Parental Altruism Research Articles

Household Decision-Making Choices: Investment in Children's Education or Self-Consumption.

Analyzing the sustainable decision-making mechanism between household consumption and education investment can theoretically develop education. This study uses the continuous-time utility model to demonstrate the independent characteristics of consumption and education investment, as well as the principle of decision incompatibility in the decision-making process of the utility maximization problem. Then, we establish a three-phase logarithmic utility model to obtain the intertemporal decision-making path of a family. The analysis shows that the investment allocation ratio between the two phases depends on the expected and discounted level of the offsprings' abilities, while the total investment level is related to parental altruism. When parents, with foresight, factor in prospective transfer payments from progeny, the optimal decision is to maximize their children's ultimate human capital within a given total investment. Education investment not only squeezes out consumption but also promotes consumption in various periods due to future transfer payments. The decision-making process of three typical growth stages indicates that as offspring mature and their human capital increases, parents' willingness to invest in education decreases while self-consumption escalates. This study provides a new perspective and theoretical basis for studying household education expenditure, motivation, and related policy formulation.

School Fees and Vouchers when Quality of Education Matters

Abstract The aim of this paper is to analyse the role that quantity and quality of education may play in the design of public policies. In our model, educated people enjoy a premium on their incomes, and education generates a positive externality for the society. Households live in two areas with different socio-economic characteristics. Altruistic parents choose both the amount and the quality of schooling they want for their children, ignoring the external effect. The latter is, instead, taken into account by the government, which is assumed to provide a composite education service that has a quantity as well as a quality dimension, and is financed mainly via taxes on the income of the parents. We investigate the effects on welfare of balanced-budget policy reforms aimed at introducing or raising i) school fees, and ii) vouchers meant to compensate the costs of attending high-quality schools. We show that, if the external effects are not considered, school fees improve private parental welfare while vouchers do not. Parental altruism is not enough to support high levels of quantity and quality of education. The consideration of social welfare, i.e. inclusive of the impact of the externality, somewhat mitigates the above results, by favouring lower (albeit positive) fees and allowing vouchers to increase social welfare under some circumstances.

Social mobility and education policy: a district-level analysis of legislative behavior

Abstract A vast literature has examined how perceptions of mobility shape demand for redistribution. These studies generally refer to contemporaneous tax policies demanded by those directly impacted. But social mobility is often measured as changes across generations. To account for these intergenerational effects, our analysis focuses on educational policies. We examine how social mobility at the district level explains legislative support for inclusive education policies. We first develop an electoral competition model where voters are altruistic parents, politicians are office seeking and the future economic status of the children is affected both by the degree of income mobility and by public education policies. We then analyze a newly compiled dataset of roll-call votes on California education legislation matched with electoral district levels of income mobility. In line with the model, our analysis suggests that upward mobility in a district negatively predicts legislative support for redistributive education bills.

The Effect of Children's Safety on Parenting Strategy

This paper hypothesizes that disadvantaged parents use more and harsher discipline in part as a rational response to parenting in more dangerous and less forgiving environments. I model parent-child interactions in which altruistic parents modify the behavior of short-sighted children by investing in children's self-control and by punishing misbehavior. In the model, parents choose to devote more resources to punishment when children's misbehavior has more serious long-term consequences. I present empirical evidence in support of this hypothesis by examining the relationship between school safety and parental discipline, finding that parents use harsher discipline when their children attend more dangerous and disorderly schools, even after accounting for neighborhood fixed-effects and a rich set of parent-level controls. Because parents are not directly exposed to their child's school environment, school safety is most likely to influence parents by shaping their concerns about their children's safety, rather than by affecting their stress, mental reserves, or knowledge about effective parenting strategies.

Childcare Subsidies and Child Skill Accumulation in One- and Two-Parent Families

I examine the role of family structure and childcare subsidies in child skill accumulation. I establish empirically that skill accumulation is more responsive to childcare price for one-parent families than for two-parent families. I analyze the effects of childcare subsidies in a model featuring endogenous family formation, parental altruism, and a baseline subsidy resembling that of the United States. I find that eliminating this subsidy generates welfare losses of 1.63 percent of lifetime consumption, that equilibrium adjustments act to mitigate these losses, and that increasing uptake among one-parent families yields the highest welfare gains per additional recipient. (JEL I21, I26, J12, J13, J24)

Efficiency with endogenous population growth. Do children have too many rights?

