An Indirect Test of Children's Influence on Efficiencies in Parental Consumer Behavior

Abstract

A statistical test is applied to explore the possibility that children can affect the efficiency with which parents consume. Parents may receive some economic benefits from children in the form of reverse integenerational transfers that occur because of a positive influence children have on family behavior. Results show that not only do children have an influence on parental consumption, but also that the influence is beneficial. In fact, not accounting for such a benefit could cause an underestimate in such measures as the rate of return to education or the benefits from such governmental programs as Head Start.