Bryan Caplan  

Imperfect Information and the Generation Gap

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I recently argued that economics could help evolutionary psychology explain why parents and their children disagree. If your actions have externalities for your siblings or other kin, the optimal choice for your parents' genes differs from the optimal choice for your genes.

But this story still seems helpless to explain all the times that kids ignore parental advice that really is in the kid's best interest, like "Don't run into traffic," or "Don't major in philosophy."

Once again, though, economics comes to the rescue. Suppose that 50% of parental advice helps the parent at the kid's expense, and 50% of parental advice actually helps the kid. Optimal kid's response: Ignore the former, heed the latter. But suppose we add a plausible catch: The kid can't tell the first kind of advice from the second. There's imperfect information: Parental nagging all sounds the same to him. By the time you figure out how to tell one from the other, you're a parent yourself.

What's a rational child to do? You choose an intermediate course of action. If there is a 50% chance that going to college is for your own good, and a 50% chance that it helps the family at your expense, parental nagging provokes roughly half the extra effort your parents recommend. (Strictly speaking, it depends on functional forms and what not, but you get the idea). The result: You follow some advice contrary to your own interest, AND ignore some advice that serves your interest. The higher the probability that your parents are putting your interests first, the milder these mistakes become.

If you're a parent, there are two strategies you could use to cope with this situation. The first is verbal inflation. If your kid goes half as far as you advise, double your recommendation. This might work for a while, but in the end, you'll probably end up with a bad case of rhetorical hyperinflation ("You must learn Latin! It's essential! Essential!"), and your kid will tune you out completely.

The second strategy is to build up credibility. Don't give into the temptation to exaggerate and manipulate. Don't be the dad who cries wolf. Then maybe your kid will believe you when it counts.


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The author at Positive Externality in a related article titled Four Excellent Posts writes:
    A blog entry about four very excellent posts by Schneier, Kling, Caplan and Scheule. Covers the London bombing, good policy decisions, raising kids, and a cute anecdotal tale. [Tracked on July 8, 2005 2:26 AM]
COMMENTS (8 to date)
Daniel Slate writes:

The credibility strategy seems the superior of the two. No one is purely rational, thanks to biology and the interconnectedness of the so-called "emotional brain" (~limbic) and "thinking brain" (~neocortex).

Verbal inflation is more likely to set up emotional minefields and barriers that could ultimately undercut the strategy. Building credibility, while the more abstract and intangible, has the potential to ease such existing barriers and produce a relationship in which the child is more receptive to advice. Still, the economic thinking should still hold.

Lancelot Finn writes:

Economists could help out evolutionary biologists in another, more direct way: By pointing out that they're wrong, inasmuch as they think their theory can explain human behavior.

In particular, economists can point out the following fact: Having children is, empirically, what economists call an inferior good. As you get wealthier, you want less of it.

Internationally, birthrates fall as countries get richer. Within countries, (I think) the birth rate is lower among people with more education and thus higher lifetime expected income. Clearly, a lot of people do want children, as evolutionary biology would predict. But they also want many other things, which evolutionary biology would be hard pressed to explain. Why do people want salvation? knowledge? beauty? honor? travel? to help strangers? power in countries where food is plentiful and the custom of providing harems to leaders has been abolished?

But what is really hard for sociobiologists to explain is that people seem to prefer some set of these non-biologically-motivated goods to the biologically-motivated good of children, when they can get enough of them.

Indeed, it seems that knowing that they're programmed to reproduce weakens or cancels the programming. Birthrates in rich countries are highest among the conservative religious, i.e. those who don't believe in, or at least have reservations about, evolution. It's as if people realize it's just biological programming to want children, and then dismiss that motive as superstitious or irrational.

But what part of a person is it that dismisses impulses rooted in evolutionary biology as irrational and non-binding? It's the rational part of a person-- which evolutionary biology attempts to reduce to biological motives, but, as should be clear by now, fails to.

(Man is not only body but soul as well, and he cannot be understood without taking this into account; but economists won't teach evolutionary biologists that. They can be content to get the ball rolling by pointing out the empirically observable fact that children are an inferior good, at least for those who don't feel ethically impelled to "go forth and multiply..." and ethics, of course, is another weak point of the sociobiologist's worldview...)

Maestro writes:

Also, don't just tell, explain why. Understanding why something is good for you will make you a whole more likely to believe and to follow through.

spencer writes:

As someone that is starting to enjoy my grandchildren and thinks we -- and I mean we--
did a good job raising our kids -- we find our adult children to be good friends.

The secret is not getting them to pay attention to you.

the secret is to teach them values and how to make good judgements. If you do a good job
at that you will not care if they pay attention to you - even when they do something you do not agree with.

Robert Schwartz writes:

Bryan: you will soon apreciate what your mother told you: "One of these days, you will have children, and then you will know what heartache is."

Your theory sounds like a good theory, but its just a theory. Remember, no battle plan survives contact with the enemy.

Aaron writes:

this sounds like a lemons problem to me.

There's also a discount factor involved, which you hint at near the end. The rate at which advice is discounted is a function of the supply of either bad advice (as a proportion of total advice) or advice in general.

J M Lonsdale writes:

I think this analysis leaves out the most obvious reason for parental and child disagreements: Time preference. Parents want things to work out well for their kids in the long run. Kids want to have fun in the short term.

And of course there are compromises between the two... (Parents want kids to do engineering, kid wants an easy subject... they compromise on econ because at least there is some math).

Ian D-B writes:

You've got the wrong game, and it's clear from your hyperinflation comment. Rhetorical hyperinflation means that you're not in an equilibrium. This is actually a cheap talk signalling model. Parents and child have different preferences. Children have imperfect information about the outcome of actions. Parents have private information on the outcome. Signalling -- parents telling kids what to do -- is costless. Crawford and Sobel (1982) show that the equilibrium is for kids to partition the range of possible statements from parents and for a signal anywhere in a part of a partition to get the same response. ,There is no fully separating equilibrium -- i.e. kids never trust parents completely -- and there is always a pooling equilibrium -- some kids do whatever they want.

As to building credibility, there are two things this could mean. One, kids think parents always know best. Then the game is the same. The other (and the one I think you mean) is that parents have the same preferences as kids. Then there is a fully separating equilibrium, some kids always listen to their parents.

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