Parental Priorities and Economic Inequality

TLDR

Other behaviors, such as charitable giving and corporate loyalty, can also be explained by this approach. The book investigates how parental actions transmit economic status across generations by modeling parental preferences. The model assumes parents set their altruistic concern and allocate time and resources accordingly, and the author tests this against evidence, including financial‑constraint models. Evidence shows intergenerational transmission of consumption, earnings, and wealth, confirming that children of wealthy parents tend to spend more than they earn, and the study appeals to quantitative social scientists and sociobiologists.

Abstract

Arguing that parental actions are important sources of wealth inequality, this book investigates the transmission of economic status from one generation to the next by constructing a model of parental preferences. It offers evidence on the intergenerational transmission of consumption, earnings and wealth. In the model, parents determine the degree of their altruistic concern for their children and spend time and resources on them accordingly, just as they might make choices about how they spend money. Mulligan tests his model against both old and new evidence, including models which emphasize financial constraints. One major prediction of Mulligan's model confirmed by the evidence is that children of wealthy parents typically spend more than they earn. Other important behaviour can also be explained using this approach, such as charitable giving and corporate loyalty. The study should appeal to a wide range of quantitatively-oriented social scientists and sociobiologists.