To Leave or Not To Leave: The Distribution of Bequest Motives (244 K)

Wojciech Kopczuk, Joseph Lupton

NBER Working Paper No. 11767 Issued in November 2005 NBER Program(s): AG PE

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In this paper, we examine the effect of observed and unobserved heterogeneity in the desire to die with positive net worth. Using a structural life-cycle model nested in a switching regression with unknown sample separation, we find that roughly three-fourths of the elderly single population has a bequest motive that may or may not have an appreciable effect on spending depending on the level of resources. Both the presence and the magnitude of the bequest motive are statistically and economically significant. On average, households with a bequest motive spend about 25 percent less on consumption expenditures. We conclude that, among the elderly single households in our sample, about four-fifths of their net wealth will be bequeathed and approximately half of this is due to a bequest motive.

Drug Advertising and Health Habits (244 K)

Toshiaki Iizuka, Ginger Zhe Jin

NBER Working Paper No. 11770 Issued in November 2005 NBER Program(s): HE IO

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We examine the effect of direct-to-consumer advertising (DTCA) of drug treatment on two important health habits, smoking and exercise, using the 1997-2001 Behavioral Risk Factor Surveillance System (BRFSS), the National Health Insurance Survey (NHIS), and MSA-level DTCA data. We find that the DTCA of tobacco cessation products increases the tendency to smoke for insured people with college education. Similarly, the DTCA related to four chronic conditions reduces the likelihood to engage in moderate exercise. These findings suggest that DTCA does not only affect pharmaceutical demand in the short-run, but also have long-run impacts on people's health by affecting their health habits.

How's the Job? Well-Being and Social Capital in the Workplace (194 K)

John F. Heliwell, Haifang Huang

NBER Working Paper No. 11759 Issued in November 2005 NBER Program(s): LS

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This paper takes a different tack in addressing one of the fundamental questions in economics: what are the factors that determine the distribution of jobs and wages? In Adam Smith’s classic formulation, and in much of the subsequent literature, wage levels have been used to estimate the values of job characteristics ("compensating" or "equalizing" differentials). There are econometric problems with this approach, principally caused by unmeasured differences in talents and aptitudes that enable people of high ability to have jobs with both high wages and good working conditions, thus understating the value of working conditions. We bypass this difficulty by estimating the extent to which incomes and job characteristics influence direct measures of life satisfaction from three large and recent Canadian surveys. The well-being results show strikingly large values for non-financial job characteristics, especially workplace trust and other measures of the quality of workplace social capital. The compensating differentials estimated for the quality of workplace social capital are so large as to suggest that they do not reflect a full equilibrium. Thus the current situation probably reflects the existence of unrecognized opportunities for managers and employees to alter workplace environments, or for workers to change jobs, so as to increase both life satisfaction and workplace efficiency.