Mums and their Sons; Dads and their Daughters: Panel Data Evidence of Interdependent Marginal

Utilities across 14 EU Countries

José Alberto Molina*, María Navarro* and Ian Walker**

* University of Zaragoza, Spain

** University of Warwick, UK

EPUNet Conference Barcelona, May 9th 2006

AIM OF THE PAPER

Estimate the extent of altruism between parents and children

Why?

Literature:

Altonji, J. , F. Hayashi, and L. Kotlikoff (AER 1992, 1995, 1996)

Schwarze (2004), Schwarze and Winkelmann (2005), Winkelmann (2005)

Simple Theoretical Background

Data

Econometric Models

Results

Conclusions

OUTLINE

Simple Theoretical Background

cyUcyUW ccpp

cp

How satisfied are you with your present financial situation?

- child data censored by leaving home

DATA

European Community Household Panel – ECHP (1994-2001)

14 EU countries

Structure of households in ECHP

Number of

observations Both

natural Only father

Only mother

Step father Step

mother Austria 5908 82.08% 1.74% 12.15% 2.74% 1.29% Belgium 4468 72.36% 3.25% 18.04% 4.34% 2.01% Denmark 2296 73.48% 4.05% 14.59% 5.53% 2.35% Finland 4067 77.13% 4.33% 13.70% 3.52% 1.33% France 9857 75.99% 3.11% 14.08% 5.17% 1.64% Germany 11372 83.97% 3.27% 10.96% 1.51% 0.29% Greece 10229 88.76% 1.15% 9.84% 0.22% 0.02% Ireland 9601 85.25% 3.31% 10.97% 0.45% 0.02% Italy 17917 89.48% 1.45% 8.51% 0.42% 0.15% Luxembourg 4605 75.68% 2.28% 14.88% 4.19% 2.98% The Netherlands 5667 84.12% 2.84% 12.56% 0.07% 0.41% Portugal 12520 81.26% 1.77% 14.67% 1.54% 0.76% Spain 17798 84.57% 2.08% 12.26% 0.83% 0.26% United Kingdom 7327 63.74% 4.93% 21.61% 7.92% 1.82%

Mean satisfaction levels – samples with any children

33.5

44.5

Fath

er

IncS

at

2.5 3 3.5 4Son IncSat

Fathers-Sons Income Satisfaction

33.

54

4.5

Fat

her

IncS

at

2.5 3 3.5 4Daughter IncSat

Fathers-Daughters Income Satisfaction

33.

54

4.5

Mot

her

IncS

at

2.5 3 3.5 4Son IncSat

Mothers-Sons Income Satisfaction

33.

54

4.5

Mot

her

IncS

at

2.5 3 3.5 4Daughter IncSat

Mothers-Daughters Income Satisfaction

Mean Satisfaction Levels – comparing leavers with stayers before leaving

2.5

33.5

4S

on IncS

at N

ot Leave

s H

om

e

2.5 3 3.5 4Son IncSat Leaves Home

Son Income Satisfaction

2.5

33.5

4D

aughte

r In

cSat N

ot Leave

s H

om

e

2.5 3 3.5 4Daughter IncSat Leaves Home

Daughter Income Satisfaction

2.5

33.

54

Son

IncS

at N

ot L

eave

s H

ome

2.5 3 3.5 4Son IncSat Leaves Home

Son Income Satisfaction

2.5

33.

54

Dau

ghte

r In

cSat

Not

Lea

ves

Hom

e

2.5 3 3.5 4Daughter IncSat Leaves Home

Daughter Income Satisfaction

SiblingsAustria Belgium Denmark Finland France Germany Greece Number of

siblings households % households % households % households % households % households % households %

1 754 34.79 818 37.80 676 38.19 990 37.49 1,663 38.08 2,855 43.44 1,279 33.19

2 790 36.46 859 39.70 722 40.79 987 37.37 1,684 38.56 2,596 39.49 1,695 43.99

3 397 18.32 355 16.40 271 15.31 461 17.46 694 15.89 789 12.00 607 15.75

4 144 6.65 96 4.44 70 3.95 142 5.38 222 5.08 216 3.29 211 5.48

5 48 2.22 17 0.79 27 1.53 39 1.48 58 1.33 76 1.16 47 1.22

6 20 0.92 13 0.60 4 0.23 13 0.49 29 0.66 21 0.32 10 0.26

7 6 0.28 3 0.14 9 0.21 12 0.18 4 0.10

8 2 0.09 3 0.14 2 0.08 5 0.11 3 0.05 9 4 0.18 3 0.11 1 0.02 3 0.05 10 2 0.09 1 0.02 1 0.02 11 2 0.08 1 0.02 12 1 0.04 13 1 0.04 14 15 1 0.02

