Friday, October 1, 2010

The Economics of Parenting

As an economist and father of two I am prone to applying economic principles in parenting.  I am not unique among economists, after all we spend our lives appreciating and understanding the power of incentives.  Fortunately my non-economist spouse keeps my instincts check so that I don't go overboard (she is a humanities-type, a good yang to my ying).  But plenty of incentives remain in my parenting style I suppose, though I think that many are common to all parents such as insisting on doing homework before play.

Anyway, a student of mine sent this to me ages ago and am only now just getting around to it.  This is a great NPR Planet Money story on an Australian economist whose economics-based parenting style is perhaps a bit extreme.  Here is a great bit about unintended consequences of incentives (what we would call in economics as a principal-agent problem):

So when the time came to potty train his daughter, B., he designed what seemed like an economically rational incentive: B. would receive a jelly bean every time she went to the toilet.

Once the new policy was in place, B. suddenly had to go to the toilet really, really often.

A few years later, B.'s younger brother needed to be potty trained. And Gans decided to expand the incentive system: Every time B. helped her brother go to the bathroom, she would get a treat.

"I realized that the more that goes in, the more comes out," says B., who is now 11. "So I was just feeding my brother buckets and buckets of water."

"It didn't really work out too well," Gans says.

My experience is that when I tried to throw positive incentives of this type at the potty training problem my sons realized that by being obstinate they could get me to up the ante; after all if an incentive is not working it must not be big enough, right? THis is precisely the problem with trying to parent as an economist. So now I try to parent like a humanities major, but that 'aint working out so well either. In the end there is no shortcut: parenting is hard. And wonderful.

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