Support Networks within the Family as a Public Good Problem

This paper examines altruism and exchange models of familial relationships. It first examines the predictions of these models when there are more than two family members, demonstrating that altruism with multiple altruists is similar to the classic public good model. The paper also examines predictions of the altruism model under the assumption that the child acts strategically. It is traditionally assumed that parents unilaterally determine the amount of assistance they provide to their child. However, if one allows strategic behavior by the child, the classic prediction of complete neutralization of redistributive policies does not hold. Empirical analyses do not overwhelmingly support either of the two models; other motivations are likely to be important.