Ireland Italy Luxembourg The Netherlands Portugal Spain United Kingdom Number of siblings households % households % households % households % households % households % households %

1 725 23.56 2,298 38.43 858 35.71 1,100 30.80 1,496 38.70 1,874 32.88 2,137 37.64

2 871 28.31 2,400 40.14 879 36.58 1,679 47.02 1,395 36.08 2,185 38.33 2,221 39.12

3 702 22.81 906 15.15 447 18.60 605 16.94 536 13.86 1,050 18.42 925 16.29

4 412 13.39 275 4.60 154 6.41 145 4.06 244 6.31 378 6.63 249 4.39

5 190 6.17 62 1.04 43 1.79 32 0.90 105 2.72 112 1.96 89 1.57

6 104 3.38 22 0.37 19 0.79 7 0.20 43 1.11 61 1.07 27 0.48

7 30 0.97 12 0.20 1 0.04 18 0.47 23 0.40 18 0.32

8 20 0.65 2 0.03 2 0.08 1 0.03 13 0.34 10 0.18 8 0.14

9 16 0.52 2 0.06 7 0.18 3 0.05 2 0.04

10 4 0.13 1 0.02 5 0.13 2 0.04 1 0.02

11 1 0.03 3 0.08 1 0.02 12 1 0.03 1 0.03 13 1 0.03 1 0.02 14 1 0.02

% of Households with number of siblings

0

5

10

15

20

25

30

35

40

1 2 3 4 5 6

Number of siblings

Ireland

U K

Mean satisfaction levels – samples with 2+ children

33.5

44.5

Fath

er

IncS

at

2.5 3 3.5 4Child IncSat

Fathers Income Satisfaction

33.5

44.5

Moth

er

IncS

at

2.5 3 3.5 4Child IncSat

Mothers Income Satisfaction

2.5

33.

54

Chi

ld In

cSat

Not

Lea

ves

Hom

e

2.5 3 3.5 4Child IncSat Leaves Home

Child-Fathers Sample

2.5

33.

54

Chi

ld In

cSat

Not

Lea

ves

Hom

e

2.5 3 3.5 4Child IncSat Leaves Home

Child-Mothers Sample

Random Effects Ordered Probit Model

Parametric Ordered Probit Model with Multiple Random Effects

1 21 2 3* *it it it it it

p p p c ci ity x x x y e

1 21 2 3* *ijht ijht ijht ijht ijht

p p p c ch jh ijh ijhty x x x y a b c e

ECONOMETRIC MODELS

Altruism parameter for FathersFather’s Economic Satisfaction (Boy) Father’s Economic Satisfaction (Girl)

Variables (1) (2) (3) (4) (5) (1) (2) (3) (4) (5)

0.1412 0.1295 0.1230 0.1519 0.1493 0.1636 0.1500 0.1371 0.1654 0.1655 Austria (0.0208) (0.0208) (0.0208) (0.0223) (0.0225) (0.0249) (0.0248) (0.0244) (0.0254) (0.0253) 0.1198 0.1071 0.1116 0.1123 0.1097 0.1022 0.0997 0.0945 0.0975 0.0975

Belgium (0.0320) (0.0312) (0.0305) (0.0311) (0.0307) (0.0332) (0.0331) (0.0329) (0.0339) (0.0335) 0.1038 0.0891 0.1013 0.1007 0.1003 0.2017 0.2081 0.2137 0.2342 0.2283

Denmark (0.0386) (0.0382) (0.0377) (0.0387) (0.0388) (0.0515) (0.0516) (0.0523) (0.0541) (0.0545) 0.2503 0.2210 0.2102 0.2244 0.2115 0.3224 0.2968 0.2811 0.2987 0.2865

