Concepts in the analysis of household/family behaviour

As explained by Kennedy and Rogers (1992), there are three common approaches to analysing intra-household behaviour, which contribute different useful perspectives to understanding family dynamics. These concepts are equally applicable to non-residential kinship or family structures, to the extent that these groups also share resources and responsibilities.

NHE research on the family began by questioning and rejecting the first of these approaches, which is the neoclassical "unified household preference function," or black box (Becker 1981; Folbre 1986). Theorists using this model tend to make an assumption of altruism in the family, in which all household resources are pooled and then reallocated according to some common rule that benefits all family members (Becker 1981). Neoclassical analysis uses relatively simple regression equations that calculate the "outcome" only as a function of inputs from outside the household, disregarding decision-making inside the household. These analyses assume that the household maximizes its unified household preferences (Rosenzweig and Schultz 1983), given its budget and production constraints. This assumption of altruism-unified preference within the household is in contrast to expectations of naked self-interest in the market (Berk 1980; Folbre 1989). Thus, the altruistic household was viewed as "the haven in the heartless world" of market competition (Lasch 1977).

Research within the past 15 years, however, has demonstrated the existence of separate, different, and often conflicting preference functions of individual members (Jones 1983). Given the different preferences, household behaviour can be described using a bargaining model (Manser and Brown 1980; McElroy and Homey 1981), according to which individual members pursue their own interests, given their relative bargaining positions inside the household. Simplistic assumptions that families are in harmonious agreement or consensus regarding the use of household resources (Samuelson 1956), or that each household has one altruistic member who works things out for the benefit of all (Becker 1974; 1981), have been shown to be inaccurate.

Some bargaining models apply mathematical game theory to marriage and household decision-making (Manser and Brown 1980; McElroy and Homey 1981). They include models of cooperative conflict (Sen 1990), which address situations in which there are many cooperative outcomes that would be more beneficial to all the parties than non-cooperation, but where the different family members have conflicting interests in the choice among these cooperative arrangements.

Bargaining is supplemented by an "implicit contracts" model (Folbre 1989) that sees the family as governed by culturally determined expectations about the entitlements and obligations of individuals in different positions within a household unit. This model explains why people who lack bargaining power retain access to some household resources. Individuals pursuing their own selfinterest also are bound by ties of affection as well as implicit contracts. These traditional norms can be viewed as the cultural "fall-back" position for men and women who are unwilling to invest time and energy in bargaining over alternative allocation (Pollak 1985), or as the upper and lower bounds on acceptable behaviour within which bargaining can be applied (Kennedy and Rogers 1992). These norms are often held in place by powerful legal and institutional factors that determine the disposition of household assets, such as family laws regarding property rights and social entitlements (Folbre 1992). Changes in these institutional factors may have greater effects on intra-household bargaining than changes in individual market earnings or assets.

Individual earning power increases bargaining power. An individual's bargaining power is determined in part by his or her "threat point" - the point at which the person believes he or she would be better off outside the household unit than in it. The greater a person's income-earning opportunities outside the household, the higher the threat point and thus the greater the bargaining power within the household. Another type of threat-point analysis defines the threat point not as divorce, but as a non-cooperative or asymmetric equilibrium within marriage, which may be reflected in different roles for men and women and different use of resources. Such analyses explain why child allowance schemes that pay the mother may have different effects from those that pay the father (Lundberg and Pollak 1992). To the extent that interventions alter the first type of threat point, they may create shifts in the family structure, while alterations in the second may influence intra-household tasks and benefits.

Pollak (1985) applies a less-developed "transaction cost" approach to intra-household transactions. The premise of transaction cost analysis is that organizations (including families and households) seek institutional modes for organizing transactions that minimize transaction costs. Pollak applies theories regarding the boundaries, structure, and internal organization of commercial firms to families, treating the family as a governance structure, with supplier-customer contract relationships. He views family governance in terms of incentives, monitoring, altruism, and loyalty.