The Economics of Parenting
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Transcript: English(auto-generated)
00:04
So our research is about the economics of parenting, parenting meaning the way people raise their children. Saying that we do the economics of parenting may seem unusual at first sight because parenting is a topic that traditionally was treated in other social sciences such as sociology and psychology. However, we argue that ultimately economics is a social science that explains that
00:24
people make choices and there's nothing that stops us from applying the economic method to choices that parents make. And in fact the choices we make as parents are often among the most important ones we face in our lifetime, whether to have children, how many to have, what kind of education to provide them with. These are very important choices that people think a lot about where the economic method
00:44
should be successful. What we want to do is to use the economic method to explain parenting choices and in particular we focus on the dimension of the choice of a parenting style. A parenting style is a concept that comes from psychology where psychologists distinguish major types of methods and approaches that parents take in dealing with their children.
01:05
The main parenting styles that are distinguished in the psychology literature are first of all authoritarian parenting where parents focus on obedience. So the parents say that I know what is right for my child and I expect my child to follow my rules. Authoritarian parenting would often involve a corporal punishment where parents are very
01:24
forceful in making their child do the right thing. The opposite of authoritarian parenting is permissive parenting where parents essentially let kids do what they want on their own and have the belief that giving a lot of freedom and leeway to children is a good approach.
01:41
Somewhere in the middle is authoritative parenting where parents do want to provide guidance to their children but do it in a different way by trying to persuade their children that their own point of view is the right one. So it's a parenting style more based on arguing with children and explaining decisions as opposed to just demanding obedience outright.
02:04
So our objective is to understand how we can explain why parenting has changed so much over time and why it varies so much across countries. We want to use the economic method. The economic method in general means that we envision as economists people as making deliberate choices to satisfy certain objectives informed by the constraints that are given
02:23
by their economic environment. So we have to start by saying what are the constraints that parents face and what are the objectives. The objectives of parents, we argue, are really just love and concern for children. Like most other people would say too, we think that ultimately what parents want is for the children to do well and to be happy.
02:43
But exactly how you can accomplish this as a parent depends on constraints that you face and it also depends on the wider economic environment. So when I talk about the wider economic environment, one very important aspect there that parents have on their minds is the degree of economic inequality. I think, for example, of a country where inequality is very high but there are some
03:02
very rich people and others who are very poor and a country where there's also a very high return to education in the sense that people who do well in education, finish school, go to university, those people ending up with very high earnings and others who, say, drop out of high school are doing much less well. If that is the economic environment that parents face, they will have very strong incentives
03:21
to push their children hard to do well in school. They will maybe be requiring them to do a lot of homework, maybe they will help them with the homework. They will really push them to succeed and thereby adopt a parenting style that's more interventionist, such as the authoritarian parenting style or the authoritative parenting style. Compare this to society where inequality is very low, where everybody, regardless
03:42
of education, does more or less equally well, where unemployment is low. In such a society, parents will have much lower incentives to be pushing. So we will expect to observe more permissive parents as opposed to, say, authoritarian parents. The key finding of our research is that the economics of parenting works even better
04:03
than we would have first imagined at explaining the choices that parents make around the world. What I mean by this is that we can map economic circumstance into parenting styles, into the distribution of parenting styles in a fairly precise way. So let me give you one main example of this, which is data from the World Values Surveys
04:23
on what values parents emphasize in raising children. The World Values Service is a large survey done in many countries, where parents are asked questions about what particular values are important for kids to learn when they grow up. And these values include things such as obedience, working hard, imagination, independence, and so on.
