The definition of a household is fundamental before examining the main ideas of household theories. Subsequently, a household is a unit that comprises of people with a similar budget who as a result of the common budget interest, organize some of the aspects of work and consumption together. The term can also be defined as the production, reproduction, consumption and finally the socialization of children. On the other hand, the term economics is used to define as a practical science that guides us on how to distribute scarce resources to many wants. Neoclassical theories will form the focal point of the paper’s discussion. Consequently, neoclassical theories are embedded on assumptions of human behavior (Bruch & Feinberg, 2017). Consequently, they present an efficient and easy technique of eluding the intricate and problems faced by households and their social and economic functions. Improving the wellbeing of all members of a household is not exclusively dependent on economy principle alone, but other important variables include non-market behavior such as humanity, security, social connections, and closeness. In relation, there is an immediate need for realistic household economic theories that aim at breaking the chains of the have been associated with old theories (Folbre, 1984).
Technically, so as to develop an effective new economic theory of household, there must be the incorporation of humane aspects of household operations into the theoretical assumptions. Also, a new economic viewpoint should be employed so as to examine the human being and all of her economic operations through broader lenses including the market system (Cahuc, Carcillo, Zylberberg & McCuaig, 2014). One important aspect of all economic theories is that they try to capture the complex structure of independent households and their behavior. To understand the effects of private as well as public sectors interventions at micro and macro level consequences, it is important to analyze information on income earning mechanism, demographic structure, resource allocation, decision-making process and gender division of labor.
The introductory phrase of the paper will tackle an overview of neoclassical theory explaining the economics of household decision making and caring for children. Secondly, the paper will review explanations presented with other alternative approaches such as the Becker’s new household economic theory, through analyzing its main ideas (Fattore, Mason & Watson, 2017). These days, the term Home economics is gradually being replaced with terms like “Human Ecology or “Family and consumer studies. Technically, as much as there exist reasons to discount the contributions of home economics as a discipline of inquiry, there also exist several reasons to acknowledge and embrace the subject. Many experts in the field have advocated for the discipline to be used as a foundation for critical thinking. Simply put, the field could exclusively focus on helping American households to understand the linkage that exists between their behavior and the world in general. Consequently, this can be examined through examining the labor practices used by firms so as to make goods available to the consumers and also, the natural resources used in manufacturing. It is paramount to point out that home economics play a vital role in addressing several economic, social and environmental challenges in contemporary societies through making suggestions for radicalizing and renewing the field by employing theoretical framework from diverse fields like feminist economics and community economics development. The primary focus of the paper is the economic organization of the household which is also commonly referred to as household economics, and the main focus is on the theories that examine this organization with particular reference to production and consumption.
1960 marked the evolution of neoclassical framework in regards to the functioning and organization of life beyond the market and firms. Relevant examples stretch from that of Gary Becker’s A Treatise on the Family (1981) to several more works that touch on the subject. The approach the came to dominate economics in the 20th century is commonly referred to as the neoclassical model. The approach is distinctive in that it took a much narrower approach view of human motivations. The traditional model builds on a simplified story about the concept of economic life through assuming that there exist only two main types of economic actors, that is, firms and the households. The model makes simplified interactions about how the two actors project themselves and act. Firms, in this case, maximize profits from s producing and selling goods and services while on the other households are assumed to maximize their utility through consuming goods and services. Also, households can be associated with being similar to firms in that; they use a whole combination of inputs so as to maximize its utility. Simply put, households use a combination of physical and human resources to maximize utility fully. Subsequently, the human resources are comprised of elements like time, skills, and energy. On the other hand, elements like assets and capital signify the physical resources. In particular regards to this, most economists agree that behavior within the home can be explained the level of financial benefits it brings to its members and hence maximizing utility comprises of seeking health and comfort as well as happiness. Examples of household production include providing transportation, meal preparation, cleaning and also caring for the children or the elderly.
The models, in this case, are constituted with the ultimate aim of working out factors that constitute a household, why and how resources are allocated between members of a household, how private utilities are met and finally how the social welfare can be maximized. Consequently, this is because it is commonly believed that intra-household interactions eventually impact not only the overall economy but also the social welfare of the people. In this context, it is assumed that the household is treated as a single unit and that the limited or scarce resources should be shared equally and fairly within it. Subsequently, this idea is based on new-classical economics which signifies households as rational actors. The theory is based on three significant assumptions:
Individuals maximize utility and firms so as to maximize profits
Individuals act independently on the grounds of full and relevant information
Persons have rational preferences among outcomes.
