongest bequest motive are the three responses “I plan to leave an
inheritance to my child(ren) only if they provide care (including nursing care) during oldage,” “I plan to leave an inheritance to my child(ren) only if they provide financial
assistance during old age” and “I plan to leave an inheritance to my child(ren) only ifthey carry on the family business” (to be collectively referred to as a “conditionalbequest motive”), and the response implying the third strongest bequest motive is “I
want to leave an inheritance to my child(ren) but I won't because I don't have thefinancial capacity to do so” (to be referred to as a “potential bequest motive”).
By contrast, the responses implying the weakest bequest motive are “I do not plan toleave an inheritance to my child(ren) under any circumstances because doing so may
reduce their will to work” and “I do not plan to leave an inheritance to my child(ren)under any circumstances because I want to use my wealth myself” (to be collectively
14referred to as “no bequest motive”), and the response implying the second weakest
bequest motive is “I do not plan to make special efforts to leave an inheritance to mychild(ren) but will leave whatever is left over” (to be referred to as a “passive bequest
motive”).
The results are shown in Table 1, and as can be seen from this table, the proportion of
respondents with an unconditional bequest motive is highest in India (68.98%), second
highest in the United States (58.17%), third highest in China (34.24%), and lowest inJapan (26.67%).

Similarly, the proportion of respondents with an unconditional orconditional bequest motive is highest in India (87.05%), second highest in the UnitedStates (60.77%), third highest in China (56.35%), and lowest in Japan (31.44%), andthe proportion of respondents with an unconditional, conditional, or potential bequest
motive is highest in India (95.88%), second highest in the United States (73.18%), third
highest in China (59.23%), and lowest in Japan (49.56%).
By contrast, the proportion of respondents with no bequest motive at all is highest in
China (4.81%), second highest in Japan (2.48%), third highest in the United States(1.82%), and lowest in India (0.62%), the proportion of respondents with only a passive
bequest motive is highest in Japan (47.96), second highest in China (35.96%), third
highest in the United States (25.00%), and lowest in India (3.50%), and the proportion of
respondents with either no bequest motive at all or only a passive bequest motive ishighest in Japan (50.44%), second highest in China (40.77%), third highest in the
United States (26.82%), and lowest in India (4.12%).
Thus, the strength of bequest motives varies considerably from country to country, andaccording to virtually all criteria, bequest motives are strongest in India, second
strongest in the United States, third strongest in China, and weakest in Japan.
Reassuringly, these findings are consistent with the findings of the studies surveyed insubsection 2.2.1, which find that actual bequests are quantitatively more important in
the United States than they are in Japan.
However, as explained in subsection 2.1, evidence on the strength of bequest motives
does not necessarily shed light on which assumption concerning household preferences
holds in the real world because positive bequests are consistent with all threeassumptions concerning household preferences and one needs evidence on the motives
for which households leave bequests in order to know which assumption concerning
15

household preferences holds in the real world. It is to such evidence that we turn next.
4.2. Evidence on Stated Bequest Motives
The new survey on bequest plans asks respondents how they feel about leaving an
inheritance to their child(ren), with the responses (grouped by the assumption
concerning household preferences with which they are consistent) being as follows:(Responses consistent with altruism)(1) I plan to leave an inheritance to my child(ren) no matter what.
(2) I do not plan to leave an inheritance to my child(ren) under any circumstances
because doing so may reduce their will to work.
(Responses consistent with self-interest)(3) I plan to leave an inheritance to my child(ren) only if they provide care (including
nursing care) during old age.
(4) I plan to leave an inheritance to my child(ren) only if they provide financial
assistance during old age.
(5) I do not plan to make special efforts to leave an inheritance to my child(ren) but will
leave whatever is left over.
(6) I do not plan to leave an inheritance to my child(ren) under any circumstances
because I want to use my wealth myself.
(Responses consistent with dynasty building)(7) I plan to leave an inheritance to my child(ren) only if they carry on the familybusiness.
(Response for which consistency with an assumption concerning household preferences
is not clear)(8) I want to leave an inheritance to my child(ren) but I won’t because I don’t have thefinancial capacity to do so.
The results are shown in Table 2, with motives being grouped by the assumption
concerning household preferences with which they are consistent and with response (8)being dropped.