04:42
The first thing we do is map these values into the parenting styles we discussed earlier. For example, the defining characteristic of the authoritarian parenting style is to demand obedience of the children. The children are supposed to do what the parents want. And so we're going to call a parent who replies on the survey that obedience is important,
05:01
we're going to call them an authoritarian parent. At the same time, there's also this value of working hard. So we're going to take the other parents who don't demand obedience and then compare those who demand hard work from their children versus those who do not. We're going to call those that do not demand hard work to be permissive, where children are left to do what they want on their own, whereas those who demand hard work, we're
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going to call those the authoritative parents. The next thing we do is then look at the relationship between inequality in a country and the distribution of parents across these parenting styles. What we find there is a very strong relationship between the degree of inequality and parenting styles.
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So in particular, if we look at high inequality countries, for example, the United States, we find a very large share of parents who are either authoritarian or authoritative, so who push their children towards performance. There's very few parents who have the opposite view of being permissive. Whereas if you go to a very low inequality society like the Scandinavian countries,
06:01
Sweden, for example, you find that the vast majority of parents are permissive and very few are of the more intensive, pushy parenting styles. I think there's two different dimensions of relevance. One dimension is this question of whether there's something we could do as a society
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to make parenting just more fun and enjoyable for everybody. What I mean by this is that sometimes the economic environment can be such that parents face incentives to be very intense, but in a way that really creates something like a zero-sum race between different parents. Think, for example, of a setting where the education system is one where there is some centralized exam
06:47
that rewards the top exam takers in the entire country very highly, whereas others do much worse. I'm thinking, for example, of China, which has a centralized exam like this, but there's other countries that have similar features. In such a country, you often observe that parenting is very intense.
07:01
Parents push their children very hard, which presumably is not that much fun for both parents but also for the children. From the economic point of view, we can think of some of this as being an externality, whereby pushing your own children very hard, you kind of force other parents to do something similar, getting an outcome that is not really optimal or ideal for everybody.
07:23
So we can ask the question, is there a better way of organizing education, for example, or organizing the labor market that makes, ultimately, parenting and having children more enjoyable than it is right now? Another question which is perhaps even more important is the question of social inequality within countries. So I've mostly discussed results across countries, but another thing we observe is that rising inequality,
07:45
which turns out to be important for parenting, also leads to large gaps in parenting within a country. We see that high-end equality countries have a large gap, for example, between the parenting investments of those who are doing very well and are, say, couples who are both well-educated and have high incomes, versus other parents who are maybe less advantaged,
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maybe single parents with a lower income and a more challenging environment. If the parenting investments between these parents start to diverge, we have a challenge for social mobility and social inequality in the future. So then we can also ask, can we use the economics of parenting, so our ability to understand the mapping between the economic environment and what parents do,
08:22
to reduce the social inequality and thereby also reduce the challenges for economic mobility that have arisen in recent decades? So this overall research project is still in a relatively early stage. We have done work that shows that this economic approach to parenting works really well,
08:42
but there's still many open questions. So just to give one example of an open question is the role of peers and neighborhoods in shaping parenting decisions. We do know that children learn a lot from the people around them, and we also know that there's large differences in how different countries are organized in terms of who the peers are that children are exposed to.
09:02
What I mean by this is that in some places you have locally financed schools where you have a lot of segregation of, say, richer and poorer families, and so you have often a peer group that's very much certified that the rich and the poor children are all in separate groups. Others where we have environments where there's more of an attempt to mix different children together.
09:20
And these would have very different implications both for the incidence of parents to undertake certain parenting investments, but also for the long-term outcomes for the children and for what's going to happen to parenting choices. In addition, there's also this policy dimension which we have already briefly touched on. I think it will be very interesting to think about what can we do as a society
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to counteract some of these tendencies that we have seen recently in this area of the economics of parenting. And here I talk in particular about the divergence that we have seen between, say, richer and poorer parents in terms of the parenting investments that they undertake. So think about a concrete measure that could be undertaken to counteract these trends.
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To some extent this could be just basic economic redistribution measures, but perhaps even more importantly, policy ideas such as providing a lot more access to preschool, to have more possibilities or flexibility for parental leave, to make it easier for all parents to deal with the challenges of modern parenting. I think these are important applications that this research could be used for.