How economics explains the way we raise (and will raise) our kids

There is more rationality, even economic rationality, in parenting than a superficial observation may suggest. Differences across parenting cultures track changes in economic inequality. A column by Fabrizio Zilibotti.

Fabrizio Zilibotti
«Parenting choices will continue to be shaped by economic transformations.»

«The infernal storm, eternal in its rage, sweeps and drives the spirits with its blast,» writes Dante Alighieri in the fifth Canto of the Inferno. Are humans, like Paolo and Francesca in Dante’s circle of hell, at the mercy of blind and brute psychological forces that sweep and drive their behavior? Or do we (more or less consciously) follow rational principles? The question has fascinated philosophers and scientists for centuries, and more recently also economists have been debating about that.

When it comes to parenting, the irrationalist’s case may appear to have an edge. Parents follow what looks like fashions and fads, changing frequently their mind after the advice of the experts of the day who cater to their anxiety and insecurity. In the 1970s, the consensus was that what parents had done for centuries, namely, requesting their children to obey and disciplining them when they misbehave, was a terrible idea. The authority of parents and educators came under threat as new values spread, with the hippie movement taking the antiauthoritarian mood to radical consequences. But then the tide has changed again. Starting from the 1980s, parents have become increasingly intensive and obsessive. According to the data on time use, American parents spend an hour a day more interacting with their children than did the parents of the 1970s. Most of these activities are geared to motivate and program their children for individual success. But it may not be over. One hears the pushback from the free-range parent movement which proposes the return to an idyllic world where all this frenzy is over.

In our recent book «Love Money and Parenting. How Economics Explains the Way We Raise our Kids» (with Matthias Doepke), we argue with the aid of historical and international data that here is much more rationality, even economic rationality, in parenting than a superficial observation may suggest. Differences across parenting cultures track changes in economic inequality, big time. Chinese and Japanese share many cultural traits (from Buddhism to Confucianism, to a common alphabet). And yet, when it comes to parenting, they follow very different principles. 90% of Chinese parents praise hard work in international survey, while only 20% of them praise imagination. Instead, in Japan the proportion praising hard work is just above 30%, and many more parents than in China praise the virtue of imagination in children. More formally, when we classify parents according to the values they promote, 65% of the Japanese are «permissive» parents, against less than 10% of the Chinese parents. Most Chinese parents are instead authoritative, namely, they push and motivate children hard to work and achieve.

In accordance with the Gini coefficient

Similar differences can be found between parents in the US and in Canada – American parents are on average more authoritative than are Canadians. What is the root of these differences? It’s the economy, as we show. China and the US are very unequal societies, with Gini coefficients for income around 40%, while Japan and Canada are in comparison much more equal, with Gini coefficient around 30%. The same pattern holds true across European countries. Swiss and German parents are more relaxed (i.e., more permissive) than Britons, while being significantly pushier than Scandinavians. When my wife and I moved with my daughter from Sweden to Switzerland, she found the school system of the confederation to be significantly more formal and demanding. Germany and Switzerland are less unequal than the UK and more unequal than Norway and Sweden. This pattern holds true across a broad range of industrial countries.

Our explanation is that parents, in all time and all countries, love their children and want them to be happy and to thrive. However, different economic circumstances (rather than just fads and psychological forces) shape their behavior by providing different incentives and different constraints. In very unequal societies, especially if the return to education is high and the school system is very competitive, stakes are higher, and parents adopt an intensive approach emphasizing the importance of working hard and getting high grades. This is viewed by them as a stepping stone towards a successful job career. At the other extreme, in low-inequality countries, a more permissive parenting style encourages children’s independence, imagination, and self-discovery.

Which one is better? There is no absolute answer, there are trade-offs. Overparenting may work well (as our data show) in societies where school achievements are important, even if it may stifle children’s creativity. Free-range parenting may work well in societies that reward more team work and independent-mindedness. In summary, parenting decisions are in large part driven by economic factors. What we emphasize is that these different parenting styles forge different forms of human capital accumulation and different models of society. Some, like the US and China, are more geared towards individual excellence. Others like Sweden and, to some extent, Switzerland, foster a more diffused social capital.

«Robot-proof» education

What about the future of parenting? Our theory predicts that the parenting choices will continue to be shaped by economic transformations. If the trend of growing economy continues, we expect the same sharpening contrasts to show up in parenting as well, with an increasingly anxious upper and upper-middle class redoubling their efforts to further the advancement of their children.

But we do not expect just «more of the same.» Future generations of parents will face new issues. Robotization will not remain confined to mid-skill jobs and will soon invade and make obsolete some of today’s most prestigious professions. Parents will have to work to «robot-proof» their children’s future. The demand for labor services is predicted to fall in high-skill medical professions such as radiology and surgery where machines are already replacing many tasks. The same is true for lawyers, airline pilots, and jobs in the financial sector. If this scenario materializes, some of today’s authoritative parents might be dismayed when they realize that years of relentless effort did not pay off and that their children’s professional future is less brilliant than they had expected even with a degree from an elite school. Choosing the right specialization (e.g., STEM vs. nonmathematical subjects) will become increasingly more important.

Parenting may intensify the social divide

Finally, the rise of intensive parenting may intensify the social divide between the rich and the poor. In the United States, the growth of overparenting has gone hand-in-hand with a growing gap between the environments in which children from different socioeconomic back-grounds grow up. In the book, we discuss how such a parenting gap across-social classes can turn into a parenting trap. Poor families cannot afford to sustain the rug rat race and give up. In the United States, this is made worse by a growing residential segregation, and with a collapse of family ties among the less wealthy. A manifestation of this phenomenon is the retreat from marriage; that is, a growing number of people never form a stable family.

Understanding these social processes require good theory and good statistical methods. Rational-choice models can guide our understanding, and indicate policy reforms that can improve societies. The infernal storm that sweeps and drive the spirits with its blast is a wonderful literary creation but not a useful guiding principle for social sciences.