Finland (0.0414) (0.0398) (0.0400) (0.0430) (0.0431) (0.0468) (0.0454) (0.0455) (0.0467) (0.0469) 0.1983 0.1765 0.1748 0.1727 0.1766 0.1936 0.1761 0.1698 0.1699 0.1698

France (0.0190) (0.0183) (0.0183) (0.0191) (0.0191) (0.0213) (0.0207) (0.0206) (0.0210) (0.0211) 0.2739 0.2327 0.2329 0.2540 0.2558 0.1583 0.1334 0.1205 0.1183 0.1139

Germany (0.0424) (0.0419) (0.0413) (0.0419) (0.0422) (0.0474) (0.0462) (0.0457) (0.0458) (0.0463) 0.5478 0.5016 0.4817 0.5135 0.5045 0.5743 0.5381 0.5008 0.5480 0.5251

Greece (0.0215) (0.0211) (0.0212) (0.0220) (0.0221) (0.0222) (0.0218) (0.0219) (0.0227) (0.0227) 0.2263 0.2109 0.2036 0.2191 0.2210 0.2134 0.1914 0.1886 0.1966 0.2005

Ireland (0.0214) (0.0211) (0.0205) (0.0215) (0.0214) (0.0230) (0.0225) (0.0223) (0.0233) (0.0233) 0.3787 0.3546 0.3456 0.3607 0.3586 0.3999 0.3828 0.3663 0.3798 0.3727

Italy (0.0132) (0.0130) (0.0129) (0.0136) (0.0136) (0.0142) (0.0140) (0.0139) (0.0142) (0.0142) 0.4447 0.4645 0.4363 0.4677 0.4936 0.3766 0.3697 0.2893 0.3878 0.3016

Luxembourg (0.0967) (0.1007) (0.0927) (0.0995) (0.1019) (0.0864) (0.0839) (0.0795) (0.0802) (0.0808) 0.1560 0.1525 0.1374 0.1494 0.1375 0.1277 0.1264 0.1249 0.1194 0.1177

Netherlands (0.0266) (0.0268) (0.0265) (0.0271) (0.0270) (0.0292) (0.0288) (0.0284) (0.0291) (0.0290) 0.4803 0.4661 0.4552 0.4700 0.4745 0.5105 0.4889 0.4873 0.5206 0.5249

Portugal (0.0212) (0.0209) (0.0208) (0.0216) (0.0217) (0.0233) (0.0232) (0.0232) (0.0238) (0.0239) 0.2291 0.2187 0.2103 0.2122 0.2101 0.2295 0.2217 0.2122 0.2236 0.2187

Spain (0.0117) (0.0115) (0.0114) (0.0118) (0.0118) (0.0124) (0.0122) (0.0120) (0.0125) (0.0124) 0.1594 0.1329 0.1382 0.1335 0.1431 0.2295 0.2076 0.2152 0.2079 0.2106

UK (0.0370) (0.0360) (0.0362) (0.0370) (0.0366) (0.0401) (0.0391) (0.0402) (0.0402) (0.0408)

Altruism parameter for MothersMother’s Economic Satisfaction (Boy) Mother’s Economic Satisfaction (Girl)

Variables (1) (2) (3) (4) (5) (1) (2) (3) (4) (5)

0.2009 0.1914 0.1869 0.2213 0.2217 0.2060 0.1997 0.1911 0.2200 0.2185 Austria (0.0196) (0.0195) (0.0194) (0.0210) (0.0211) (0.0238) (0.0236) (0.0231) (0.0239) (0.0240) 0.1187 0.1024 0.0995 0.1061 0.1040 0.1747 0.1709 0.1557 0.1547 0.1500

Belgium (0.0270) (0.0261) (0.0255) (0.0259) (0.0259) (0.0291) (0.0283) (0.0286) (0.0287) (0.0289) 0.1320 0.1130 0.1143 0.1163 0.1176 0.1034 0.1112 0.1066 0.1108 0.0999

Denmark (0.0370) (0.0367) (0.0369) (0.0377) (0.0378) (0.0456) (0.0450) (0.0456) (0.0459) (0.0465) 0.2515 0.2010 0.1993 0.1920 0.1836 0.3461 0.3198 0.2978 0.3131 0.3106