16

As can be seen from this table, the proportion of respondents whose attitude toward
bequests is consistent with altruism is highest in India (75.80%), second highest in the
United States (66.97%), third highest in China (37.40%), and lowest in Japan (33.98%),
while the proportion of respondents whose attitude toward bequests is consistent with
self-interest is highest in Japan (64.96%), second highest in China (55.10%), third
highest in the United States (32.76%), and lowest in India (21.82%).
Finally, the proportion of respondents whose attitude toward bequests is consistent withdynasty building is low (no higher than 7.50%) in all four countries but is highest in
China (7.50%), followed by India (2.38%), Japan (1.06%), and the United States (0.26%).
Thus, it appears that there are considerable differences among the four countries instated bequest motives, with stated bequest motives being primarily altruistic in India
and the United States and primarily selfish in Japan and China and dynastic motives
not being important in any of the four countries but more important in China thanelsewhere.
Moreover, a comparison of Tables 1 and 2 shows that there is a very high correlation
between the strength of bequest motives and stated bequest motives, with the rankordering of the four countries being exactly the same regardless of whether they are
ranked according to the strength of bequest motives or according to the proportion of
respondents whose attitude toward bequests is consistent with altruism, with India
being first, the United States second, China third, and Japan last.

Conversely, therank ordering of the four countries when they are ranked according to the strength ofbequest motives is just the opposite of their rank ordering when they are ranked
according to the proportion of respondents whose attitude toward bequests is consistent
with self-interest.

It thus appears that altruistic individuals have strong bequest

motives and that selfish individuals have weak bequest motives, as conventional
wisdom would predict.

Moreover, our findings are broadly consistent with the findingsof the studies surveyed in subsection 2.2.2, which find that bequest motives are morealtruistic in the United States than they are in Japan.
Looking in more detail at the importance of the individual responses, the dominantaltruistic motive in all four countries is “I plan to leave an inheritance to my child(ren)no matter what,” and the rank ordering of the four countries with respect to the
proportion of respondents selecting this response is identical to the rank ordering of the17four countries with respect to the proportion of respondents whose attitude toward
bequests is consistent with altruism.
Similarly, the dominant selfish motive in all countries except India is “I do not plan tomake special efforts to leave an inheritance to my child(ren) but will leave whatever isleft over,” and the rank ordering of the four countries with respect to the proportion of
respondents selecting this response is identical to the rank ordering of the four
countries with respect to the proportion of respondents whose attitude toward bequests
is consistent with self-interest.
By contrast, the proportion of respondents selecting the two exchange-related selfish
motives (“I plan to leave an inheritance to my child(ren) only if they provide care(including nursing care) during old age” and “I plan to leave an inheritance to mychild(ren) only if they provide financial assistance during old age”) is highest in India(and second highest in China) and lowest in Japan (and second lowest in the UnitedStates) even though the proportion of respondents whose attitude toward bequests is
consistent with self-interest is lowest in India and highest in Japan.
Finally, the proportion of respondents who do not plan to leave an inheritance for either
altruistic or selfish reasons is small (less than 3%) in all four countries, and the
proportion of respondents who plan to leave an inheritance to their child(ren) only ifthey carry on the family business (the only response that is consistent with the dynasty
model) is also small (no higher than 7.50%) in all four countries.
Thus, except for the results for exchange-related selfish motives, the detailed results
are consistent with our earlier finding that bequest motives are primarily altruistic in
India and the United States and primarily selfish in Japan and China and that dynastic
motives are not important in any of the four countries but more important in China
than elsewhere.

As for why exchange-related selfish motives are stronger in India andChina than in Japan and the United States, it could be because mutual assistance andsupport and risk sharing within the family are necessarily stronger in countries where
social safety nets are weaker, as suggested by Esping-Andersen (1990, 1999).
4.3. Evidence on Bequest Division Plans
Evidence on bequest division plans can shed further light on which assumption
18

concerning household preferences holds in the real world so, in this subsection, we
present evidence on bequest division plans in China, India, Japan, and the UnitedStates from the new survey on bequest plans. This survey asks respondents not only
about how they feel about leaving inheritances to their child(ren) but also about how
they plan to divide their inheritances among their children.