Fertility rates are declining in many countries. But are fertility rates inefficiently low? This paper addresses this question by exploring the efficiency properties of equilibria in an overlapping generations setting with endogenous fertility and dynastic parental altruism, using the notion of P ‐efficiency proposed by Golosov, Jones and Tertilt (2007). In contrast to Schoonbroodt and Tertilt (2014), who show that any equilibrium for which nonnegativity constraints on intergenerational transfers are binding is A ‐inefficient (and, under the assumption that new lives always increase social welfare, also P ‐inefficient), I characterize symmetric, P ‐efficient allocations as the equilibria arising from different distribution of rights among the agents, and show that many equilibria exhibiting binding constraints on transfers are P ‐efficient. To be more precise, except for dynamically inefficient equilibria, there is no need to alter children's rights so as to achieve efficiency.

What is the source of the intergenerational correlation in earnings? A comment

Gayle et al. (2022) study the sources of intergenerational persistence in earnings using a structural model estimated with data from the Panel Study of Income Dynamics. In the model, altruistic parents choose whether to have children or not, how much time to spend with their children and how much time to work, as well as how much to consume. Earnings in the labor market depend on observable characteristics of individuals, as well as parents’ education, ability, income and time investments. The estimated model predicts that nurture explains between 60 and 70% of intergenerational persistence, with a large role for labor market effects.

A Review of Matthias Doepke and Fabrizio Zilibotti’s Love, Money and Parenting: How Economics Explains the Way We Raise Our Kids

As Generation X’s (born in the 1960s and 1970s) child bearing years draw to a close, its parenting practices are due for assessment, the topic of the book under review. The book organizes its discussion around Diana Baumrind’s three parenting styles: authoritarian, permissive, and authoritative. It chronicles the drift toward the two latter and argues that income inequality determines which one of the two will be popular. When inequality is low, less is at stake and the parenting style can be more relaxed. By contrast, high inequality pushes parents toward the achievement- oriented authoritative style. More generally, the book argues, cultural differences in parenting styles can be understood as the outcome of altruistic parents’ efforts to prepare their children for adulthood, a useful perspective when parental rights are limited, long the case in the West.(JEL D13, D63, I20, J12, J13, J16)

Reuse of treated industrial wastewater and bio-solids from oil and gas industries: Exploring new factors of public acceptance

The major hurdle to the implementation of wastewater treatment plants' byproducts reuse schemes resides in public's acceptance. This study explores the attitudes of people towards using recycled water and bio-solids generated from oil and gas industries through surveying an ethnically diverse population. Novel to this study is the interaction between age and education, which have not been investigated in depth. Moreover, this is the first study that explores the reason behind women's reluctance in reusing treated wastewater, as it looks at maternal and paternal altruism, promising parameters in predicting the acceptance level. Findings indicate that respondents are relatively optimistic in the reuse of TIW and bio-solids especially for low contact level applications. Furthermore, parental altruism has been demonstrated to be a factor to predict the acceptance of the public. Females with children are found to be less likely to accept the use of TIW for high contact level applications.

The contribution of the external director for Brazilian private family business: a generational approach

PurposeThis paper aims to analyze the contribution of the external director to the governance of family businesses (FBs) in different generations. The authors aim to support the literature regarding the heterogeneity of these companies, showing that the generation of the primary decision-maker is an essential factor that differentiates the FBs from each other. These differences have numerous impacts in governance structures as boards' role and composition.Design/methodology/approachThe authors hypothesized that the main contribution of external directors to FB controlled by family members of the first generation is to provide resources to the company's survival. As it evolves and the later generations begin to participate as owners and managers, dealing with specific agency problems associated with this type of organization becomes essential. Four activities found in literature were tested: control of parental altruism and intrafamily divergences and provision of resources and external relations. Quantile regression (QR) was applied based on the dependent variables' characteristics, which show a strongly asymmetric distribution for all the models proposed.FindingsThe QR techniques and ordinary least squares (OLS) showed statistically significant results for the agency's activities when comparing the first and the second generations. The contribution of the external director in this context is to overcome the challenges associated with the beginning of sharing ownership and management. The resource provision and the establishment of the relations proved to be more critical in third-generation FBs. At this stage, the directors provide the needed resources for these companies' survival in an increasingly dynamic and complex environment.Research limitations/implicationsAmong this work's limitations, the authors highlight the lack of a variable that captures the life cycle in which the company is. They believe that the inclusion of this control factor would bring more robust results to the analysis. Besides, they point to the condensation of the countless activities performed by external directors to just four. This generalization fails to capture the other duties and contributions of this director in the family organizational environment.Practical implicationsThis study aims to provide guidelines so that external directors of FBs understand more clearly the needs of the companies in which they operate, whether from the first, second or third generation onward. The contribution of this director may be different for each type of organization. By understanding the weaknesses and concerns inherent to each generational stage, the external director can focus his efforts on adopting actions that effectively contribute to organizational performance.Originality/valueIn Brazil, most studies focus on the effects of board's composition and structure on financial results. In these papers, the data is usually secondary, found on companies' websites. The authors step further in this paper by analyzing primary data from privately held companies, which in Brazil is challenging to access. So, they believe they are surpassing the analysis traditionally found in the literature on the composition of boards of directors in terms of scope and methodology.

