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ECON0115 Week 3
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Week 3Households, models and the unitary model
Households
De nitions
• Families are economic units that share consumption, coordinate the work activities, accumulate
wealth, and invest in children
◦ Economics of the Family, 2014
• The family is the association established by nature for the supply of men’s everyday wants
◦ Aristotle, 384-322 BC
• During the Industrial Revolution (1760-1840) Cantillon, Smith and Malthus
◦ Timing of marriage is a means of controlling fertility
◦ Connection between economic circumstances and size of the population
• Post revolution in the mid 19th century, Mill and Le Play
◦ Family impacts on standard of living of its members via self production, insurance,
redistribution of family resources
◦ Allocation of bequests amount siblings can a ect marriage patterns, incentives of parents
and children to work and save, and the distribution of wealth in society
Changes
• The role of the family has changed recently
◦ Individuals can enter and exit marriage at will
‣ Higher turnover, some individuals transit through several marriages, being single for a
longer part of their lives
◦ Avoiding pregnancy is easy
◦ Child mortality is low
◦ Singles and marries partners can choose whether to have children
◦ Technological change has decreased the role of domestic production
◦ It is common for husbands and wives to participate in the labour market
Becker’s insight
• Uni ed approach to the family in modern societies
• Ties within family allocation with aggregate patterns of marriage and divorce
• When each person can chose amount several alternative spouses, competition over spouses
matter
◦ The options of each person willing to marry depend on whether individuals of the opposite
sex are willing to marry them
◦ Equilibrium concept must be such that in existing marriages, no one wants to become single
or to replace the current spouse
• This can explain associative matching patterns and high marital turnover observed in modern
society
Di erent approaches to the family
Methodological individualism- causality must result from the preferences and actions of individual
agents
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