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The Power of the Family
Alesina and Giuliano report:
The structure of family relationships influences economic behavior and attitudes. We define our measure of family ties using individual responses from the World Value Survey regarding the role of the family and the love and respect that children need to have for their parents for over 70 countries. We show that strong family ties imply more reliance on the family as an economic unit which provides goods and services and less on the market and on the government for social insurance. With strong family ties home production is higher, labor force participation of women and youngsters, and geographical mobility, lower. Families are larger (higher fertility and higher family size) with strong family ties, which is consistent with the idea of the family as an important economic unit. We present evidence on cross country regressions. To assess causality we look at the behavior of second generation immigrants in the US and we employ a variable based on the grammatical rule of pronoun drop as an instrument for family ties. Our results overall indicate a significant influence of the strength of family ties on economic outcomes.
Here is the link. This topic remains understudied by economists. Biographically speaking, our political views often spring from our experience of our families and our views of what kind of family structure is acceptable. That is partly why true Russian liberals are so hard to find, and also why Russians are not obsessed with the welfare state. Libertarians tend to be family-ornery; compared to their conservative brethren, they are less willing to knuckle down and admit the morally binding power of irrational family obligations.
Addendum: Will Wilkinson has a good post on family.
Posted by Tyler Cowen on April 27, 2007 at 07:29 AM in Economics | Permalink
Comments
"the grammatical rule of pronoun drop "
What does this phrase mean?
Posted by: Brian Moore at Apr 27, 2007 9:28:20 AM
Family obligations are not irrational, it makes sense to care for your genes. By that libertarian logic living itself is irrational. Shows how clueless many economists are about our evolutionary natures.
Posted by: adrian at Apr 27, 2007 9:32:35 AM
It's like those economic models which assert that the only reason people have kids is to have someone to take care of them in their old age. The idea that people might desire children in and of themselves, like most animals everywhere, seems to fly past their heads.
Posted by: adrian at Apr 27, 2007 9:38:47 AM
Adrian, thank you for showing everybody that you don't know any economics.
Oh, and in case you didn't notice, your two posts actually show that you fail to do exactly what you accuse economists of failing to do.
In your first post, you say economists don't think about evolutionary aspects to behavior. I guess you never heard of evolutionary game theory, a subbranch of economic theory.
But then in your second post you whine that economists don't think that people might just plain like children, and that it's stupid to model having children as a strategic decision to be cared for in your old age.
But that just shows your own failure to think in evolutionary terms.
After all, our own "like" of children occurs in an evolutionary context. So if old people have some use to the tribe, then people may develop a fondness for children because children will care for them, in addition to the inherent fondness rooted in passing one's genes.
So your failure to appreciate economics and the logic of economic modeling is rooted in your own failure to think in evolutionary terms.
Posted by: Keith at Apr 27, 2007 10:04:34 AM
What is new in this paper? Family ties and community ties are so strong in India among muslims and christians and some castes among hindus like Konkani brahmins and they prosper compared to others.
However, christians and muslims are geographically highly mobile in the state of Kerala in India(check the religion-wise distribution of Gulf migrants; out of ten Keralites in USA, surely nine will be christians).This fact goes againstAlesina's and Guiliano's findings.
Posted by: GVV at Apr 27, 2007 10:22:53 AM
Adrian, there is no genetic reason why we should live or have families at all. Sweeping your hand across the world and saying "look, everything has genes and essentially genes continually copy themselves" has nothing to do with our course of action. Suicide and abandoning families is done all the time and there are equally simple explanations for doing both of those things.
Tyler, excellent post.
Posted by: John Goes at Apr 27, 2007 10:24:09 AM
keith.
have heard of it, but didn't know it applied to economics. my own encounter with the model i described was in the context of development economics. i was perhaps generalizing too much, and only meant that some ultra-rational economic models do not take account of the fact that humans do not always act in their own self-interest, and sacrifice for their kin, with children in grave circumstances, sometimes unto death.
john -
yeah, there is no reason to live, our genes really just trick us into continuing with this stupid farce (fyi not being sarcastic)
Posted by: adrian at Apr 27, 2007 1:07:47 PM
I am from a real close family. I have two older brothers. My mom is like
my best friend. I believe that having strong family ties is very important
in todays society. Society today is growing away from the the family and
focusing on more on individualism and money. Growing with such strong
family ties i could never imagine anything different than being close
with my family. Close family ties is good for the economy also becuase it
allows more family to spent on wants and needs for a family. Families that
are close are going to spend more money for their family members more than
people who are more individualistic. So in reality society should start to
steer back towards family being the most important componet.
Posted by: Jenna at Apr 27, 2007 5:16:05 PM
Jenna, a personal question: do you have children? If not, do you intend to? The reason I ask is because in some of the southern European countries where, according to A & G, family is really important, fertility rates are WAY below the replacement rate. Alesina & Giuliano do not address this issue.
Posted by: Johan Almenberg at Apr 27, 2007 5:30:53 PM
johan
- the post was about how families influence economics, not how economics impacts on the family. the family is strong and important in southern europe, with grandmothers frequently being childminders.
there could be other explanations for the fertility drop. italian guys are not famous for their monogamy! perhaps the fall of the church allowed them free reign with their natures, and now girls are unwilling to commit, lest they be abandoned. That's certainly what has happened in Russia, where the male propensity for cheating and drunkenness has driven many women to either date foreigners or nobody, rendering asunder the family and national greatness, soon to be conquered by China from the East, and the lands of Muhammad from the south.
Muhammad's legions eye the Latian shores as well, and all old Europe in her infertile gloom.
Posted by: adrian at Apr 27, 2007 6:57:11 PM
I think that family as social insurance for both the young and old is highly underregarded. It is in significant part because of this that I am comfortable as a libertarian calling for large reductions in government transfer payments of most kinds (I actually like unemployment insurance, at least as practiced in the US where it is definitely time limited. Don't tell anyone), because family, along with a dynamic job market and personal savings, make up the best safety net, while at the same time the government safety net frays family cohesiveness due to its significant redundancy.
Posted by: happyjuggler0 at Apr 27, 2007 9:20:32 PM
@Johan:
"The reason I ask is because in some of the southern European countries where, according to A & G, family is really important, fertility rates are WAY below the replacement rate."
Funny that you should say this. A dutch economist, Lans Bovenberg, suggest that de fertility rates in
southern Europe (especially Italy) are low because the insider-outsider distinction on the labor market
is so prominently present. Let me explain: the employed have very high job-security compared to the
employment opportunity of the unemployed. Since women are at a shorter side of the labor market then
men, young women postpone their child bearing decision to remain 'employable' (sometimes indefinately)
Posted by: JSK at Apr 28, 2007 8:14:35 PM
Here's an excerpt from the paper explaining the grammatical rule of pronoun drop, which was new to me:
"We use the intuition of Kashima and Kashima (1998), that language may embed a particular conception about relationships among people. They suggest that the linguistic practice of pronoun drop, particularly the omission of the first-person singular pronoun (e.g., "I" in English), is linked to the psychological differentiation between the speaker and the context of speech. Societies more individualistic in nature tend to emphasize the importance of the individual in the context of speech, so they tend to keep the first-person singular pronoun. More collectivistic societies, on the other hand, tend to drop the first pronoun."
"Our hypothesis is that societies with weak family ties are more individualistic, therefore should be associated with pronoun drop."
Posted by: Edith at Apr 28, 2007 11:59:04 PM