However, since bequest

division among one’s children is a moot question in the case of respondents with nochildren or only one child, only respondents with two or more children are asked about
bequest division plans.

They are first asked whether they plan to divide theirinheritances equally or unequally among their children, and those who are planning todivide their inheritances unequally are then asked how they plan to divide theirinheritances among their children, with the following responses (grouped by theassumption concerning household preferences with which they are consistent):(Responses consistent with altruism)(1) I plan to leave more or all to the child (children) who has less earning capacity.
(2) I plan to leave more or all to the child (children) who has greater needs.
(3) I plan to leave more or all to the child (children) whom I like more.
(Responses consistent with self-interest)(4) I plan to leave more or all to the child (children) who lives with me.
(5) I plan to leave more or all to the child (children) who lives near me.
(6) I plan to leave more or all to the child (children) who helps me with housework.
(7) I plan to leave more or all to the child (children) who provides nursing care.
(8) I plan to leave more or all to the child (children) who provides financial assistance.
(Responses consistent with dynasty building)(9) I plan to leave more or all to the child (children) who carries on the family business.
(10)

I plan to leave more or all to my eldest son or daughter even if he/she does notlive with me, does not live near me, does not help me with housework, does notprovide nursing care, does not provide financial assistance, and does not carry on
the family business.
As can be seen from Table 3, the proportion of respondents whose way of dividing theirbequest among their children is consistent with altruism is high (in excess of 70%) in all
four countries but highest in the United States (97.58%), second highest in India(84.35%), third highest in Japan (80.12%), and lowest in China (78.79%).
19

These

findings are broadly consistent with the findings of previous studies surveyed insubsection 2.2.3, which find that bequest division is much more altruistic in the UnitedStates than in Japan.
By contrast, the proportion of respondents whose way of dividing their bequest among
their children is consistent with self-interest is highest in Japan (20.46%), second
highest in China (19.28%), third highest in India (15.63%), and lowest in the UnitedStates (2.52%).

Similarly, the proportion of respondents whose way of dividing theirbequest among their children is consistent with dynasty building is highest in China(7.85%), second highest in Japan (7.51%), third highest in the United States (0.84%),
and lowest in India (0.48%).
Thus, the results pertaining to bequest division plans are broadly consistent with theresults pertaining to stated bequest motives, with Americans and Indians being morealtruistic than the Japanese and Chinese, the Japanese and Chinese being more selfish
than Americans and Indians, and dynastic motives being unimportant in all countries
but more important in China than in the other countries.
Looking in more detail at the importance of the individual responses, equal division
among one’s children is by far the most common response in all four countries, with theproportion of respondents who plan to divide their bequests equally exceeding 70% in all
four countries.

This proportion was highest in the United States (92.55%), second

highest in India (84.17%), third highest in Japan (72.67%), and lowest in China(70.28%), and hence the rank ordering of the four countries is exactly the same as in thecase of the proportion of respondents whose planned way of dividing their bequest
among their children is consistent with altruism.
Turning to the importance of the responses for dividing bequests unequally, most ofthem are of only negligible importance, with the proportion of respondents choosing any
given response exceeding 10% in only three cases, all of which occur in Japan and
China: 14.38% of Japanese respondents selected the response “I plan to leave more or
all to the child (children) who lives with me,” while 12.82% of Japanese respondents and11.60% of Chinese respondents selected the response “I plan to leave more or all to thechild (children) who provides nursing care.” Both of these responses are consistent
with self-interest, and thus the fact that they were found to be the most prevalent in thetwo countries in which preferences are the most selfish is not at all surprising.
20

The three altruistic responses excluding equal division, the three selfish responses
excluding the two aforementioned ones, and the two dynastic responses are notimportant in any country, with no more than 6.5% of responses selecting any of these
responses in any of the four countries.
Thus, the results concerning bequest division plans are somewhat divergent from ourearlier results concerning stated bequest motives, with bequest division plans being
much more altruistic than stated bequest motives in all countries and bequest divisionplans being more selfish in China than in Japan and more altruistic in the UnitedStates than in India, which is the opposite of the pattern observed for stated bequest
motives.

