Endogenous Changes in Tastes

Abstract

Parents care about their children, spend resources on educating them and bequeath them some physical and/or human capital. Here we argue that the actions of the parents have an influence, not only on the productive possibilities open to the children (through the capital they inherit) but also on their tastes and attitudes. We investigate the resulting dynamics of this idea. Several influences are identified but one startling result is that, if inheritance has a large influence on people's attitude to work, the pattern of behavior becomes completely unpredictable after a few generations.

Keywords: Endogenous preferences, bequests, chaos

JEL Classification: D11