Changes in cohort wealth over a generation

Empirical computation of expected wealth is hampered by two problems: mortality risks vary in the population and over time; and observation of net estates for most cohorts is truncated, as some individuals in a cohort survive the calendar date on which observation is terminated. These two problems are solved in estimating cohort wealth for a sample of Wisconsin taxpayers. Hazard rate models of differential occupational mortality risks were estimated from the occupational information on the tax records. Values of net estate are simulated for individuals in each birth cohort who survived. Survivors have characteristics that imply greater wealth holdings than the deceased in every birth year covered by the study (1890–1924). Because of this, estimates of wealth-age relationships produced by the estate multiplier method for any given year will have a serious downward bias. Longitudinal data imply that dissaving does not occur after age 65.