However, the discrepancy regarding the prevalence of altruism can bereconciled if one bears in mind that equal division is not consistent with the simplest
version of the altruism model and that it is consistent with the altruism model only if it
is extended to include the presence of relative deprivation or some other additional
assumption, as noted in subsection 2.1, meaning that regarding equal division as being
consistent with altruism will lead to an overestimate of the proportion of households
whose bequest division plans are consistent with altruism.
Our findings pertaining to stated bequest motives and those pertaining to bequest
division plans are mutually consistent in that they both indicate that the applicabilityof the various assumptions concerning household preferences vary greatly from country
to country, with Americans and Indians being much more altruistic than the Japaneseand Chinese and the Japanese and Chinese being much more selfish than Americans
and Indians, and that dynastic preferences are not very prevalent in any of the four
countries but are more prevalent in China than elsewhere.

Moreover, our findings arealso broadly consistent with the findings of previous studies surveyed in subsection 2.2,
which find that Americans are more altruistic than the Japanese.

5.

Possible Reasons for Inter-Country Differences in Bequest Plans

Our results suggest that there are substantial inter-country differences in theprevalence of self-interest and altruism, with the bequest plans of Americans andIndians being much more consistent with altruism than those of the Japanese andChinese and the bequest plans of the Japanese and Chinese being much more21

consistent with self-interest than those of Americans and Indians.

In this section, we

speculate about the reasons for these substantial inter-country differences in bequest
plans.

One possibility is that inter-country differences in bequest plans reflect

inter-country differences in household preferences.

Alternatively, these differences

may reflect inter-country differences in outside influences on bequest plans such as
income levels, income growth, inheritance laws, tax policies, social safety nets, social
norms, and other institutions and government policies, as noted in subsection 2.1.
Looking first at the impact of income levels, households living in countries with highincome levels should have stronger bequest motives than households living in countries
with low income levels if poor households cannot afford to leave bequests and bequests
are a superior good those consumption increases with income.

Thus, the fact thatbequest motives are strong in the United States where income levels are high and weakin China where income levels are low suggests that inter-country differences in income
levels can partly explain inter-country differences in the strength of bequest motives.
However, the fact that bequest motives are weak in Japan even though income levels
are high and strong in India even though income levels are low and the fact that the
proportion of respondents who don’t plan to leave a bequest because they don’t have thefinancial capacity to do so is much higher in Japan and the United States than in China
and India even though income levels are much higher in these countries (see Table 1)
point toward the opposite conclusion.
Looking next at the impact of income growth, households living in countries with highrates of income growth should be less likely to leave bequests, ceteris paribus, thanhouseholds living in countries with low rates of income growth because high rates ofincome growth imply that the lifetime incomes of children will be much higher than the
lifetime incomes of parents.

Thus, the fact that bequest motives are strong in the

United States where income growth has been low and weak in China where income
growth has been high suggests that inter-country differences in income growth canpartly explain inter-country differences in the strength of bequest motives. However,the fact that bequest motives are strong in India even though income growth has beenhigh and weak in Japan even though income growth has been low points toward the
opposite conclusion.
Looking next at the impact of inheritance laws, the fact that the equal division ofbequests among one’s children is less prevalent in Japan than elsewhere even though it
22

is not possible to disinherit any given child completely in Japan (one is legally required
to leave at least one-half of an equal share to each child) suggests that inter-country
differences in inheritance laws are not the explanation for inter-country differences inbequest division plans.
Looking next at the impact of social safety nets for the elderly (public old-age pensions,long-term care insurance, health insurance, etc.), our finding that the use of bequests to
induce one’s children to provide care and/or attention during old age is much moreprevalent in China and India, where social safety nets for the elderly are less developed,
and less prevalent in Japan and the United States, where social safety nets for theelderly are more developed, suggests that inter-country differences in social safety nets
for the elderly are a partial explanation for inter-country differences in stated bequest
motives.
Looking finally at the impact of social norms, the social norm in Japan and China has
traditionally been primogeniture, meaning that eldest sons inherit the entire estate of
their parents but are expected, in exchange, to live with their parents and care for themduring their old age.

