The Economics of the Family and Family Policy

The Economics of the Family and Family Policy

Francisco Cabrillo

This comprehensive and authoritative book offers a global approach to the modern economics of the family, family law and family policy. Beginning with the division of labour in the family, this book deals with the economics of marriage, the demand for children, inter-generational relationships, and the economics of inheritance. The family is analysed using the theory of utility maximisation assuming that individuals wish to achieve the greatest possible satisfaction with limited resources and imperfect knowledge. The family is examined from both long and short term perspectives, and it is assumed that the family is cooperative with incentives for altruistic behaviour greater than in any other social group.

Chapter 7: Inheritance

Francisco Cabrillo

Subjects: development studies, family and gender policy, politics and public policy, public policy, social policy and sociology, family and gender policy


1  WHY INHERITANCE? Family links have economic implications even after the death of a member of the family because estates are normally transferred from one generation to another when a  person dies. Inheritance is therefore of great economic importance not just because it allows for the transfer of the estate but also because it may determine the  behaviour of the testator and heirs before the death of the former. Why do people accumulate a greater amount of assets than they can use while alive and leave them as inheritance to other people, usually their closest relations? There  is a wide range of answers to this question.1 Some people find such accumulation satisfying in itself; others because it protects them against future risks. Let us take the  case of a person who finds no satisfaction in setting aside capital nor has any interest whatsoever in transferring his fortune to others. Under ideal conditions in which  this person knows with absolute certainty what his flow of income and date of death will be as well as the exact amount of any extra costs arising—illness,  hospitalization and so on—he will gain maximum satisfaction from distributing his expenditure during his lifetime in the most convenient way and will leave zero assets, or  less, at the time of his death. But, if he lives under conditions of uncertainty with no information on many of these aspects, he will prefer to have set aside some capital to  which he can resort to if necessary...

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