Tough love and intergenerational altruism

Vipul Bhatt, Masao Ogaki

Research output: Contribution to journalArticle

14 Citations (Scopus)

Abstract

This article develops and studies a tough love model of intergenerational altruism. We model tough love by modifying the Barro-Becker standard altruism model in two ways. First, the child's discount factor is endogenously determined, so lower childhood consumption leads to a higher discount factor later in life. Second, the parent evaluates the child's lifetime utility with a constant high discount factor. Our model predicts that parental transfers will fall when the child's discount factor falls. This is in contrast with the standard altruism model, which predicts that parental transfers are independent of exogenous changes in the child's discount factor.

Original languageEnglish
Pages (from-to)791-814
Number of pages24
JournalInternational Economic Review
Volume53
Issue number3
DOIs
Publication statusPublished - 2012 Aug 1

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ASJC Scopus subject areas

  • Economics and Econometrics

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