The new home economics

The branch of economics concerned with intra-household or family dynamics is known as the "new household economics" (NHE). Prior to NHE, the household was treated as a "black box" (Pollak 1985) no attempt was made to model the dynamics of intra-household decision-making. The tendency to treat the household as a black box tells us nothing about how its decision-making process is structured by the complex interests and different capacities of family members. The NHE brings economic theory into the microcosm of the household, building on the observation by Becker (1965), "A household is truly a 'small factory': it combines capital goods, raw materials and labour to clean, feed, procreate and otherwise produce useful commodities." NHE redefines household satisfaction in terms of intangible products or utilities. Households are viewed as "consuming" the things that satisfy them, such as the health of their members, bright and successful children, or relaxation (Berman, Kendall, and Bhattacharyya 1994). These ultimate consumption goods are considered to be "commodities. "

Sen (1990), refines the terms that he believes should be applied to the measures of individual well-being in these analyses. He suggests that the intangible outcomes should be considered as capabilities of persons, or positive freedoms that the different members of the family can enjoy. He points out that such a capabilities perspective is particularly useful for evaluating social conditions and programmes in relation to children, in terms of freedom from undernourishment and nutrition-related diseases and of developmental capabilities. Such research should address both the immediate benefit aspects and the investment aspects of personal consumption - e.g. in looking after children, short-term considerations must be balanced against long-term concerns for the well-being of the next generation and the support of the parents in old age.