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Inheritance

Published online by Cambridge University Press:  01 July 2016

David Stirzaker
David Stirzaker*
Affiliation:
University of Oxford
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Abstract

We consider a population of reproducing individuals who inherit, earn, consume, and bequeath wealth. A model is constructed to describe the wealth of an individual selected from the nth generation by following a random line of descent from the initial individual. It is shown that bequests are commonly a convex function of wealth. Considering a linear approximation to the bequest function enables us to obtain estimates of the limiting distribution of wealth as the number of generations increases, when earnings of parent and offspring are independent. More generally when earnings of parent and offspring are not independent we obtain upper bounds for the tail of the wealth distribution using a martingale inequality.

Keywords

WEALTHINHERITANCEQUEUESUTILITY

Information

Type
Research Article
Information
Advances in Applied Probability , Volume 12 , Issue 3 , September 1980 , pp. 574 - 590
Copyright
Copyright © Applied Probability Trust 1980 

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References

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Stirzaker, D. (1980) Bequest functions and wealth distribution in a stratified society. To appear.Google Scholar