The present Civil Codes of both Japan and China provide for

equal division, but primogeniture is still surprisingly common and can be legally
enforced if the decedent leaves a will and/or if all children other than the eldest son“voluntarily” renounce their inheritance rights (see Horioka (2002) for a more detailed
discussion).

If social norms are an important influence on bequest plans, we would

expect equal division to be less prevalent and dynastic bequest division to be moreprevalent in Japan and China than in the United States and India, and this is, in fact,
exactly what we find.
It thus appears that many outside influences on household behavior (such as income
levels, income growth, and inheritance laws) are not capable of explaining inter-country
differences in bequest plans although some outside influences (such social safety nets
for the elderly and social norms) are capable of partly explaining inter-country
differences in bequest plans.

This implies that inter-country differences in bequest

plans are at least partly due to inter-country differences in household preferences.
Turning finally to the question of why household preferences vary from country tocountry, one possibility is that inter-country differences in household preferences reflect
inter-country differences in culture.

The fact that bequest plans are similar in Japan23

and China, which have very similar cultures, suggests that inter-country differences inculture are a partial explanation for inter-country differences in bequest plans, but thefact that bequest plans are similar in the United States and India even though they
have very different cultures suggests that culture is not the main explanation forinter-country differences in bequest plans.
Another possibility is that more deeply religious people have more altruistic preferences
and that inter-country differences in the degree of religiosity (which is one component of
culture) can explain inter-country differences in household preferences. The survey weused asks respondents whether or not the statement “I am deeply religious” applies tohim/her, with 1 indicating that it is particular true for him/her and 5 indicating that it
does not hold true at all for him/her, and this question was asked in all countries except
for China. The results for this question, combined with supplementary data on all four
countries from Zuckerman (2005), suggest that the degree of religiosity is highest in
India, second highest in the United States, third highest in China, and by far the lowest
in Japan (see Table 4).

This is exactly the same rank ordering as when the four

countries are ranked with respect to the extent to which their stated bequest motives
are altruistic, which suggests that inter-country differences in the degree of religiosity
may explain inter-country differences in household preferences, which in turn may
explain inter-country differences in bequest plans.

The importance of religiosity is

confirmed by Gans, Silverstein, and Lowenstein (2009), who find that religious children
are more likely to provide care to their aged parents.

In a different context, Lehrer(2004) and Mukhopadhyay (2011) analyze the impact of religiosity on educational
attainment and find that religiosity has a significant impact on educational attainment,with Lehrer (2004) finding that it has a positive impact and Mukhopadhyay (2011)
finding that it has a negative impact. This provides further corroboration that one’s
degree of religiosity may affect one’s preferences and behavior.

It thus appears that inter-country differences in household bequest plans are not due tointer-country differences in income levels, income growth, or inheritance laws but thatthey partly reflect inter-country differences in social safety nets and social norms andpartly reflect inter-country differences in household preferences, which in turn may
reflect inter-country differences in the degree of religiosity.

There are other possible

reasons for inter-country differences in household preferences such as inter-country
differences in genes, the degree of financial development, and tax systems (for example,
24the level and structure of income taxes, property taxes, and estate taxes and theavailability of tax breaks for charitable contributions).

A causal analysis on theimportance of these factors is left as a topic for future research.

6.

Summary, Conclusions, and Policy Implications

In this paper, we discussed three alternative assumptions concerning household
preferences (altruism, self-interest, and a desire for dynasty-building) and showed thatthese assumptions have very different implications for bequest motives and bequest
division.

After reviewing some of the literature on actual bequests, bequest motives,and bequest division, the paper presented data on the strength of bequest motives,stated bequest motives, and bequest division plans from a new international survey
conducted in China, India, Japan, and the United States.

It found striking

inter-country differences in bequest plans, with the bequest plans of the Japanese andChinese appearing to be much more consistent with selfish preferences than those of
Americans and Indians and the bequest plans of Americans and Indians appearing to bemuch more consistent with altruistic preferences than those of the Japanese andChinese.

