The Impact of Bequest Motives on the Real Estate Asset of the Elderly

This study examined how bequest motives could affect allocated assets of the elderly which focused on real estates (especially housing) and investigated the broader implications of these changes for the housing market. This study developed a dynamic optimization model incorporating a bequest utility term and find that a stronger bequest motive leads to a significant increase in housing assets of older adults through simulation. This result identified a theoretical prediction that higher bequest motives could raise the marginal utility of future assets and reinforce the tendency to accumulate housings. Using panel data of the Korea Retirement and Income Study (KReIS), this study estimated both the panel linear regression model and the latent growth model. The empirical findings confirmed that households with stronger bequest motives are likely to hold more housing assets. In the case of lower burdens from inheritance according to alleviated taxes, more older adults rushed to real estates to be a pressing button on housing markets. The motives could play a role in the markets beyond decisions of assets for the elderly. Finally, overall approaches for bequest motives are necessary to make policies of inheritance taxes and housings.