Published online by Cambridge University Press: 23 September 2009
The first three lectures-turned-into-chapters in this book implement the idea that economic methodology is helpful in understanding the motives for and the repercussions of transfers and exchanges even if they take place outside markets. Although it may seem odd to think of a family environment as a “marketplace,” or of family members in their relationships with each other as market agents, it is quite natural to use an economist's lens to view the ways in which the preferences and actions of one family member impinge upon and modify the choice-set, the behavior, and the wellbeing of another.
Chapter 1 investigates the relation between the allocative behavior and wellbeing of one family member and his altruistic link with another. Chapter 2 explores how the timing of the intergenerational transfer of the family's productive asset affects the recipient's incentive to engage in human capital formation. Chapter 3 sheds light on the way in which transfers from an adult to his parents impinge on future transfers to him from his own children. Each chapter also traces at least some of the ensuing market repercussions. Chapter 1 refers to a disincentive to transact in anonymous markets arising from altruistically-motivated automatic trans-fers between altruistically-linked family members; chapter 2 considers the effect of individuals' human capital investment decisions on economy-wide per capita income; and chapter 3 suggests that the benefits that accrue to particular family members from engaging in intrafamilial transfers could account for the fact that they have a lower rate of participation in the labor market. Economics (narrowly defined) thus provides the tools but also reaps some gains from their use.