The History and Economics of the Family: A Guest Post

When I tell my non-economist friends that I do research on the “economics of the family,” they often look puzzled. (The funniest response comes from those who think that this is the same as “home economics“; as Betsey Stevenson will tell you, I surely would have failed home ec.) But Tim Harford is a lifesaver, and his new book provides a wonderful primer on how economists think about family life and what we have learned from this line of research. Fortunately, a chapter has just been excerpted by Slate, so you can read more here and here.

One of the fun things about this field is getting to talk to sociologists, demographers, gender studies folks, lawyers, and historians. The history of the family is endlessly fascinating, and it is truly amazing how the institution has evolved over the centuries. Let me recommend an absolutely fascinating survey of this history by Stephanie Coontz, available here (summarizing her excellent book, Marriage, A History). Go back and click on that link. Her essay is a must read for anyone interested in understanding the family.

Coontz shows quite convincingly that there is nothing traditional about our usual understanding of “traditional marriage.” Her essay is the focus of an online symposium asking “Can Marriage Survive?” Betsey and I were asked to write a short response, and we took this as an invitation to re-read Coontz’s historical narrative through the lens of economics. You can read our essay here, but let me describe the gist of our argument.

On the “traditional” role of families:

[F]amilies have always played a role in “filling in” where incomplete market institutions would otherwise have hindered economic development. For example, even in the absence of well-functioning contract law, families found ways to enforce agreements among kin. This naturally gave the family a role as an organizing device for economic activity, and the limits of the firm often coincided with the limits of the family. … Similarly, prior to the expansion of the welfare state, the family had been a key provider of insurance, as spouses agreed not only to support each other “through richer, through poorer, in sickness and in health,” but also extended this guarantee to parents, children, and siblings. Before modern credit markets arrived, access to capital was often facilitated through family ties. … A number of goods and services, such as freshly-cooked meals or childcare, were historically not sold in the market sector. Thus, the family became the firm producing these household services.

While the words above are ours, the influence of Gary Becker on our thinking should be pretty obvious. But we argue that things are changing:

The forces shaping family life have changed with the development of the market economy. An increasingly sophisticated system of contract law has made possible enormous economic benefits, but in the process the modern corporation has come to supplant the family firm as the key unit of production. The development of social insurance has spread greater security to many but has reduced the role of the family as a provider of insurance. Most recently, technological, social and legal changes have reduced the value of specialization within households.

In light of these changes, we suggest that economists need to develop a new – dare we say post-Beckerian? – model of the family:

So what drives modern marriage? We believe that the answer lies in a shift from the family as a forum for shared production to shared consumption. In case the language of economic lacks romance, let’s be clearer: modern marriage is about love and companionship. Most things in life are simply better shared with another. … The key today is consumption complementarities – activities that are not only enjoyable, but are more enjoyable when shared with a spouse. We call this new model of sharing our lives “hedonic marriage.”

A more politically charged response to Coontz’s essay come from Kay Hymowitz, and a different perspective comes from Norval Glenn. I’m never a fan of mixing advocates with academics, and you will definitely see differences in style. I suspect that we professors are generally less persuasive, but our facts are more often true. Online discussion of this topic will continue throughout the coming week.

UPDATE: If you would prefer to see this post summarized as a cartoon, click here. (And yes, Betsy and I love playing on our Wii.)

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  1. misterb says:

    Dr. Wolfers,
    You don’t mention that this discussion takes place on Cato Unbound, a libertarian advocacy site. That doesn’t invalidate any of the arguments, but it does set a particular context.
    I think that you and Koontz miss the point that families are not static in one time period, but contribute directly to the next generation. It’s a dynamic effect that static economic analyses will not capture. However, attitudes generated *even subconsciously* by parents will directly affect their children, and *especially* the subconscious motivations will be passed on through the generations.
    Trying to separate marriage and family from what I can only call “micro-evolution” is creating spherical chickens. Certainly, that is economists’s specialty, but in an area so important to our futures, a more complete analysis is required.

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  2. Diversity says:

    I guess it is past time someone did some serious analysis on this. A littleover 50 years ago I wondered about the differences between my marriage and those of my grandparents’ generation, and identified one way of thinking about the difference as a shift in the use of time from production to meet basic needs to production of joint personal fulfillment. This clearly was and I think still is a shift in degree rather than a shift in kind. Maybe it points to a Becker/Wolfers synthesis. But the only worthwhile critics of such models are likely to be people contemplating or recently launched on marriage; preferably economists.

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  3. Justin Wolfers says:

    In response to #2: FWIW, I don’t think that any of the panelists in this online symposium have any links to Cato. We were given no editorial line to follow, and our essay reflects our ideas, and was subject to no interference by the Cato folks.

    (This is not to deny that Cato are political advocates – they are often involved in the political debate. But I have no idea whether our essay is helpful or embarrassing to their cause. It was commissioned before they knew what line we would take.)

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  4. HJBoitel says:

    I have not read all of the references cited in the main article, but from what I have read, it is surprising that a discussion of this subject by a group of economists does not, at some point, dwell upon the significance that the change in economics of the family would have in the event of an economic depression.

    At the time of the last depression, there was a great deal of substantive bonding within families and extended families. They were able to tolerate and support each other under stressful circumstances, including poverty, crowded living conditions and caring for the sick. Family members frequently lived with each other or nearby each other.

    In the 78 intervening years, familial relationships relationships and individual expectations of comfort have changed dramatically. The spirit of self-sacrifice for family seems to have diminished. On the whole, individuals have become more selfish, i.e. needing things to keep themselves happy and somewhat addicted to technology where only one participant is needed to interact with a computer or a TV or a game or an ipod. We also have a society in which individuals are more likely to confess emotional and endurance weaknesses.

    Has there been anything written on the subject of how such changes will enhance (or diminish) the impact and duration of an economic depression?

    HJBoitel

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  5. frankenduf says:

    kind of silly to reduce marriage to economics, but I agree with highlighting the dilemma of family autonomy being eroded by corporate encroachment via TV/marketing (e.g. TV as the “third parent”)- this has inexorably led the American family to raise consumers rather than citizens- civil society needs to be buttressed, and corporate rights limited to reverse this, otherwise we may have further dissolution of child rearing- a ‘hedonic’ rather than ethical rearing

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  6. Andrew M says:

    To respond to frankenduf, marriage is nothing but economics. It is a practical endeavor, and frankly it is silly to reduce it to romance. You can’t pick who you fall in love with, but you can pick who you marry.

    It is refreshing to see people discussing the institution with their heads and not their hearts. Some might think that doing so takes the magic out of marriage, and they’re right. But a successful marriage is no more magic than a successful business. The difference being that in marriage the partners are allowed sexual relations.

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  7. Princess Leia says:

    Since I have been taught that marriage is about selflessness and service, considering a ‘hedonic marriage’ is an interesting twist.

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  8. Sailor boy says:

    To Princess Leia,
    I think you missed part of the point. Marriage “used to be” about selflessness and service. This at one end of the spectrum is no longer the case and at the other end is but to a lesser extent. Marriage used to be a necessity, now it is totaly optional. If this theory could be trended out I would assume that there would be a stong corralation to the rise in divorce.

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