Intergenerational Transfers and Savings Behavior

This chapter provides new evidence suggesting that transfer wealth accounts for approximately 20 to 25 percent of current household net worth, using the 1998 Survey of Consumer Finances. This figure is calculated in two ways, both of which yield quite similar results: direct survey evidence, and estimating of the flow of transfers in 1998 using an improved methodology that accounts for the correlation between wealth and mortality and converting this into a stock of transfer wealth. In addition to the methodological improvement, new estimates are useful because the composition of household wealth has changed substantially over the past several decades. Second, the chapter examines the heterogeneity of the size of transfers received and expected. It demonstrates that while in aggregate, transfer wealth does not appear to be as large as some prior estimates suggest, it is nonetheless quite important for a small subset of the population.