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Economic in a Family Way

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  • Ted Bergstrom

    ()
    (University of Michigan, Economic)

Abstract

This paper is an advertisement for some facts and ideas that I think likely to lead to a richer theory of the economics of the family. The discussion references many papers from anthropology and biology. Because of the intimate connection between the family and reproduction, it should not be surprising that there is much to be learned about the economics of the family from the study of evolutionary biology. Given the increased prevalence in recent decades of unwed parenthood, divorce with sequential monogamy, and ``non-traditional'' family arrangements, it also seems plausible that anthropo logical studies of alternative family structures would help us to understand our own. The first section presents an evolutionary theory of interpersonal sympathy among family members. It discusses the genetic theory of {\em kin selection}\/ and its implications for human preferences and relate these ideas to theories of the {\em cultural evolution}\/ of preferences. The next section takes an evolutionary viewpoint in exploring the riddles posed by the {\em demographic transition}\/ and the question of intergenerational flows of wealth. The third section discusses non-monogamous family structures in our own culture and in other cultures. The final section draws on a more traditional source of inspiration for economists. This section outlines an approach to bargaining theory within the family based on recent discoveries in non-cooperative game theory and discusses ways of integrating the theory of spousal bargaining with the theory of marriage markets. Gary Becker's ``Rotten Kid Theorem'' asserts that if all family members receive gifts of money income from a benevolent household member, then even if the household head does not precommit to an incentive plan for family members, it will be in the interest of selfish family members to maximize total family income. We show by examples that the Rotten Kid theorem is not true without assuming transferable utility. We find a simple condition on utility functions that is necessary and sufficient for there to be the kind of transferable utility needed for a Rotten Kid Theorem. While restrictive, these conditions still allow one to apply the strong conclusions of the Rotten Kid Theorem in an interesting class of examples.opology Servers

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File URL: http://www.econ.ucsb.edu/~tedb/Family/psfiles/famway.ps
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Bibliographic Info

Paper provided by University of Michigan, Department of Economics in its series Papers with number _028.

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Date of creation: Jun 1995
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Handle: RePEc:wop:michec:_028

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  1. Theodore C. Bergstrom, . "Primogeniture, Monogamy and Reproductive Success in a Stratified Society," ELSE working papers 044, ESRC Centre on Economics Learning and Social Evolution.
  2. Ted Bergstrom, 1994. "On the Economics of Polygyny," Papers _026, University of Michigan, Department of Economics.
  3. Bergstrom, T.C., 1993. "A Survey of Theories of the Family," Papers 93-02, Michigan - Center for Research on Economic & Social Theory.
  4. Donald Cox & Oded Stark, 1996. "Intergenerational Transfers and the Demonstration Effect," Boston College Working Papers in Economics 329., Boston College Department of Economics.
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