Tough love and intergenerational altruism

Vipul Bhatt, Masao Ogaki

Research output: Chapter in Book/Report/Conference proceedingChapter

Abstract

This chapter 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
Title of host publicationBehavioral Interactions, Markets, and Economic Dynamics
Subtitle of host publicationTopics in Behavioral Economics
PublisherSpringer Japan
Pages43-78
Number of pages36
ISBN (Electronic)9784431555018
ISBN (Print)9784431555001
DOIs
Publication statusPublished - 2015 Sep 12

Keywords

  • Endogenous time discounting
  • Parenting
  • Tough love

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)
  • Business, Management and Accounting(all)
  • Psychology(all)

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  • Cite this

    Bhatt, V., & Ogaki, M. (2015). Tough love and intergenerational altruism. In Behavioral Interactions, Markets, and Economic Dynamics: Topics in Behavioral Economics (pp. 43-78). Springer Japan. https://doi.org/10.1007/978-4-431-55501-8_2