«The more unequal a society today, the more unequal human capital tomorrow. »
People think of economics as a discipline dealing with money, profit, and interest. Yet, today economics is a tool to analyze human behavior that can be applied to any kind of human activity, such as crime, law, the family, war and conflicts, even religion. The essence of the economic approach is that it envisions people as doing the best they can to achieve their objectives, subject to the constraints that the environment and their own human skills impose on them.
One of the areas where economic imperialism has extended its realm is family economics. In some recent research with Matthias Doepke at Northwestern University whose results will be summarized in a book published by Princeton University Press, we study child rearing and parenting styles.
Why should we, economists, care about the way in which parents interact with their children? Among other reasons, because it affects the formation of human capital, which is in turn is a crucial determinant of long-run growth and future inequality. When it comes to children, describing parenting activity as dominated by monetary objectives would miss the main picture.
Rather, it is love and altruistic concern for their children that motivates most parents’ child-rearing effort. These motives include both the present – parents would like their children to be happy – and the future – parents would like their kids to do well in life.
The discussion on child rearing practices has been raging in recent years. In 2011, Amy Chua sparked a heated debate with her book Battle Hymn of the Tiger Mother in which she advocates for a strict, rule-oriented model of parenting.
While the methods promoted by Chua triggered much disagreement, tiger mom parenting is part of a wider trend towards more involved, time-intensive parenting among the educated classes. Time-use surveys reveal that parents, especially among the educated classes, spend considerably more time on parenting than a generation ago. The term helicopter parenting (to denote anxious parents permanently hovering over their kids, guiding and protecting them) has gained wide currency, especially in Anglo-Saxon countries.
Working hard vs. having fun
From the perspective of the parents, a helicopter-like parenting style that aims to control or influence the children’s behavior comes with costs. Some of these costs are direct (the time and effort spent on controlling the children or on instilling the appropriate values in them), and others are indirect (parents care about their children, and take into account the suffering that obsessive parenting imposes on the kids). A first prediction of the economic theory of parenting style is, therefore, that parents will be willing to bear the costs of hovering over their children only if the return is sufficiently high. So what is the return to helicopter parenting?
The benefit of helicopter parenting is that the children are more likely to engage in the choices that the parents consider appropriate. The return, therefore, depends on the stakes, i.e., the extent to which it matters whether the children make the right or wrong choices from the parents’ perspective. A common area of disagreement between parents and children is the trade-off between working hard for school and for one’s career versus having fun with friends and other immediate enjoyments. Few parents wish that their kids blew off homework more often in exchange for some instant pleasure. Rather, many parents push their children towards harder work.
The return to pushing children hard consists of the increased likelihood that they will succeed in education and do well later in life. How important this is to parents depends crucially on the degree of economic inequality, and in particular on the return to education. In an economy where education and effort are highly rewarded and where people with little education struggle, parents will be highly motivated to push their children hard.
Thus, we expect economic inequality to be associated with the popularity of helicopter parenting. In contrast, in an economy where there is little inequality and artists and school dropouts earn only slightly less than doctors and engineers, parents can afford a more relaxed attitude, and permissive parenting should be more prevalent.
The more unequal the less leeway
The international evidence is consistent with the prediction that income inequality has a strong effect on the choice of parenting styles. In our research, we measure the parenting style using the World Value Survey, where people are asked which attitudes or values they find most important in child rearing. We classify parents who emphasize the values of imagination and independence as permissive.
Helicopter parents are those who emphasize hard work, and finally authoritarian parents are those who emphasize obedience. We find that in more unequal countries like the United States there are more helicopter parents placing emphasis on hard work, and considering imagination and independence to be less important.
Conversely, Scandinavian parents emphasize the value of imagination and independence, consistent with the casual observation that in these low-inequality countries children enjoy greater leeway. Swiss parents are in-between, if closer to Scandinavians than to Americans. The pattern also holds up for developing countries. In China, a country with large economic inequality and big stakes, the importance of hard work is almost universal among parents.
With the aid of an econometric model, we derive some quantitative predictions about the effect of income inequality, which we measure by the interdecile ratio between the gross income of the top 10% and bottom 10% earner in the income distribution. In the United States, this ratio is almost twice as large as in Switzerland, confirming the well-known fact that income inequality is higher there. Accordingly, we find that the majority (59%) of Swiss parents are permissive, only 19% are helicopterparents and 22% are authoritarian. In contrast, only a small minority of American parents are permissive.
Sweden, Switzerland vs. USA, China
We draw inferences on the effect of inequality on the choice of parenting styles holding constant the effects of education and cultural differences. Based on those inferences, we make a simple thought experiment: we imagine that all Swiss parents, counterfactually, face the level of income inequality observed today in the United States. We find that in this hypothetical scenario the distribution of parenting styles would change big time in Switzerland. The share of permissive parents would fall to 15%, that of helicopterparents would increase to 50%, and that of authoritarian parents would increase to 35%.
In short, the lower inequality explains why in Switzerland there are fewer helicopter parents than in the United States. It also explains why Swiss parents are less permissive than Swedish parents, as my own personal experience as a father living in Sweden confirms. My Swedish friends look horrified at the experience of stressed Swiss sixth graders contemplating the «Gymiprüfung». Yet, this is a bed of roses when compared with the drama of admission to college in the United States or, even worse, the gruesome Chinese national exam named Gaokao.
In summary, economic incentives shape family behavior much more than people are prepared to admit. What are the effects on the new generations? When parents put more effort, the advantage of growing up in wealthy and educated parents is magnified. In his great book Our kids: the American dream in crisis, Robert Putnam provides a great account of how the social divide between American families grows through the choice of parents, especially in countries where the well-off segregate their children into expensive private schools.
Then, the more unequal a society today, the more unequal human capital tomorrow. This may be a much more important source of persistence of inequality of income and opportunities than other factors(e.g., the rate of return on financial investments) that have attracted attention in the public debate recently.