The Manipulation of Children's Preferences, Old Age Support, and Investment in Children's Human Capital
28 Pages Posted: 17 Oct 2014
Date Written: August 2014
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: Suggested Citation