Finland (0.0418) (0.0407) (0.0413) (0.0436) (0.0442) (0.0418) (0.0410) (0.0406) (0.0409) (0.0414) 0.1962 0.1793 0.1734 0.1835 0.1808 0.2161 0.1939 0.1791 0.1868 0.1803

France (0.0175) (0.0173) (0.0170) (0.0179) (0.0179) (0.0197) (0.0190) (0.0191) (0.0196) (0.0197) 0.2463 0.1977 0.1985 0.2149 0.2087 0.2503 0.2184 0.2033 0.1907 0.1849

Germany (0.0375) (0.0357) (0.0353) (0.0362) (0.0366) (0.0493) (0.0474) (0.0468) (0.0467) (0.0471) 0.6548 0.6105 0.5947 0.6381 0.6250 0.6290 0.5906 0.5713 0.6191 0.6102

Greece (0.0209) (0.0207) (0.0210) (0.0218) (0.0219) (0.0211) (0.0207) (0.0209) (0.0216) (0.0218) 0.2071 0.1912 0.1836 0.2044 0.2027 0.1936 0.1783 0.1790 0.1856 0.1879

Ireland (0.0193) (0.0192) (0.0189) (0.0197) (0.0197) (0.0200) (0.0196) (0.0193) (0.0202) (0.0202) 0.4107 0.3870 0.3760 0.3990 0.3938 0.4647 0.4476 0.4310 0.4497 0.4435

Italy (0.0125) (0.0124) (0.0122) (0.0129) (0.0129) (0.0135) (0.0133) (0.0132) (0.0136) (0.0135) 0.3180 0.3149 0.2656 0.3326 0.2810 0.2221 0.2343 0.1842 0.2795 0.2279

Luxembourg (0.0759) (0.0739) (0.0699) (0.0730) (0.0702) (0.0759) (0.0769) (0.0707) (0.0767) (0.0730) 0.1554 0.1424 0.1388 0.1396 0.1422 0.1945 0.1846 0.1664 0.1674 0.1586

Netherlands (0.0251) (0.0242) (0.0241) (0.0247) (0.0246) (0.0287) (0.0277) (0.0276) (0.0285) (0.0281) 0.5031 0.4860 0.4743 0.5029 0.5000 0.5841 0.5665 0.5551 0.5828 0.5821

Portugal (0.0191) (0.0190) (0.0189) (0.0196) (0.0196) (0.0213) (0.0212) (0.0211) (0.0215) (0.0216) 0.2718 0.2610 0.2532 0.2594 0.2552 0.2762 0.2676 0.2607 0.2709 0.2657

Spain (0.0110) (0.0109) (0.0108) (0.0112) (0.0112) (0.0117) (0.0114) (0.0114) (0.0117) (0.0117) 0.1995 0.1708 0.1606 0.1675 0.1636 0.2444 0.2297 0.2249 0.2272 0.2235

UK (0.0312) (0.0300) (0.0303) (0.0306) (0.0306) (0.0343) (0.0337) (0.0334) (0.0342) (0.0338)

AuBe Dk

Fi

Fr

Ge

Gr

Ir

It

Lu

Ne

Po

Sp

UK

.1.2

.3.4

.5.6

Fath

ers-S

ons A

ltruis

m

.1 .2 .3 .4 .5 .6Fathers-Daughters Altruism

Fathers-Sons & Fathers-Daughters

Au

BeDk

Fi

Fr

Ge

Gr

Ir

It

Lu

Ne

Po

Sp

UK

0.2

.4.6

.8

Moth

ers-S

ons A

ltruis

m

.1 .2 .3 .4 .5 .6Mothers-Daughters Altruism

Mothers-Sons & Mothers-Daughters

OTHER RESULTS

Fathers less altruistic towards step children than natural - but not significant

Mothers much sensitive than fathers to income shocks

Married or cohabiting Mothers more income satisfied

Negative effect of Family Size in income satisfaction on both

Highly significantly positive effect of the household owning the house

GLLAMMFather’s Economic Satisfaction Mother’s Economic Satisfaction

Variables (1) (2) (3) (4) (5) (1) (2) (3) (4) (5)

