Then, too, it is difficult to find evidence that wealth declines the way it is supposed to in Modigliani's view. But in fact, the data tend to suggest that the savings rate among 80-year olds is positive. Still another skein of evidence involves the observation that the demand for annuities, reverse life insurance products, is far less than the life- cycle hypothesis would predict. But the most persuasive points are the most fundamental, according to Summers. One is that the inequality of wealth is very much greater than the inequality of earnings.
Bequests are a natural explanation for the fact.
Moreover, consumption patterns don't look the way a simple life-cycle story says they should. It's not true that most of the earnings come early in life, and that consumption comes late in life, as the hypothesis suggests. None of which has persuaded Modigliani. When Summers and Lawrence Kotlikoff published a paper concluding that up to 80 percent of existing wealth has been inherited, Modigliani checked their algebra, changed a few definitions and concluded that only 20 percent of wealth came in the form of bequests. His old friend Ando says Modigliani still calls up at intervals to argue that bequests are not of very great importance.