Hyperbolic discounting in an intergenerational model with altruistic parents

Hyperbolic utility discounting has emerged as a leading alternative to exponential discounting because it can explain time-inconsistent behaviors. Intuitively, hyperbolic discounting should play a crucial role in intergenerational models characterized by intertemporal trade-offs. In this paper, we incorporate hyperbolic discounting into a dynamic model in which parents are altruistic towards their children. Agents live for four periods and choose levels of consumption, fertility, investment in their children’s human capital, and bequests to maximize discounted utility. In the steady state, hyperbolic discounting decreases fertility, increases human capital investment, and shifts consumption towards younger ages. These effects are more pronounced in the time-consistent problem (in which agents cannot commit to a course of action) than in the commitment problem, which can be interpreted as realized and intended actions, respectively. The preference-based discrepancy between intended fertility and realized fertility has important implications for the empirical literature that compares the two.

Welfare rationales for conditionality of cash transfers

We study efficiency and distributional effects of conditioning transfers on educational investments by parents, in an OLG model with missing financial markets and heterogeneity of learning ability. Conditional cash transfers (CCT) can be designed to generate a Pareto improvement relative to either laissez faire, or unconditional transfers such as universal basic income proposals. This applies irrespective of whether the status quo involves underinvestment or overinvestment in education from a first-best perspective, or the nature and extent of parental altruism towards children. The CCT corrects a market failure of insurance and lack of consumption smoothing for parents with respect to random realizations of ability of their offspring.

Magyar mikro- és kisvállalkozások családivállalat-kormányzásának specialitásai

A családi vállalkozások nemzetközi szakirodalmában előkelő helyen szerepelnek a családivállalat-kormányzás kutatás eredményei. Hazai viszonylatban a családi vállalkozások többsége mikro- és kisvállalkozás. A tanulmány célja, hogy feltérképezze a mikro-, kis- és középvállalkozások családivállalkozás-kormányzása témakörben született legfontosabb nemzetközi kutatási eredményeket és bemutassa a hazai családi vállalkozások körében a témában lefolytatott interjúk eredményeit. A szerzők kutatása rávilágít arra, hogy a magyar mikro- és kisvállalkozások esetében is fellelhetők klasszikus, családivállalkozás- specifikus (önkorlátozás, szülői altruizmus, családi opportunizmus) ügynöki problémák. Ennek ellenére a vizsgált vállalkozói körben kevéssé jellemző a családivállalat-kormányzás eszközeinek alkalmazása. Pozitívumként említhető, hogy a kutatási eredmények alapján, a második generáció nyitottságot mutat bevezetésükre és alkalmazásukra.

Effect of proxy voting for children under the voting age on parental altruism towards future generations

What types of people are most concerned about the sustainability of our society? Does empowering such people in the political process influence us to make collective decisions that best serve the interests of future generations? This study invites 1000 parents with children under the legal voting age and 1000 parents with children over the legal voting age to an incentivized donation experiment in which a donation will be made to non-profit organizations committed to a better future society. The size of the donation per participant is determined by vote among the participants. We compare two voting rules: ordinary voting, whereby each participant is given one ballot, and proxy voting, whereby parents with unenfranchised children are given an extra ballot on behalf of their children. We observe that, with ordinary voting, the mothers with children under the voting age exhibit a higher degree of altruism towards future generations. With proxy voting, however, this distinction disappears. Furthermore, with proxy voting, the overall average donation indicated by participants is smaller than that indicated under ordinary voting. These observations imply that empowering institutionally those who tend to be more altruistic does not necessarily result in collective decisions that are more altruistic towards future generations.

