Title: Gary Becker
1Gary Beckers household economics how unitary
and how unified?
- By Shoshana GrossbardPrepared for Sciences Po
- March 2010
2Introduction
- There are hundreds of references to Gary Beckers
unitary models--the reference often being to
his paper on the allocation of time (Becker 1965)
or his Treatise on the Family (1981, 1991),
models of the household that dont distinguish
between decision-making agents. - The alternative to unitary models are models
assuming that multi-person households include
individual decision-makers. Such models have been
coined individual models (Apps and Rees 2010)
or collective models (Bourguignon, Browning,
and Chiappori 1995). Most of those who refer to
Beckers unitary model prefer to use such
individual models.
3Examples of lack of recognition of Beckers
individual models
- As editor of Review of Economics of the Household
I have read many papers who attribute unitary
models to Becker. I googled to see how common
this is and found many other articles giving
Becker this same credit - For example, Tak Wai Chau, Hongbin Li, Pak Wai
Liu and Junsen Zhang (2007) contrast their
collective or individual labor supply model
with the unitary model pioneered by Becker
(1991) Other individual models of labor supply in
multi-person households that have contrasted
their own model with Beckers unitary model
include Chiappori (1988) and Chiappori, Fortin
and Lacroix (xx). Jill Tiefenthaler (1999) and
Emily Klawon and Tiefenthaler (2001) have
contrasted their bargaining models with Beckers
unitary model of fertility.
4Cont.
- Models of care work such as Suzanne Bergeron
(2009), child labor and school attendance such as
Patrick Emerson and André Souza (2007) and of
the demand for pets (see Peter Schwarz, Jennifer
Troyer, and Jennifer Walker 2007) all contrast
their individual model, which is typically a
bargaining model or a collective model, with
Beckers unitary model. - Most of these papers give credit to their
favorite model, not recognizing that earlier
models also took an individual non-unitary
perspective. In fact, to the best of my
knowledge, one of the many models that Gary
Becker published is the FIRST individual economic
model of household decision-making. It is one of
the models found in his theory of marriage,
originally published in the JPE in 1973
5Basic competitive model of marriage in Becker
- This model appears in both 1973 and 1981
- Assume that
- identical men and identical women are in the
market for one another. - as a couple, a man and a woman can produce a
composite good Zmf - This marital good exceeds the sum of the Zf a
woman could produce alone and the Zm that a man
could produce alone. - The market then may determine how the total gain
from marriage Zmf Zm Zf is subdivided
between husband and wife. - graph
- if the number of men exceeds the number of women,
i.e. the sex ratio exceeds one, the entire gain
from marriage goes to women. - If the number of women exceeds the number of men,
the entire gain from marriage goes to men. - If the number of men and women are the same, ??
No market solution. This opens the door for
(collective or private?) bargaining models.
6Examples of insights from Beckers simple DS
model of marriage
- The higher womens productivity in marriage, the
more men are willing to pay - One can infer that when men have more income they
will demand more wives - More advantageous marriage market conditions for
women when number of men exceeds number of women,
and vice versa (sex ratio effect)
7Second DS model only found in Becker 1973
hedonic model
- choice between mates of different types market
for men of type i and women of type j - Hedonic to the extent that there are no prices
for the valuable characteristics serving as the
basis for distinguishing various types of men and
women. - supply and demand takes account of possible
substitution between mates belonging to a
continuum of different types. - in these circumstances the equilibrium division
of output in marriage can fall anywhere between
the best division from a male point of view and
the best division from a female point of view
8Why second model only in 1973?
- In a 2004 email I asked Becker that question
- In his emailed response, he explained
- My Treatise was considered by me to be a
complement to my previous work, not a substitute.
So I did not go over everything in the earlier
papers that I considered to be valid and
sometimes even important. - I never abandoned my view that imputations to
men and women are determined by a competitive
marriage market - what you call the supply demand
framework.
9- Becker thus played a pivotal role in the
development of individual decision-making models
by couples, and deserves some of the credit that
is generally given to the bargaining theorists. - Now I want to share with you why it bothers me so
much that contemporary economists often overlook
Beckers individual models. I am not an objective
observer here.
10A variety of Becker models
- My own exposure to such variety of models
- As a first-year student at Chicago, in January
1973, I first got to know Gary Becker as my
professor in price theory, a course packed with a
variety of maximization models and aimed at
getting us to practice his specialty Applying
calculus to everything. Just identify a utility
function and some constraints and you are in
business. - Two years later I took his course on the
economics of the family. It was the first time
he was teaching it. I was lucky he had an
interest in preparing such course while he was
working on his Treatise on the Family, which
eventually got published in 1981. Again, Becker
showered us with what seemed like an endless
stream of optimization models, but this time they
all addressed issues related to household
economics.
11- Furthermore, given that I wrote my dissertation
with him, I got to participate in Beckers
workshop on Applications of Economics in the
years 1974-1976. Regular participants included
the Who is Who in economics at Chicago including
Jim Heckman, T W Schultz, Ed Lazear, George
Stigler and Richard Posner. Neither Becker nor
Heckman had yet received their Nobel prizes, and
Lazear was a beginner level assistant professor.
Milton Friedman also attended occasionally. - We as students got the impression that Becker is
a virtuoso, a brilliant performer on the academic
stage, able to produce a variety of
thought-provoking intellectually stimulating
models. Like an artist, he had a whole palette of
models, and he and his students could chose the
one that adapted best to a given problem. Some
were unitary, some not. We did not experience
that there was a unified Becker theory on
anything. It was my impression that good
economists can pick and choose their models,
depending on what works best.
