The central role of intra-family gifts
This leads us to the other essential feature of family economics, but one which Becker’s “neoclassical” theory omits. Like Adam Smith, Becker presumes that all economic transactions, including those within marriage, are essentially self-interested efforts to maximize one’s own utility or satisfaction. Now, family members do acquire their incomes mostly by exchanges with those outside the family. But the “division of labor” within the family, as Aristotle and Augustine pointed out, occurs mostly by personal and joint gifts, not exchanges. We all need to be fed, clothed, sheltered, and transported, whether or not we earn income. Our income therefore typically exceeds our consumption during parenthood and the “empty nest” (i.e. after children have left home), while consumption exceeds income during childhood and old age. This involves extensive gifts, not only from parents to dependent children but also between husbands and wives and from adult children to aged parents. … Without government social benefits, the retirement gap could be bridged only by love: a gift from someone (most often one’s adult children) whose own consumption and utility are thereby reduced.
Why do people have children?
Becker answers that children provide parents satisfaction as producer or (in modern economies) consumer durables. But this theory is not very accurate. In what I call “neo-scholastic” economic theory, parents have children for one of two reasons: because they love the children for their own sakes, and/or love themselves and expect some benefit from the children. … Becker’s theory cannot accommodate this fact, since worship, like marriage and fertility, involves another kind of sacrifice of valuable resources by the giver.
John D Mueller Demographic Winter