From a neutral perspective, if the household models at micro-economic theory are examined, they dictate the household to have a single utility function. Consequently, this obscures the fact that some will lose at the expense of those who will gain even in cases where the aggregate utility increases. A comprehensive example includes selling the car for the eldest child’s education. However, such economic approaches have been the exclusive basis on which upon which policies have been not only designed but also implemented. Subsequently, with the passing of time and as development shifted its focus from quantitative to a more qualitative progress, the refinement of the models identified that inequalities between gender were evident in households. Technically, it is still evident that the new model still lacks the ability comprehensively examines intra-house relations with particular regards to the concept of gender differences. The central criticism directed towards the neo-classical household theory is that it portrays weak interaction between economic theory, genuine problems and the counter policies that are formulated to solve such problems. In most occurrences, the model has no contact with actual events and hence making it useless in extreme cases. In relation, it can be deducted that the theoretical lenses of the models are in many cases embedded on false assumptions.
From a neoclassical perspective, the main points as illustrated by Heiloner’s comprises of: Emotion, social bonds, and identity, Power illustrated through class differences of labor vs. capital, coercion and social embeddedness consisting of norms, law, and religion
The tradition or orthodox view, however, lays its original assumptions on three key elements, that is Scarcity in cases where other resources are limited, rationality where set goals exist and finally the market equilibrium which deals with the balance between demand and supply.
An economy is not only charged with the responsibility of producing goods and services for consumption but also, ensure that its population reproduces itself. Also, the reproduction process should not only take into account numbers but also examine the health aspect of the functioning participants in the said economy. One factor that attributes to the distinct difference regarding production is that different societies will socialize its children differently, taking into accountability variables such as its tradition and culture (Kotlikoff, 2016). The economic explanation of care defines several logics behind it, some define it as an investment aiming at future returns, caring for children is part of a system of reciprocal gifts and the social norms of a society that dictates the responsibility to parents. The care of children as an investment can be examined through several logical angles, that is, when they reach the working age, the expected returns are beneficial to the individual and society levels. Children are also the supporters of their parents when they are elderly (Konner, 2014). However, it is important to point out that investment in the care of boys and girls have different pay offs. In relation, both ways of treating children can be observed in agricultural societies like in India. In certain areas such as the Mediterranean countries and other developing countries, the returns on investment of children appear to be negative. This can be attributed to the fact that most developing countries have low or no family disposable income as compared to their counterparts in the developed countries.
There is also the concept of opportunity cost which signifies gone opportunities as a result of caring for the child. Opportunity cost simply puts means, proceeding to buy a car so as to pay for a child’s tuition fee or any other related expenditure. Other related challenges include when the investment cost is more that the benefits cost, such as declining importance of children’s work within the family. There also exist the concept of the increasing cost of children’s education and the long length of time parents continue to take care of their children. Children nowadays have become a poor investment technically. According to G. Becker, mothers poses endogenous taste for caring and they get better through the experience involved in generating pleasure through looking after their children. In relation, caring for children is known to enhance and develop personal capital.
Personal capital, on the other hand, increases productivity (Z-goods). Also, in this case, social capital is regarded as a characteristic of an individual and not the society as a whole. Compared to the New Home Economics, the New Home Economics theory does exclusively link child care activities to human capital which is similar to personal capital. Consequently, the time spent in establishing a relation with one’s child is regarded as an investment in personal capital. In this case, it is not the taste of the mother that has changed but rather her ability to generate self-pleasure through looking after the children (Manser & Brown, 1980). The aspect of caring as a norm examines the logical relationship between the said norm and the behavior; the relationship is circular and interactive since it is characterized by both positive and negative feedback loops. In this case, positive feedback is depicted when an initial change results in further change towards the same direction which illustrates a reinforcement of the initial change. On the other hand, negative feedback is expressed when change is reflected in the opposite direction which indicates a negative effect on the initial change.
The investment model states that individuals should be treated as rational maximize who are primarily concerned with their personal welfare. In relation, this model corresponds with the neoclassical consumer theory discussed in the first section of the paper. The concept of altruistic preferences also indicates that husbands prefer sharing their resources with their wives. Also, a comparison of the two theories points out that development of personal capital can be best utilized to explain caring behaviors attributed to gender differences in a similar way to how human capital is used to define the existence of gender division of labor in households (Grossbard, 2015). Also, positive feedback plays a central role in magnifying the effects of small biological differences. In neoclassical theory, endogenous preferences are considered part of an institutionalist critique. On the other hand, when using personal and social capital concepts, endogenous preferences are explained from a neoclassical framework (Altman, 2015). Also, it is important to understand that social norms affecting the caring behavior of people are much more consistent with the institutionalist approach to the behavior of the consumers. In relation, social norms are important in institutionalist explanations especially with specific regards to the household division of labor. The same concepts were considered when routines in firm’s behavior were analyzed.
