Chapter 4: Marriage Paradoxes with Reiner Eichenberger
THE NEO-CLASSICAL THEORY OF MARRIAGE AND BEYOND This chapter discusses a particular application of anomalies to a family issue. The standard economic theory of the family has given us many valuable and novel insights into how individuals act within a family, and also how they choose to form a family. This constitutes a great step forward, compared with the previous notion in economic theory that households are a ‘black box’ and act as if they were individuals. This economic theory of the family assumes that individuals act rationally and maximize their utility. This does not necessarily mean that their interests are selﬁsh, as the theory explicitly allows for altruism among family members. They are taken to act according to the same principles within the family as in any other area. This uniﬁed theory is one of the main attractions of the economic approach. It compares favourably with other social sciences, in particular psychology, where explanations tend to rely on a set of isolated effects. There are particularly good reasons for applying the economic model of behaviour to the family, because the incentives to act rationally are particularly strong. For most individuals, family decisions are of central importance and the cost of wrong decisions may be extremely high. Thus, having a child, instead of remaining childless, binds the time and ﬁnancial resources of the parents for about 20 years, perhaps even for the rest of their lives. Much of the work on the economics of the family has been...
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