The Economic Reasoning of “Ultimogeniture” of Amish Farms

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My younger son’s family visited the nearby Amish country and did a tour of several farms. The guide mentioned that the youngest son usually takes over the farm from his father. The older brothers typically learn trades. She thought this happens because the father isn’t ready to give up the farm when the older brothers reach adulthood.

My economic explanation is that this minimizes the frequency of paying estate taxes (no longer a very binding constraint, but it was until quite recently). Perhaps this “ultimogeniture” is an illustration of an unusual excess burden generated by estate taxes. Or perhaps there’s another explanation? (Related: check out Freakonomics Radio on “The Church of ‘Scionology.’”)

 

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COMMENTS: 14


  1. John B. Chilton says:

    This seems plausible:

    “The family unit is central to their community, where children welcomed joyously and considered a gift from the Lord and the elderly are cared for in a separate apartment built as an addition onto the family home for them to live independently yet in the midst of family. Their strong community is evidenced by barn raisings and co-operative insurance, where if an emergency arises, the members come together and financially provide for needs. Another amazing example is fathers providing for their sons’ futures by buying farms for them or helping them buy farms or start cottage businesses; the youngest son usually inherits the family farm.”

    http://hubpages.com/hub/Amish-Culture-and-Society-Community–Religion–Technology

    Given these strong family bonds, and that families stay near each other, the parents can expect that they will be cared for by their children in their old age.

    The question, perhaps, is why this has not been more common in other cultures. Or perhaps it is.

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  2. BL1Y says:

    In primogeniture cultures the family business is handed over when the father is ready to retire, not when the oldest son reaches adulthood, so the first explanation seems unlikely.

    I’m also skeptical of an estate tax explanation. Just doesn’t really seem… you know, Amish.

    However, the estate tax explanation is based on the idea of longer periods of continuity, and that may be the explanation. At the time the father is old enough to retire, the oldest son may be past his physical prime, and not in a great position to take over the farm. The youngest son, having the most good years left, would be the best choice.

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    • John B. Chilton says:

      I like this. What may be going on is that a family farm needs just one person in management. The father is generally far from retirement when the eldest son is ready to enter management. In larger family businesses that isn’t true. What if it’s a small business? At least in large markets there are examples where the firm grows by creating branches managed by sons. In Amish scale farms there’s no advantage to branching.

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  3. Tara says:

    In many societies the family estate is given to the youngest child, who is expected to care for the aging parents in exchange. The parents remain in the family home until their death. This is understood by the children from an early age and the older siblings don’t fight over the land because of what the youngest child has had to fore-go (travel, perhaps a family) in taking care of the parents for what may be many years.

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  4. Eric M. Jones. says:

    Hidden due to low comment rating. Click here to see.

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  5. jonathan says:

    Not knowing how long the practice has been around, how widespread it is, whether it predates the estate tax, an economic reason would be that older kids can start businesses that then have customers in the parents and other relatives. They would also be strengthening the economy of the Church-based community. They would also be strengthening bonds between Amish communities while maintaining health since they could each then bring in men skilled in trades and keep the genetic pool from shrinking.

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  6. Ron says:

    I grew up on a farm and had both older and younger brothers. When the oldest son is an adult and ready to work, the father is still well within working age (say 40-50 years old). By passing the farm on to the youngest son, the father gets to work his whole working life as a farmer and transition it off to his son at about the age we are ready to retire.

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  7. Impossibly Stupid says:

    Uh, why not just ask the Amish why they do it? It’s not like we have to puzzle it together as an archaeological mystery. For all we know, it could be something without any reasonable explanation, like some buried Biblical guideline.

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    • Efftrain says:

      Great idea. Let us know when you write them a letter and receive a handwritten response. Or you can wait until an Amish blogger runs an internet connection to his farm, fires up his computer and responds to this article…

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  8. Enter your name says:

    The estate tax idea doesn’t work for me: it’s still one transfer per generation.

    Also, most of these smaller farms aren’t valuable enough to pay any estate taxes (remember, the limits have been much higher [usually doubled] for family farms), and if they are, it’s pretty trivial to set up a legal partnership that transfers the wealth over the course of a few years until it is under the tax threshold.

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  9. Bill Harshaw says:

    The Amish have been growing their population religiously for hundreds of years, spreading into new areas where they can find relatively good and cheap farmland (i.e., upstate New York). The growth means it’s likely some of the older sons and their spouses are the migrants. It’s only relatively recently that the Amish have diversified into trades, like furniture.

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  10. Johan J. says:

    maybe some form of benjamin behaviour? Stereotypical older son has earned responsibilities very young, the jonger person stays at home?
    BTW: mentioning benjamin in a religious context. Cain, was older and a hunter. Abe was a farmer. Jacob was a younger sun and less rough than his older brother. Benjamin/Joseph also seem to stay home more, and David was bringing food to his brothers in the army.
    Maybe they have taken a religious observation and applied it to their conetext?

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  11. Pete Beckary says:

    I hail from Intercourse, Lancaster County, PA… the oldest Amish/Mennonite community in the US… surprising that the father will sell the farm to the next generation.. it is not simply handed down as you would expect. There is an extreme obsession with money in these groups – I liken it to drug abuse or alcoholism… Not something the outside world knows until you’ve been here a while.

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