0.1183 0.1120 0.1056 0.1309 0.1294 0.1602 0.1561 0.1529 0.1734 0.1720 Austria

(0.0227) (0.0226) (0.0225) (0.0231) (0.0231) (0.0215) (0.0215) (0.0215) (0.0220) (0.0220)

0.0691 0.0785 0.0569 0.0615 0.0714 0.1109 0.1136 0.1072 0.1093

0.1040

Belgium

(0.0293) (0.0294) (0.0294) (0.0294) (0.0303) (0.0263) (0.0266) (0.0262) (0.0265) (0.0265)

0.1537 0.1651 0.1646 0.1682 0.1690 0.0951 0.1003 0.0955 0.0979 0.0938 Denmark

(0.0461) (0.0440) (0.0452) (0.0445) (0.0468) (0.0442) (0.0438) (0.0440) (0.0438) (0.0440)

0.2433 0.2269 0.2161 0.2285 0.2186 0.3100 0.3000 0.2916 0.2936 0.2910 Finland

(0.0433) (0.0420) (0.0419) (0.0424) (0.0425) (0.0436) (0.0432) (0.0433) (0.0437) (0.0439)

0.1453 0.1358 0.1363 0.1316 0.1333 0.1582 0.1462 0.1445 0.1453 0.1451 France

(0.0192) (0.0191) (0.0190) (0.0193) (0.0193) (0.0181) (0.0179) (0.0180) (0.0180) (0.0182)

0.1387 0.1165 0.1148 0.1072 0.1082 0.2036 0.1791 0.1714 0.1585 0.1568 Germany

(0.0493) (0.0486) (0.0483) (0.0487) (0.0487) (0.0470) (0.0458) (0.0452) (0.0457) (0.0456)

0.5276 0.5086 0.4838 0.5313 0.5140 0.5804 0.5591 0.5457 0.5956 0.5890 Greece

(0.0208) (0.0205) (0.0207) (0.0211) (0.0212) (0.0197) (0.0195) (0.0195) (0.0201) (0.0201)

0.1546 0.1473 0.1506 0.1576 0.1630 0.1507 0.1439 0.1449 0.1554 .1573168 Ireland

(0.0207) (0.0206) (0.0207) (0.0211) (0.0212) (0.0199) (0.0198) (0.0197) (0.0202) .0202206

0.3422 0.3341 0.3246 0.3397 0.3346 0.3933 0.3940

Italy

(0.0133) (0.0132) (0.0131) (0.0133) (0.0133) (0.0137) (0.0137)

0.4138 0.3849 0.3794 0.3889 0.3750 Luxembourg

(0.0922) (0.0866) (0.0922) (0.0872) (0.0957)

0.4539 0.4385 0.4390 0.4589 0.4642 0.4828 0.4729 0.4717 0.4961 0.4968 Portugal

(0.0215) (0.0214) (0.0214) (0.0218) (0.0218) (0.0212) (0.0211) (0.0211) (0.0214)

(0.0214)

.1928914 .1897875 .1861097 0.1894

0.2360

0.2331 0.2310 0.2360

0.2341

Spain

.0118585 .0117857 .0117239

(0.0119) (0.0113)

(0.0112) (0.0112) (0.0113)

(0.0113)

0.1961 0.1812 0.1874 0.1852 0.1869 0.2376 0.2293 0.2258 0.2318 0.2266 United Kingdom

(0.0367) (0.0364) (0.0361) (0.0361) (0.0363) (0.0321) (0.0317) (0.0313) (0.0314) (0.0315)

Au

Be

Dk

Fi

Fr Ge

Gr

Ir

It

Po

SpUK

.1.2

.3.4

.5

Fath

ers

Altru

ism

.1 .2 .3 .4 .5 .6Mothers Altruism

Fathers & Mothers

Estimated altruism parameters – all children

Fathers money metric, Oswald (2002, 2004)

Father’s Economic Satisfaction (Son) Father’s Economic Satisfaction (Daughter) Variables

(2) (3) (4) (5) (2) (3) (4) (5)