Finally, we found that inter-country differences in bequest plans areapparently not due to inter-country differences in income levels, income growth, orinheritance laws but could partly reflect inter-country differences in social safety nets
for the elderly and social norms and partly reflect inter-country differences in household
preferences, which in turn may reflect inter-country differences in the degree of
religiosity.
It thus appears that when economists model household behavior, it is important to use amodel that nests selfish as well as altruistic preferences or to use a model that assumes
selfish preferences in countries where self-interest dominates and a model that assumes
altruistic preferences in countries where altruism dominates.
Turning finally to the policy implications of our findings, it is well-known that the
impact of government policies are dramatically different depending on whether
households are selfish, altruistic, or dynastic (see Barro (1974), Masson and Pestieau(1996), and Arrondel and Masson (2006)).
For example, our finding that the Japanese and Chinese are predominantly selfish
25

implies that Ricardian equivalence will not hold in Japan and China and that tax cuts
financed by the issuance of government bonds will be effective as an economic stimulus
in these countries because households in these countries will not care about the higher
taxes that future generations will have to pay in order to redeem the government bonds
and will therefore increase their consumption spending in response to the tax cuts.

Bycontrast, our finding that Americans and Indians are predominantly altruistic implies
that Ricardian equivalence will hold in the United States and India and that tax cuts
financed by the issuance of government bonds will not be effective as an economic
stimulus in these countries because households will save the entire tax cut in order toincrease their bequests and compensate future generations for the higher taxes they
will have to pay when it comes time for the government to redeem its bonds (see Barro(1974)).
Similarly, our finding that the Japanese and Chinese are predominantly selfish implies
that the introduction of a pay-as-you-go public old-age pension system will reduce
household saving in Japan and China because the introduction of such a system will
alleviate the need for them to save on their own in preparation for retirement.
Moreover, the introduction of such a system will also enable them to enjoy a higher
standard of living during retirement, which is presumably the aim of such a system,
because the introduction of such a system will force them to postpone consumption until
after retirement.

By contrast, our finding that Americans and Indians are

predominantly altruistic implies that the introduction of a pay-as-you-go public old-age
pension system will not have any impact on household saving in the United States andIndia because households will bequeath all of their pension benefits to their children tocompensate them for the payroll taxes they will have to pay to finance these benefits,meaning that they will have to save just as much as before to finance their living
expenses during retirement.

Moreover, the living standards of Americans and Indians

during retirement will not be raised at all by the introduction of such a system because
they will bequeath all of their pension benefits to their children.
We turn finally to the implications of our findings for inheritance taxes and othermechanisms for alleviating the intergenerational transmission of wealth inequalities.
Our finding that the Japanese and Chinese are predominantly selfish implies that
wealth inequalities are less likely to be passed on from generation to generation in
Japan and China because selfish households will leave less bequests and because they
will leave a bequest to their children only if there is a quid pro quo from their children
26

such as care, attention and/or financial support during old age, meaning that bequests
from parents to children will be at least partly offset by intergenerational transfers in
the other direction (namely, the monetary value of care, attention, and/or financial
support from children to parents).

By contrast, our finding that Americans andIndians are predominantly altruistic implies that wealth inequalities are more likely to
be passed on from generation to generation in the United States and India because
Americans and Indians will leave more bequests and because they will leave a bequest
to their children even if there is no quid pro quo from their children, meaning that theirbequests will be less likely to be offset by intergenerational transfers in the opposite
direction.４

Furthermore, Horioka (2009) finds that, in Japan, the correlation between

bequests received and life cycle wealth is negative, meaning that individuals who
receive fewer bequests accumulate more life cycle wealth, which will alleviate theintergenerational transmission of wealth inequalities.

Thus, our findings imply that

there may be a greater need for estate taxes and other mechanisms for alleviating theintergenerational transmission of wealth inequalities in the United States and India
than in Japan and China.

It follows that activist government policies will be successful in achieving theirobjectives (for example, tax cuts financed by the issuance of government bonds will beeffective in stimulating consumption and the economy as a whole and the introductionof a pay-as-you-go public old-age pension system will be effective in raising living
standards during retirement) in Japan, China, and other countries with selfish
denizens but not in India, the United States, and other countries with more altruistic
denizens.

