How Inheritance Expectations Shape Financial, Employment, and Family Decisions

Inheritances are one of the most consequential financial transfers many households will experience. While a large literature has examined how received inheritances affect behavior, much less is known about the impact of expecting an inheritance. These expectations are particularly complex given uncertainty surrounding the timing and magnitude of potential transfers. We conduct two national surveys to examine how inheritance expectations influence present-day decisions. In Study 1 (N = 1,047), we find that expecting to receive an inheritance corresponds to reports of saving less, increasing financial risk, reducing labor effort, and increasing investment in family relationships. In Study 2 (N = 2,013), we run a randomized experiment that exogenously lowers expectations of inheritance by providing information about the high cost of long-term care, a major and often underappreciated expense that can substantially reduce estate value. The treatment causally reduces expectations about both the likelihood of receiving an inheritance and its amount, corresponding to significant changes in behavior, largely consistent with findings from the correlational data. Treated respondents report greater savings, lower financial risk-taking, and increased labor effort. However, they also report an increased investment in family relationships. These results suggest that inheritance expectations can shape economic and social decision-making long before any assets change hands. Understanding how families form and revise expectations around intergenerational wealth has implications for research on household finance, inequality, and retirement policy.