We propose a general framework for determining the extent of measurement error bias in ordinary least squares and instrumental variable (IV) estimators of linear models while allowing for measurement error in the validation source. We apply this method by validating Survey of Health, Ageing and Retirement in Europe data with Danish administrative registers. Contrary to most validation studies, we find that measurement error in income is classical once we account for imperfect validation data. We find nonclassical measurement error in schooling, causing a 38% amplification bias in IV estimators of the returns, with important implications for the program evaluation literature.

We exploit inheritance episodes to provide novel causal evidence on the long-run effects of a large financial windfall on saving behavior. For identification, we combine a longitudinal panel of administrative wealth reports with variation in the timing of sudden, unexpected parental deaths. We show that after inheritance, net worth converges toward the path established before parental death, with only one-third of the initial windfall remaining after nine years. We interpret these findings through the lens of a generalized consumption-saving framework. To quantitatively replicate this behavior, life-cycle consumption models require impatient consumers and strong precautionary saving motives.