Economic theory has always had major difficulties, especially when dealing with children. Consequently, this is because adults do not always carry themselves as rational economic agents. In relation, most legislative systems set regulations on the notion of an age of the majority (Craig, 2016). With specific regards to the same, children cannot be expected to carry out themselves as adults hence behave as full citizens. Below the certain age limit, the child is not considered mature enough to make personal decisions such as to marry, make legal and binding contracts and also obtain the right to vote (Gillingham, & Palmer, 2014). Someone else, of a specified legal age, is supposed to make the decisions for the minor. In the same perspective, economic theory defines that children cannot equally know what exactly is best for them and hence acts accordingly in their personal best interests. Someone else on the shoes must make decisions for them. An efficient economy defines that it is not only primarily responsible for producing goods and services but to effectively ensure that its population involves healthy functioning participants. In relation, this calls for providing for the needs of children and also caring for other people engaged in the labor force. The caring concept is considered an investment since it effectively prepares the children for their eventual participation in the same economy (Himmelweit, Santos, Sevilla & Sofer, 2013). It is important to acknowledge that children do not only have what is considered as physical subsistence needs but also, care in a broader concept which is often personal and time-consuming oriented. Simply put, beyond food and shelter, children need special attention in the process of nurturing them to become full members of the society. Different societies take different strategies in the way through which they nurture their children. They differ regarding how responsibilities for children are shared between the wider community and individual parents. A relevant example includes publicly provided childcare and the state benefits to the parent (Atkinson & Stiglitz, 2015). Also, some theories work best for some societies than in others, and this is explained by several fundamental factors.
From a technical perspective, the cost of consumption, with specific regards to a child’s consumption is likely to be lower in an Indian farm household than that of a Western Europe household, although not necessarily as a proportion of the total household income. Subsequently, a large proportion of the cost will be in the form of time and not necessarily regarding money. This is attributed to the fact that much of the farm’s household consumption is directly produced by the household labor rather than being produced and purchased in the market. Technically, in most households in Western Europe, one of the most important elements considered regarding raising a child is the opportunity cost. The opportunity cost is incurred when a mother foregoes all the other presented chances such as earning money so as to take care of the child. Consequently, this may take the shape of reduced levels of overtime part-time working or give up on working for a certain period so as to effectively take care of the child. On the other hand, in Indian farm household, the related opportunity costs will be technically lower since women only participate in household employment (Frederiks, Stenner & Hobman, 2015). Women only take part in working in the household and can only perform exchange work program within the institution of the household. Most of the time, the counter work performed by these women are directly connected with childcare. Older girls are also charged with the responsibility of taking care of their young one’s hence generally lowering the cost to parents associated with providing for the child.
Simply put, fewer western Europe households can look up to any material benefits from caring for their children while the Indian household provides a plausible account of how its system is defined and works so as to give care for children. Although in this context the cost of caring is regarded as low, the cost of education is particularly high if it is to be paid for and if it prevents contribution of children in household activities (Jain, Jain & Jain, 2015). Also, education in this context may not be as economically vital particularly to those who expect to inherit their parent’s way of life. As a result, an Indian household considers it a better investment to have more children rather than focus more on each one’s education.
In the United States, the debate over family policy is dominated by the concerns over children welfare. Increased public support directed towards child rearing, such as universal health insurance and subsidized child care would redistribute the income from adults to the elderly and the young (Anderson et al., 2016). Also, the transition can be traced from men to women and in most cases from the rich to the poor. Simply put, the group that benefits most is the least powerful groups at the expense of the most powerful groups. However, regarding enhancing economic efficiency, it is important to implement a more equitable distribution of developing children capabilities. The primary argument, in this case, is that money, time and care devoted by parents to their children creates a trend of public good and the economic benefits of the same are enjoyed by individuals and institutions who pay a small share of the total cost. Economics defines public good as one that is exclusively difficult to put a price tag on since it is both nonrival and nonexcludable (Umar, 2014). Explicit laws like rules and taxes can be used to curb the uncertain situation of public goods being used by individuals who ride free on other people’s efforts. Simply put, an implicit social contract that governs the relationship between women, men, children, and parents are renegotiated as a result of the changing structure of family and work.
In summary, a cohesive family structure illustrates that an investment in the form of care of children is likely to be repaid hence considered worthwhile. In relation, such an investment is made by having few children so as to take charge of each one’s care and education, or by having a large number of children. Also, low levels of the participation of females in the paid workforce indicate low levels of opportunity costs in caring for a large number of children at home. Several arguments in the paper also point out that large families have a higher probability of being a better investment as compared to smaller ones (Healy, 2014). This is because high levels of family employment imply expensive education and the skills obtained outside the home may technically be unimportant for future material welfare. The general impression created by the examined theories is that there exists a collective struggle over the distribution of the cost involved in taking care of children (Frederiks, Stenner & Hobman, 2015). Subsequently, this is because the production of children’s skills and abilities creates what can be referred to as public good that cannot be under-credited. As a result, there exist the need to redesign the existing social contract so as to encourage more suitable and sustainable forms of intergenerational reciprocity and altruism.
References
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