Austria 16% 11% 13% 13% 14% 11% 11% 13% Belgium 13% 29% 14% 28% 18% 25% 18% 27% Denmark 6% 8% 7% 8% 16% 20% 21% 22% Finland 12% 12% 12% 13% 15% 16% 15% 17% France 14% 15% 14% 15% 13% 15% 13% 15% Germany 23% 23% 23% 24% 9% 9% 8% 9% Greece 78% 83% 76% 84% 91% 94% 86% 97% Ireland 23% 25% 20% 25% 14% 18% 14% 18% Italy 64% 71% 61% 70% 79% 91% 76% 90% Luxembourg 85% 61% 38% 49% 42% 38% 35% 45% Netherlands 19% 20% 20% 20% 13% 14% 13% 14% Portugal 97% 104% 94% 104% 130% 150% 116% 139% Spain 50% 56% 46% 55% 37% 42% 37% 42% UK 11% 13% 12% 14% 15% 19% 16% 18%

Mothers money metricMother’s Economic Satisfaction (Son) Mother’s Economic Satisfaction (Daughter) Variables

(2) (3) (4) (5) (2) (3) (4) (5)

Austria 34% 23% 26% 25% 27% 19% 20% 20% Belgium 11% 15% 13% 15% 15% 18% 15% 17% Denmark 6% 6% 6% 6% 9% 14% 12% 12% Finland 8% 9% 8% 8% 21% 27% 22% 30% France 16% 18% 16% 18% 15% 17% 15% 17% Germany 18% 18% 17% 18% 17% 18% 15% 17% Greece 106% 113% 107% 116% 106% 114% 104% 118% Ireland 26% 29% 26% 30% 17% 21% 17% 21% Italy 85% 99% 81% 97% 99% 119% 95% 116% Luxembourg 25% 20% 32% 21% 16% 18% 17% 19% Netherlands 13% 17% 14% 18% 19% 22% 20% 22% Portugal 125% 142% 122% 139% 161% 172% 142% 160% Spain 57% 65% 56% 65% 42% 48% 43% 49% UK 18% 23% 20% 23% 20% 25% 22% 25%

Fathers money metric of child well-being

00.20.40.60.8

11.21.41.61.8

Aus

tria

Bel

gium

Den

mar

k

Fin

land

Fra

nce

Ger

man

y

Gre

ece

Irel

and

Ital

y

Luxe

mbo

urg

Net

herla

nds

Por

tuga

l

Spa

in

UK

Mothers money metric of child well-being

00.20.40.60.8

11.21.41.61.8

Austria

Belg

ium

Denm

ark

Fin

land

Fra

nce

Germ

any

Gre

ece

Irela

nd

Italy

Luxem

bourg

Neth

erlands

Portugal

Spain

UK

Estimated money measures (as % of parent income ) of the value of a 1 std dev change in child satisfaction

Fathers and Mothers money (%) metric (GLLAMM)

Father’s Economic Satisfaction Mother’s Economic Satisfaction Variables

(2) (3) (4) (5) (2) (3) (4) (5) Austria 14% 11% 13% 13% 28% 22% 22% 23% Belgium 21% 29% 14% 35% 16% 17% 15% 16% Denmark 13% 17% 13% 16% 7% 8% 7% 8% Finland 11% 12% 11% 12% 15% 16% 15% 16% France 12% 14% 12% 13% 15% 16% 14% 16% Germany 9% 10% 8% 9% 16% 16% 13% 14% Greece 93% 98% 91% 101% 112% 117% 110% 122% Ireland 16% 21% 16% 21% 21% 26% 22% 26% Italy 83% 93% 79% 92% 134% Portugal 111% 124% 106% 123% 147% 165% 135% 155% Spain 50% 55% 47% 55% 60% 54% 61% UK 15% 18% 16% 18% 28% 31% 30% 31%

Fathers and Mothers money metric of child well-being (GLLAMM)

0%20%40%60%80%

100%120%140%160%

Aus

tria

Bel

gium

Den

mar

k

Finl

and

Fran

ce

Ger

man

y

Gre

ece

Irela

nd Italy

Por

tuga

l

Spa

in UK

Fathers and Mothers money (%) metric (GLLAMM)

CONCLUSIONS

Strong parental altruism

More so in Southern Europe

Not religion – Ireland also low

Mothers seem more altruistic than fathers

Fathers seem more altruistic towards their daughters than sons

Mothers seem more altruistic towards their sons in some countries but the pattern is less clear