Rotten spouses, family transfers and public goods

Helmuth Cremer and Kerstin Roeder ()

No 822, IDEI Working Papers from Institut d'Économie Industrielle (IDEI), Toulouse

Abstract: We show that once interfamily exchanges are considered, Becker?s rotten kids mechan- ism has some remarkable implications that have gone hitherto unnoticed. Specifically, we establish that Cornes and Silva's (1999) result of e¢fficiency in the contribution game amongst siblings extends to a setting where the contributors (spouses) belong to different families. More strikingly still, the mechanism does not just have consequences for efficiency but it may have dramatic redistributive implications. In particular, we show that the rotten kids mechanism combined with a contribution game to a house- hold public good may lead to an astonishing equalization of consumptions between the spouses and their parents, even when their parents'wealth levels differ. We consider two families, each consisting of a parent and an adult child, who are "linked"by the young spouses. Children contribute part of their time to a household (couple) public good and provide attention to their respective parents"in exchange"for a bequest. Spouses behave towards their respective parents like Becker's rotten kids; they are purely selfish and anticipate that their altruistic parents will leave them a bequest. The most striking results obtain when wages are equal and when parents'initial wealth levels are not too different. For very large wealth differences the mechanism must be supplemented by a (mandatory) transfer that brings them back into the relevant range. When wages differ but are similar the outcome will be near efficient (and near egalitarian).

Keywords: rotten kids; altruism; private provision of public good; subgame perfect equilibrium; family aid (search for similar items in EconPapers)
JEL-codes: D13 D61 D64 (search for similar items in EconPapers)
Date: 2014-01
New Economics Papers: this item is included in nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://idei.fr/sites/default/files/medias/doc/by/cremer_h/ltc_family32.pdf Full text (application/pdf)

Related works:
Journal Article: Rotten spouses, family transfers, and public goods (2017)
Working Paper: Rotten Spouses, Family Transfers and Public Goods (2014)
Working Paper: Rotten Spouses, Family Transfers and Public Goods (2014)
Working Paper: Rotten spouses, family transfers and public goods (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ide:wpaper:27916

Access Statistics for this paper

More papers in IDEI Working Papers from Institut d'Économie Industrielle (IDEI), Toulouse Contact information at EDIRC.
Bibliographic data for series maintained by ().