By contrast, estate taxes and other policies that alleviate theintergenerational transmission of wealth inequalities will be more necessary anddesirable in India, the United States, and other countries with altruistic denizens thanin Japan, China, and other countries with more selfish denizens.

27

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34

Table 1: An Inte rnatio nal Co mpariso n o f the Stre ngth o f Be quest Mo tive s
The proportion of respondents holding each view (%)
China
India
Japan
I plan to leave an inheritance to my child(ren) no matter what
I plan to leave an inheritance to my child(ren) under certain conditions
Those with an actual bequest motive
I want to leave an inheritance to my child(ren) but I won't because I don't havethe financial capacity to do so
Those with an actual or potential bequest motive
I do not plan to make special efforts to leave an inheritance to my child(ren)but will leave whatever is left overI do not plan to leave an inheritance to my child(ren) under any circumstancesThose with only a passive bequest motive or no bequest motive at all
Total
Number of observations

U.S.

34.24
22.11
56.35

68.98
18.07
87.05

26.67
4.76
31.44

58.17
2.60
60.77

2.88

8.83

18.12

12.41

59.23

95.88

49.56

73.18

35.96

3.50

47.96

25.00

4.81
40.77
100.00
2264

0.62
4.12
100.00
1928

2.48
50.44
100.00
4514

1.82
26.82
100.003464

Notes: The figures show the proportion of respondents excluding those who did not respond to this question.
Data Source: 2012 Preference Parameter Survey of Osaka University (Kurashi to Konomi to Manzokudo ni tsuite no Anke-to
Chousa) except for rural China, for which the 2010 survey was used. The results for the urban and rural surveys for China andIndia were weighted by the proportions of the urban and rural populations in each country (52/48% in China and 32/68% inIndia).

35

Table 2: An International Comparison of Stated Bequest Motives
The proportion of respondents holding each view (%)
China
India
Altruism
I plan to leave an inheritance to my child(ren) no matter what
35.25
75.66

Japan

U.S.

32.58

66.41

2.15

0.14

1.41

0.56

37.40

75.80

33.98

66.97

I plan to leave an inheritance to my child(ren) only if they provide care(including nursing care) during old age

10.10

11.49

4.06

2.08

I plan to leave an inheritance to my child(ren) only if they provide financial
assistance during old age

5.17

5.95

0.70

0.63

I do not plan to make special efforts to leave an inheritance to my child(ren)but will leave whatever is left over

37.03

3.84

58.58

28.54

2.80

0.54

1.62

1.52

55.10

21.82

64.96

32.76

7.50

2.38

1.06

0.26

7.50
100.002071

2.38
100.001866

1.06
100.003696

0.26
100.003034

I do not plan to leave an inheritance to my child(ren) under any circumstances
because doing so may reduce their will to work
Responses consistent with altruism
Self-Interest

I do not plan to leave an inheritance to my child(ren) under any circumstances
because I want to use my wealth myself
Responses consistent with self-interest
Dynasty Building
I plan to leave an inheritance to my child(ren) only if they carry on the familybusiness
Responses consistent with dynasty building
Total
Number of observations

Notes: The figures show the proportion of respondents excluding those who did not respond to this question and those
who replied that they want to leave a bequest to their child(ren) but won't because they don't have the financial capacity
to do so.
Data Source: 2012 Preference Parameter Survey of Osaka University (Kurashi to Konomi to Manzokudo ni tsuite noAnke-to Chousa) except for rural China, for which the 2010 survey was used. The results for the urban and rural surveys
for China and India were weighted by the proportions of the urban and rural populations in each country (52/48% in
China and 32/68% in India).

36

Table 3: An Inte rnatio nal Compariso n o f Be que st Divisio n Plans
The proportion of respondents holding each view (%)
China
India
Altruism
I plan to divide my inheritance equally among my children
70.28
84.17

Japan

U.S.

