Preference Formation within Families

Children are born with their genetic makeup and their experiences in the womb, but are largely a tabula rasa compared to the effects of a lifetime of future experiences. One does not have to accept the Freudian emphasis on very early childhood and early sexual fantasies to believe that childhood and teen-age experiences have an enormous influence on adult preferences. Basic values, preferences in food and clothing, attitudes toward the opposite sex, ambitions, and other parts of preferences all get influenced by what happens to a person when young. And no one has a greater influence on preference formation than parents and other close relatives. They usually determine practically all the experiences of children during their first few years of life, and many of their experiences through the teens. What parents do and do not do has a great influence on the preference formation of their children. Most parents are aware of this, if only vaguely. To the extent they care about what their children’s preferences will be, they incorporate the effects on children in their decisions concerning what they do. For example, if their smoking raises the likelihood that their children smoke, they may decide not to smoke because they do not want the children to take up smoking. Or they may go to church only because they believe churchgoing will improve the values of their children. Of course, what parents want to do is constrained also by their preferences, as influenced by their own childhood experiences. Rational parents maximize their utility, conditional not only on their resources, but also on their past experiences, and their attitudes toward their children. Sections 2 and 3 of this paper are organized around the issue of support of parents in their old age. Parents will accumulate assets to help provide for their old-age needs. Whether they also want their children to help support themdepends on their altruism toward children. I will show that the desire for support also interacts with whether parents invest the optimal amount of human capital in children. How can parents insure that their children will want to help them if they need help? One way is to try to influence the formation of children’s