Laurence J. Kotlikoff and Lawrence Summers analyze the role of intergenerational transfers in U.S. capital accumulation. Using historical data, they find that intergenerational transfers account for the majority of U.S. capital formation, while life cycle or "hump" savings contribute only a small fraction. This challenges the traditional Life Cycle Theory of Saving, which emphasizes savings for retirement as the main form of capital accumulation. The authors argue that intergenerational transfers are a more significant factor in U.S. capital accumulation than life cycle savings. They use a new methodological approach to estimate the shapes of age earnings and consumption profiles, and find that these profiles are too flat to generate substantial life cycle savings. The study also highlights the importance of intergenerational transfers in various economic issues, including the burden of the national debt, the impact of social security on savings, and the optimal structuring of taxes. The authors conclude that intergenerational transfers are a crucial component of U.S. capital accumulation and that more research and data collection on this topic are needed. The paper also discusses the economic implications of changes in intergenerational transfers and the impact of interest rates on capital accumulation. The study uses historical data to estimate the size of life cycle wealth and finds that it is much smaller than total U.S. wealth, indicating that intergenerational transfers are the major element determining capital accumulation in the United States. The authors also discuss the methodology used to estimate life cycle wealth and the data sources used in the analysis. The study provides evidence that intergenerational transfers are a significant factor in U.S. capital accumulation and that the traditional Life Cycle Theory is not sufficient to explain the data. The authors argue that models emphasizing intergenerational transfers are more appropriate for understanding capital accumulation in the U.S. economy.Laurence J. Kotlikoff and Lawrence Summers analyze the role of intergenerational transfers in U.S. capital accumulation. Using historical data, they find that intergenerational transfers account for the majority of U.S. capital formation, while life cycle or "hump" savings contribute only a small fraction. This challenges the traditional Life Cycle Theory of Saving, which emphasizes savings for retirement as the main form of capital accumulation. The authors argue that intergenerational transfers are a more significant factor in U.S. capital accumulation than life cycle savings. They use a new methodological approach to estimate the shapes of age earnings and consumption profiles, and find that these profiles are too flat to generate substantial life cycle savings. The study also highlights the importance of intergenerational transfers in various economic issues, including the burden of the national debt, the impact of social security on savings, and the optimal structuring of taxes. The authors conclude that intergenerational transfers are a crucial component of U.S. capital accumulation and that more research and data collection on this topic are needed. The paper also discusses the economic implications of changes in intergenerational transfers and the impact of interest rates on capital accumulation. The study uses historical data to estimate the size of life cycle wealth and finds that it is much smaller than total U.S. wealth, indicating that intergenerational transfers are the major element determining capital accumulation in the United States. The authors also discuss the methodology used to estimate life cycle wealth and the data sources used in the analysis. The study provides evidence that intergenerational transfers are a significant factor in U.S. capital accumulation and that the traditional Life Cycle Theory is not sufficient to explain the data. The authors argue that models emphasizing intergenerational transfers are more appropriate for understanding capital accumulation in the U.S. economy.