Beyond critical education for sustainable consumption

Abstract This paper empirically supports environmental courses and activities based upon ‘parental altruism’ as an effective environmental education in developing citizen’s pro-environmental values, attitudes, and behaviors. This is a case study of the Homemaker’s Union Consumer Cooperation (HUCC), a prominent environmental consumer non-profit organization in Taiwan with over 70000 members. Re-examining Paulo Freire’s critical dialogical pedagogy, this study uses Paul Stern’s three levels of value orientation to investigate changes of HUCC members’ consumption behaviors. The courses and activities with parental-care are efficiently received by members than those of critical knowledge with the environment in terms of developing pro-environmental behaviors. Parental altruism is the key in changing consumer’s environmental values. This finding contributes to rethinking the meaning of dialogue in environmental education.

Agricultural Returns to Labour and the Origins of Work Ethics

AbstractWe examine the historical determinants of differences in preferences for work across societies today. Our hypothesis is that a society’s work ethic depends on the role that labour has played in it historically, as an input in agricultural production: societies that have for centuries depended on the cultivation of crops with high marginal returns to labour effort will work longer hours and develop a preference for working hard. We formalise this prediction in the context of a model of endogenous preference formation, with altruistic parents who can invest in reducing their offsprings’ disutility from work. To empirically found our model, we construct an index of potential agricultural labour intensity, that captures the suitability of a location for the cultivation of crops with high estimated marginal returns to labour in their production. We find that this index positively predicts work hours and attitudes towards work in contemporary European regions. We investigate various mechanisms of persistence, including cultural transmission, as well as a society’s production structure and institutions.

Taxes on unhealthy food and externalities in the parental choice of children's diet.

This study examines whether taxes on unhealthy food are suitable for internalizing intergenerational externalities inflicted by parents when they decide on their children's diet. In an overlapping generations (OLG) model with an imperfectly altruistic parent, the optimal steady-state tax rate on unhealthy food is strictly positive. However, it is only second-best because, in addition to reducing unhealthy consumption by the child, it distorts the parent's unhealthy consumption. Surprisingly, the optimal tax may underinternalize or overinternalize the marginal damage.

Social welfare, parental altruism, and inequality

AbstractWhen individuals have heterogeneous and persistent degrees of one‐sided parental altruism, inequality may grow large and standard social welfare criteria are problematic. If the planner selects Pareto optimal allocations based on some target level of consumption inequality, the solution implies an aggregation of individuals' utilities that is strongly asymmetric and biased toward the less altruistic dynasties. If instead, the planner uses a symmetric utilitarian criterion, the solution is likely to generate a large degree of long‐run inequality (even relative to laissez‐faire competitive equilibria), it can only be decentralized with negative estate taxes or lower bounds on bequests, and it is time‐inconsistent.

Is an unfunded social security system good or bad for growth? A theoretical analysis of social security systems financed by VAT

AbstractThis study investigates how unfunded public pensions financed by value added tax (VAT), as discussed in Japan, affect economic growth and whether payroll tax (PT) or VAT is the more growth‐friendly tax structure for financing public pensions. We examine these issues using overlapping generations models with parental altruism and find that a public pension system financed by VAT may increase economic growth when bequests are operative. By contrast, when bequests are inoperative, public pensions hinder growth unless agents are sufficiently patient. Finally, public pensions financed by VAT are more growth‐friendly than those financed by PT.

Child Care Subsidies with One- and Two-Parent Families

The implementation of child care subsidies has varied widely across countries and states, as well as over time, ranging from universal to poverty-tested eligibility. I study the implications of eligibility rules for child care subsidies in a general equilibrium, overlapping generations framework where altruistic parents invest in child skill. I allow for one- and two-parent families, and endogenize family formation with a marriage market. This explicitly incorporates single mothers, who currently parent 20% of children under 5 in the United States. Using individual-level data from the US Department of Education, I estimate how mother time, father time, and non-parental child care affect child skill for each family structure. These estimates allow me to account for the differential effect of child care subsidies on one- and two-parent families. My general equilibrium framework accounts for the effect of the subsidy on government expenditures as well as the skill distribution and, through that, on endogenous tax rates. I find that universal subsidies yield ex ante welfare gains of 5.9 percentage points, while targeting child care subsidies to one-parent families or poor families yields welfare gains of 2.4 and 2.0 percentage points, respectively. Universal subsidies more fully insure newborns against the risks they face than targeted subsidies, and do not disincentivize skill investment as happens with subsidies to the poor.