The burgeoning field of 'family economics' reveals hidden household strife: Don Pittis

If you are one of the majority of Canadians celebrating Family Day today, maybe you thought the day's plans were based on an amicable consensus with each member having an equal voice.

That's not how the proponents of a growing branch of study called "family economics" see it. 

Instead, harmonious decision disguised a battle.

Rather than being the bosom of warmth and joy illustrated in modern storylines,the family is more like a Grimm's fairy tale or a scene from Game of Thrones — a seething hotbed of conflict between members with different power based at least partly on their financial contribution to the clan.

"Traditionally what ... economics did is it assumed that households acted as if they were a single individual that had one set of preferences," said Shelly Lundberg a leading light in the burgeoning field.

Family feud 

Lundberg, a transplanted Canadian who teaches at the University of California, Santa Barbara, and author of recent paper called Canadian Contributions to Family Economics, said research shows the concept of household unanimity is flawed.

"What I did in my work and other people have done as well is to say, 'Wait a minute, that's just not how things happen,'" said Lundberg. "Households contain more than one person and we have to look explicitly at how do they trade off their potentially different interests."

The concept of family economics as a separate branch of study is usually attributed to the late Nobel-winning economist Gary Becker. Becker saw the inner workings of the family as a crucial component of the wider economy.

A conservative who did his work at the University of Chicago, Becker examined the family in the context of heterosexual marriage of the 1960s, when increasingly educated women were working outside the home.

The celebration of family as an institution is often seen as the territory of conservatives and the religious right. But family economics has been widely adopted by liberal scholars, its concepts are applied to family relationships of different kinds.

Divorce threat bargaining

In the difficult process of trying to look inside the power dynamic of family decision-making, family economics contains some prickly sounding concepts — such as "divorce threat bargaining," an attempt to calculate who would be better off in the event of marital breakdown.

Research has shown that in the tradeoff between competing interests, the person with the potential to earn the largest income also gets the biggest say in family decisions. Applying concepts related to feminist economics, researchers have theorized that a partner who stays home to look after kids can lose clout in the family power dynamic as their professional skills atrophy while the other partner rises through the earnings ranks.

Lundberg has demonstrated that who controls the money really does matter. Her research in the U.K. showed that once family allowance was switched from an income tax benefit on the principal wage earner to a cheque to moms, spending on children's clothing rose.

Of course, in many cases, decisions are made cooperatively. But sometimes a family relationship can reach a non-cooperative equilibrium short of divorces that one wit at an academic conference described as "harsh words and burned toast."

The price of love

It's pretty clear that whether conscious or not, decisions we make about choosing a partner, forming a family and raising kids are based on considerations of our own advantage. But as with a lot of economics, trying to dig down to the profit and loss of relationships seems to twist warm and cozy feelings like altruism and benevolence into mechanistic game theory.   

"Love has a price," said Aloysius Siow, a family economics specialist at the University of Toronto. He points to studies that show people willing to give up an organ for a family member, but not to a stranger. 

Despite the fact that it may make us uncomfortable, Siow said understanding the economic forces at work are important for making good policy decisions.

"We think that many of these policy issues are serious and we should discuss them more openly," he said.

The fact that couples and families are in a constant state of internal bargaining does not necessarily take the romance out of a relationship, said Elisabeth Gugl, an economics professor at the University of Victoria in B.C. and a specialist in family economics. 

"There is plenty of room for love, selflessness, and altruism," she said.

"The way bargaining works is that both people agree that they are much better off being married to each other than being single or married to another person."

And what happens within a family does not stay in the family. Gugl pointed out decisions about how Canadian families spend time or money, whether to work outside the home or within it, or how children should be raised and educated all have an effect on the wider Canadian economy.

"Families are the producers of labour, so we need to understand what is going on in the family," she said.

But don't let that wreck your day.

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