Intergenerational transfers within the family

Social security, social welfare and the aging population

“…Their utility is derived from their "love of" or "duty to" their children rather than any personal return they may reap from their investment or any other strategic motive (see Cremer, et al, 1992). This inter vivos bequest motive encompasses the lifetime bequest motive.…”

Transfers within a three generations family: When the rotten kids turn into altruistic parents

“…Now, the concavity of W (and the SOC for the optimal solution) imply that ϕ * (e) is everywhere decreasing. 4 Further observe that…”

“…As often in a dynamic setting, we define the optimum as the allocation that maximizes the lifetime utility of an individual who treats his children and his parents as he would have liked to be treated himself when a child or when a parent (see, e.g., Cremer et al, 1992). Note that the individual successively takes the role of c, p, and then g. We count only the own utility, laundering out the altruistic terms.…”

“…Interestingly, this inefficiency "spills over" to the provision of aid. To see this, 4 The detour via ϕ * is necessary because we cannot sign ϕ ′ (which is an equilibrium condition and not a FOC) from the SOC. On the other hand ϕ * ′ is the SOC for the maximization of W (reformulated to have e as single decision variable).…”

“…2 The predecessors to our paper which also focus on intergenerational transfers to the young and old, on the other hand, do not consider altruism. For instance Cremer et al (1992) show that selfish parents underinvest in the education of their children (even when they can commit to a strategic bequest rule). In their model the parent's incentives to invest in their offspring's education are solely driven by the surplus they can extract from an attention-for-bequest game.…”