72.67

92.55

0.04

4.39

1.38

1.95
0.90

0.13
0.00

3.90
0.75

3.06
1.43

Responses consistent with altruism

78.79

84.35

80.12

97.58

Self-Interest
I plan to leave more or all to the child (children) who lives with me
I plan to leave more or all to the child (children) who lives near me

4.11
1.84

6.99
4.63

14.38
4.07

0.94
0.74

2.09

1.96

4.49

0.69

11.60

5.63

12.82

0.54

2.56

1.25

4.85

0.59

19.28

15.63

20.46

2.52

I plan to leave more or all to the child (children) who carries on the familybusiness

4.25

0.41

5.04

0.10

I plan to leave more or all to my eldest son or daughter even if he/she does
not live with me, does not live near me, does not help me with housework,
does not provide nursing care, does not provide financial assistance, anddoes not carry on the family business

3.82

0.07

2.83

0.74

7.85
105.92733

0.48
100.461780

7.51
108.083118

0.84
100.942457

I plan to leave more or all to the child (children) who has less earning
capacity

6.42

I plan to leave more or all to the child (children) who has greater needs
I plan to leave more or all to the child (children) whom I like more

I plan to leave more or all to the child (children) who helps me withhousework
I plan to leave more or all to the child (children) who provides nursing care
I plan to leave more or all to the child (children) who provides financial
assistance
Responses consistent with self-interest
Dynasty Building

Responses consistent with dynasty building
Total
Number of observations

Notes: The figures show the proportion of respondents excluding those who did not answer the question about statedbequest motives, those who replied that they would not leave a bequest, and those who have zero or one child. Those
who responded that they would divide their bequest unequally but did not answer the follow-up question about bequest
division were assumed to have the same distribution of answers for the follow-up question as those who answered thefollow-up question. The totals do not necessarily add up because mutliple responses are allowed.
Data Source: 2012 Preference Parameter Survey of Osaka University (Kurashi to Konomi to Manzokudo ni tsuite noAnke-to Chousa) except for rural China, for which the 2010 survey was used. The results for the urban and rural
surveys for China and India were weighted by the proportions of the urban and rural populations in each country(52/48% in China and 32/68% in India).

37

Table 4: An Internatio nal Comparison of Re ligio sity
China
India
Japan
The degree of religiosity (on a scale of 1 to 5)
na
3.66
1.66
The number of observations
1928
4556
The proportion of believers in God
86-94
94-98
35-36

U.S.
2.99
3559
91-97

Note: "na" denotes "not available."
Data Source: First 2 rows: 2012 Preference Parameter Survey of Osaka University (Kurashi toKonomi to Manzokudo ni tsuite no Anke-to Chousa). The results for the urban and rural surveys
for India were weighted by the proportions of the urban and rural populations (32/68%). The orderof the responses was reversed so that 5 indicates that it is particularly true for him/her and 1
indicates that it does not hold true at all for him/her. Last row: Zuckerman (2005).

38

Endnotes

１

Two additional assumptions concerning household preferences are (1) that thehousehold derives utility not only from its own consumption but also from its wealth (asassumed in the “capitalist spirit” or “wealth-in-the-utility function” model of Carroll(2000)), and (2) that the household derives utility not only from its own consumption but
also from the size of its bequest (as assumed in the “joy of giving,” “warm glow,” or“bequest-as-consumption” model of Abel and Warshawsky (1988)).

These assumptions

are not discussed in detail here because they do not have clear implications for bequest
motives and bequest division (except that assumption (2) implies that households will
leave bequests to their children even without any quid pro quo, as in the case ofaltruistic preferences).
２

The term “dynasty model” is often used to refer to what we call the “altruism model”

but we use the term in a different sense.

What we call the dynasty model is also called

the “primogeniture model” if it is the eldest son who carries on the family line and/or thefamily business (Chu (1991)).

３

Another possibility is that selfish parents who want their children to take care ofthem in old age will set an example by taking care of their own elderly parents in frontof their children (the so-called “demonstration effect” of Stark (1995) and Cox and Stark(1996)).

In this case, the quid pro quo for care given to one’s elderly parents will not bebequests received from one’s elderly parents but rather care received from one’s
children.
４Note, however, that altruistic parents will leave more bequests to less affluent

children, meaning that inter-sibling inequalities will be alleviated to a greater extent in
the case of altruistic parents.

I am indebted to an anonymous referee for this point.

39