12More specifically not even a unified theory of
marriage
- At one of the weekly meetings of the workshop,
he, Lisa Landes and Bob Michael presented a
draft of what became their 1977 JPE article on
divorce. Whether it was on that day or during
another workshop dealing with marriage, I am not
sure, but I have clear memories of a big
discussion about Beckers theory of marriage.
More precisely, I recall that another one of my
thesis advisors, Ed Lazear, was critical of
Beckers matching model of marriage and pointing
out some of the contradictions between that model
and what we perceived as Beckers principal model
of marriage his Demand and Supply model. - Another of my thesis advisors was critical of
Beckers theory of marriage Jim Heckman, who
had recently arrived from Columbia where he had
advised Fredericka Pickford Santos, a student
trained by Becker and Mincer there who wrote her
dissertation on the economics of marital status
using a trade model of marriage (see Santos 1975
cited in Becker 1981). Heckman tried to convince
me to apply such model to my dissertation on
polygamy.
13Intro, cont
- After considering all the models of marriage
availableincluding a few Becker models-- and
hours of heated one-to-one discussions with
Lazear, Heckman, T.W. Schultz and a number of
fellow students just as enthusiastic about
Chicago imperialism as I was, I opted for a
marriage model that I adapted from labor
economics that is closely related to Beckers D
and S model of marriage. In part, I was attracted
to this model because in his workshop Becker had
demonstrated that when he engaged in an empirical
application of his own theoriesin joint work
with Landes and Michaelhe relied mostly on his
demand and supply models of marriage. These are
the models that were most inspiring to students
writing their dissertations on marriage at the
time. This applies not only to my own experience,
but also to the case of Michael Keeley. - Likewise, when it comes to models of the family
in general, including marriage, fertility and
intergenerational relations, we as students got
the impression that Beckers models were far from
unified. Most of them were unitary, but the
economics of marriage was a central piece of
Beckers perspective on the family, and a central
model of his economics of marriage was an
individualnot a unitarymodel.
14More general lessons from studying with Becker
- We also got a clear impression of Beckers
ideological bent. He presented his work on gender
specialization in the household and on
sociobiology. Here he emphasized biological
differences between male and female. The few
women amongst us dissociated themselves from
Beckers ideology on these matters. - In historical perspective, after so many years
went by, I wonder to what degree Beckers
insistence on biological differences between men
and women clouded his judgment regarding my own
theory of marriage.
15model of allocation of time in labor and marriage
(Grossbard 1984)
- Utility Function
- (1) Ui ( li,hi,si, hj, xi,) where U Utility
- x Commercial goods and services
- s Time for self, often called leisure.
- l Labor ( If you go to work)
- h Household labor
- i maximizes utility function
- 2. Three uses of time
- (2) Ti Si Li hi (explained on next slide)
- Utility maximization
- individual i maximizes utility function (1)
subject to time constraint (2) and Budget
constraint
16More on utility function Utility Function Ui (
li,hi,si, hj, xi,)
- hi and hj contribute to individual Is utility.
- h is household labor. It is labor in the sense
that (1) it is an activity that people have to
put up even though it is not their favorite
activity (i.e. there is an opty cost) and (2) the
activity benefits another person/organization who
is willing and able to compensate the worker. - if I is husband and j is wife U i (..hj..) means
that husband benefits from wifes hh labor. Ex
wife Doing her husbands laundry. Gender
symmetric husbands may work for wives - si Time for self (Leisure time)
- hj potential or actual spouse
17Budget constraintI wili yihi Pixi yjhj
- LHS income
- I non-work income ( EX rental income)
- wwage
- llabor
- yihi Earnings from household labor
- yi quasi-wage for household labor ( It may not
be monetary or material , could consist of
psychic, spiritual, emotional benefits) - h hours of household labor
- RHS expenditures
- Pi Is the price of commercial goods
- yjhj payment for spouse js household labor it
is assumed that j gets an hourly rate of yj
18Different kinds of marriage
- Traditional marriage yjhj gt yihi , wife works
more in hh than husband (could be that both
spouses are in the labor force), where i male
and j female - 2. Egalitarian marriage this is where the value
of work of yihi and the value of yjhj cancel each
other out. - 3. Reversed-role marriage yjhj lt yihi ,
husband works more in hh than wife
19Equilibrium condition
- MUs y MUhi w MUli
- MUx MUx MUx
- MU marginal utility
- y MUhi/MUx Total compensation and benefits
per hour of own hh labor - MUx MU from x
- w MUli/MUx total compensation per hour of
labor in labor market
20Marriage markets and quasi-wages y
- These quasi-wages are established in markets.
Effect of Demand and Supply - One basic inference higher opportunity cost of
LFP if higher y due to more relative demand in
marriage (see lecture 2) - Other basic inference compensating differentials
(see Grossbard-S and Neuman 1988)
21In conclusion
- 1/ Beckers individual models have been
overlooked, especially in recent years. This is
related to the false impression that Becker
himself fostered in his Treatise on the Family
that his theory of the family is a unified
framework (see p x Becker 1981). This encouraged
readers to view the dominant unitary models in
his book as a unified theory and to overlook the
individual models that are also covered in the
Treatise. - 2/ Individual models by Becker students are often
overlooked, including my own. This may be related
to Beckers attitude towards women.