The Manipulation of Children's Preferences, Old Age Support, and Investment in Children's Human Capital

28 Pages Posted: 17 Oct 2014

See all articles by Gary S. Becker

Gary S. Becker

University of Chicago - Department of Economics; University of Chicago - Booth School of Business

Kevin M. Murphy

University of Chicago; National Bureau of Economic Research (NBER)

Jörg L. Spenkuch

Northwestern University - Department of Managerial Economics and Decision Sciences (MEDS)

Date Written: August 2014

Abstract

We consider the link between parents' influence over the preferences of children, parental investments in children's human capital, and children's support of elderly parents. It may pay for parents to spend resources to "manipulate" children's preferences in order to induce them to support their parents in old age. Since parents invest more in children when they expect greater support, manipulation of child preferences may end up helping children and parents. A new result, that we call the "Rotten Parent Theorem," demonstrates that if children are altruistic, then even selfish parents will make the optimal investment in kids' human capital.

Keywords: preferences, old age support, human capital, bequests

JEL Classification: J24, J10, J14

Suggested Citation

Becker, Gary S. and Murphy, Kevin M. and Spenkuch, Jörg L., The Manipulation of Children's Preferences, Old Age Support, and Investment in Children's Human Capital (August 2014). Available at SSRN: https://ssrn.com/abstract=2510866 or http://dx.doi.org/10.2139/ssrn.2510866

Gary S. Becker

University of Chicago - Department of Economics ( email )

1126 East 59th Street
Chicago, IL 60637
United States

University of Chicago - Booth School of Business

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Kevin M. Murphy

University of Chicago ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-7280 (Phone)
773-702-2699 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Jörg L. Spenkuch (Contact Author)

Northwestern University - Department of Managerial Economics and Decision Sciences (MEDS) ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

HOME PAGE: http://jspenkuch.github.io

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