The strong dislike evidenced by the American public towards the estate tax suggests that the wealthy wish to transfer resources to their heirs tax-free and would thus exploit mechanisms allowing them to reduce the tax burden whenever possible. However, I find strong evidence that the wealthy fail to utilize what is perhaps the simplest method of tax avoidance--that of making transfers to eventual heirs up to the annual exclusion. Instead they transfer far less than the amount permitted by the tax code, whether measured in cross-section or over time. In failing to give more, they forgo significant tax savings.

This study uses data from the National Longitudinal Survey of Youth to distinguish empirically between mover—stayer, “search good,” and “experience good” models of job mobility. We estimate wage models in which the pattern of overall job mobility affects both the level and tenure slope of the log-wage path. After controlling for the correlation between mobility patterns and time-constant person- and job-specific unobservables, we find that workers who undergo persistent mobility have lower log-wage paths than less mobile workers. This finding is consistent with models in which job mobility is driven by time-varying unobservables, such as “experience good” models, where changes in perceived match quality cause turnover.

Economists have invested a great deal of effort in trying to understand the motivation for family transfers, yet recent empirical work testing the seemingly appealing models of altruism and exchange has led to decidedly mixed results. A major stumbling block has been the lack of adequate data. We take a fresh look at the issue using responses to an innovative survey question that directly asks mother about the planned division of their estates. We find that both altruism and exchange are frequently offered as explanations of behavior and are of nearly equal importance. Furthermore, the explanations are consistent with observable characteristics of the mother, lending support to the validity of the question. We also find that among step or adopted families, genetic ties play an important role. Because motivating factors appear to differ across families the lack of a consensus among previous researchers about motives ought not to be surprising.

We demonstrate the existence of multiple dimensions of private information in the long-term care insurance market.Two types of people purchase insurance: individuals with private information that they are high risk and individuals with private information that they have strong taste for insurance.Ex post, the former are higher risk than insurance companies expect, while the latter are lower risk.In aggregate, those with more insurance are not higher risk.Our results demonstrate that insurance markets may suffer from asymmetric information even absent a positive correlation between insurance coverage and risk occurrence.The results also suggest a general test for asymmetric information.Theoretical research has long emphasized the potential importance of asymmetric information in impairing the efficient operation of insurance markets.Several recent studies in different insurance markets, however, have found no evidence to support the central prediction of many asymmetric information models that those with more insurance should be more likely to experience the insured risk. 1 In this paper, we use a new method to test for the presence of asymmetric information in the long-term care insurance market in the United States.We use individuals' subjective assessments of the chance they will enter a nursing home to show that, conditional on the insurance companies' own assessment of the individuals' risk type, individuals have residual private information that predicts their eventual risk.Moreover, this residual private information is also positively correlated with insurance coverage.Combined, these two findings provide direct evidence of asymmetric evidence in the long-term care insurance market.

We demonstrate the existence of multiple dimensions of private information in the long-term care insurance market. Two types of people purchase insurance: individuals with private information that they are high risk and individuals with private information that they have strong taste for insurance. Ex post, the former are higher risk than insurance companies expect, while the latter are lower risk. In aggregate, those with more insurance are not higher risk. Our results demonstrate that insurance markets may suffer from asymmetric information even absent a positive correlation between insurance coverage and risk occurrence. The results also suggest a general test for asymmetric information.

Dynamic Inefficiencies in Insurance Markets: Evidence from Long-Term Care Insurance by Amy Finkelstein, Kathleen McGarry and Amir Sufi. Published in volume 95, issue 2, pages 224-228 of American Economic Review, May 2005

Preference Heterogeneity and Insurance Markets: Explaining a Puzzle of Insurance by David M. Cutler, Amy Finkelstein and Kathleen McGarry. Published in volume 98, issue 2, pages 157-62 of American Economic Review, May 2008