Rotten Spouses, Family Transfers and Public Goods
AbstractWe show that once interfamily exchanges are considered, Becker's rotten kids mechanism has some remarkable implications that have gone hitherto unnoticed. Specifically, we establish that Cornes and Silva's (1999) result of efficiency in the contribution game amongst siblings extends to a setting where the contributors (spouses) belong to different families. More strikingly still, the mechanism does not just have consequences for efficiency but it may have dramatic redistributive implications. In particular, we show that the rotten kids mechanism combined with a contribution game to a household public good may lead to an astonishing equalization of consumptions between the spouses and their parents, even when their parents' wealth levels differ. We consider two families, each consisting of a parent and an adult child, who are "linked" by the young spouses. Children contribute part of their time to a household (couple) public good and provide attention to their respective parents "in exchange" for a bequest. Spouses behave towards their respective parents like Becker's rotten kids; they are purely selfish and anticipate that their altruistic parents will leave them a bequest. The most striking results obtain when wages are equal and when parents' initial wealth levels are not too different. For very large wealth differences the mechanism must be supplemented by a (mandatory) transfer that brings them back into the relevant range. When wages differ but are similar the outcome will be near efficient (and near egalitarian).
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7998.
Length: 23 pages
Date of creation: Feb 2014
Date of revision:
Contact details of provider:
Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org
Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Other versions of this item:
- Helmuth Cremer & Kerstin Roeder, 2014. "Rotten Spouses, Family Transfers and Public Goods," CESifo Working Paper Series 4681, CESifo Group Munich.
- Cremer, Helmuth & Roeder, Kerstin, 2014. "Rotten spouses, family transfers and public goods," IDEI Working Papers, Institut d'Ãconomie Industrielle (IDEI), Toulouse 822, Institut d'Économie Industrielle (IDEI), Toulouse.
- Cremer, Helmuth & Roeder, Kerstin, 2014. "Rotten spouses, family transfers and public goods," TSE Working Papers, Toulouse School of Economics (TSE) 14-470, Toulouse School of Economics (TSE).
- D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
- D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
- D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Helmuth Cremer & Kerstin Roeder, 2013.
"Long-Term Care and Lazy Rotten Kids,"
CESifo Working Paper Series
4372, CESifo Group Munich.
- Cremer, Helmuth & Roeder, Kerstin, 2013. "Long-term care and lazy rotten kids," TSE Working Papers, Toulouse School of Economics (TSE) 13-424, Toulouse School of Economics (TSE).
- Cremer, Helmuth & Roeder, Kerstin, 2013. "Long-term care and lazy rotten kids," IDEI Working Papers, Institut d'Ãconomie Industrielle (IDEI), Toulouse 789, Institut d'Économie Industrielle (IDEI), Toulouse.
- Cremer, Helmuth & Roeder, Kerstin, 2013. "Long-Term Care and Lazy Rotten Kids," IZA Discussion Papers 7565, Institute for the Study of Labor (IZA).
- Xavier Vives, 2001. "Oligopoly Pricing: Old Ideas and New Tools," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 026272040x, December.
- Wolff, Francois-Charles, 2006. "Microeconomic models of family transfers," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier, Elsevier.
- Richard C. Cornes & Emilson C.D. Silva, 1997.
"Rotten Kids, Purity and Perfection,"
Keele Department of Economics Discussion Papers (1995-2001), Department of Economics, Keele University
97/13, Department of Economics, Keele University.
- Richard C. Cornes & Emilson C. D. Silva, 1999. "Rotten Kids, Purity, and Perfection," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 107(5), pages 1034-1040, October.
- Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, Elsevier, vol. 29(1), pages 25-49, February.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak).
If references are entirely missing, you can add them using this form.