Economics and the mid-life crisis have much in common: Both dwell on foregone opportunities

C'est la vie; c'est la guerre; c'est la pomme de terre . . . . . . . . . . . . . email: jpalmer at uwo dot ca

. . . . . . . . . . .Richard Posner should be awarded the next Nobel Prize in Economics . . . . . . . . . . . .

Sunday, December 12, 2004

Is Leaving Money to Heirs an Inferior Good?

According to The Economist,

The 4.9% of families in America with net worth of $1 million or more accounted for 42% of all donations to charitable organizations ... As the size of the estates rises, the proportion going to heirs shrinks and the share left to charity increases ... The estates of $20 million and more left an average of 49% of their value to charity and 21% to heirs, the rest going in taxes.
Well, this isn't quite in the category of being an inferior good, but it does indicate that in general as wealth increases, people tend to look after their heirs first and then donate to charity. It also suggests that the wealth elasticity of demand for altruism is greater than 1, putting it in the luxury category.

There are other interesting factoids (see here for more, along with fascinating discussion):

In rural Peru, 24% of young women say they lost their virginity to a rapist. In rural Uttar Pradesh (in India), 83% of married women surveyed said that before they moved in with their husbands, they didn't know how women become pregnant.
I'm not really sure I believe that last one. But my skepticism may just reflect my own ethnocentrism.
[Thanks to Marginal Revolution (you all are reading their blog, aren't you?) for the link]

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