Working class family as an economic unit: an enquiry into attitudes affecting earning, spending, and the distribution of income between family members

Abstract

CHAPTER 1 This chapter examines some deficiencies in the present methodology of economics. The deficiencies referred to may be summarised as follows: 1. The problems arising from the compartmentalisation of economics into disconnected academic fields. || 2. Problems arising from the tendency of economists to define the scope of economics too narrowly, possibly thus excluding s number of important cutural variables from their models. || 3. This tendency creates a further difficulty; that one can often not be sure to whet range of cultures, historical periods, or actors' circumstances, the models are applicable. || 4. The over-eraphasis which economists have placed on macro-economic statistical relationships in 'constructing forecasting models. Without a proper investigation and understanding of these relationships at the "micro" level, i.e. that of individual actors, there is some danger of using spurious relationships, end again of the problem referred to under (3) above.

Finally, the argument calls for an integrated model of the household's economic behaviour, taking in all three main aspects of its economic activity (expenditure, work and saving) which have hitherto been dealt with by economics mainly in isolation from each other. Such a model should be based on relationships empirically verified at the level of the individual household. It should incorporate as variables the norms, goals and interaction patterns of the household end its members, from- which their economic actions arise. Since these may be difficult to ascertain on a macroeconomic level, some demographic or economic indicators of sociological variables which are salient for the model must also be identified.

CHAPTER 2 The second chapter reviews some recent literature relating to the supply of labour by the household to the market. (This chapter does not attempt to give a complete coverage of the aspects of the field of labour economics which are relevant to the objectives of the thesis; most of the literature on the labour force participation of married women is left over to chapter 6, where it is examined in conjunction with my empirical findings on the family's labour supply). The interdependence of the supply of, and demand for labour, are considered as they relate to the issue of how much work is available to the individual employee. There follows a discussion of the determinants of the individual's supply of labour to the market. This involves a consideration of how the utility which the individual household member derives from his marginal earnings is effected by the distribution of these earnings amongst personal and collective uses. The question is then raised as to whether such variations in the utility of marginal earnings might be used to predict the reactions of workers to wage increases and hence the elasticity of supply of labour to the individual to the individual firm.

CHAPTER 3 This chapter sets out the data available from existing sociological studies about the distribution of income within the family, end the nature of each spouse's responsibilities within the family budgeting system.

CHAPTER 4 This chapter describes the design of a small survey undertaken amongst working-class families in Edinburgh to investigate the nature of the distribution of income end budgeting responsibilities within the family, end their relationship to the husband's end wife's supply of labour#' The methods used to analyse the data ere also outlined.

Chapter 5 This chapter gives the findings of the survey on the distribution of income within the family and the nature of the budgeting system. Factors effecting the size of the husband's personal expenditure ere examined. Two main systems of budgeting are identified, together with their cultural correlates.

CHAPTER 6 This chapter gives the findings of the .survey on the family's supply of labour. An overall analysis is made of the determinants of the husband's and wife's propensity to work, and the importance of the distribution of income within the family is assessed in relation to other factors. A summary of the rather complex conclusions of this chapter will be found at the end of it.

CHAPTER 7 Chapter 7 concerns some implications of the savings behaviour of families in the sample for contemporary theories of the consumption function. The data suggest a basis for a forecasting model of consumer demand which would treat some types of saving as commodities. A mathematical model is therefore developed for predicting the cross-elasticities of substitution between current consumption of particular commodities, and that part of saving which is made towards future planned purchases« The implications of this type of substitution effect for the aggregate savings ratio ore also considered.

CHAPTER 8 This chapter develops the notion of a utility tree - that is, a clustering of commodities according to the degree to which they are substitutes for one another in the consumer's expenditure. A utility tree enables the economist to identify groups of commodities, such that the demand for all commodities in the group is effected to the same extent by a price change of a good external to the group. Such findings greatly simplify the work of calculating the cross-elasticities of substitution. The typical division of expenditures between husband and wife, identified in chapter 5, forms a logical basis for the classification of commodities into groups between which the cross-elasticity of substitution is low. Using this division as a basis for classification, a hypothetical utility tree is constructed, tested on consumer expenditure data from the National Incomes Blue Book, and found to be reasonably correct.

Together with the work on saving in the preceding chapter, the notion of a utility tree suggests a basis for the integrated model of household economic behaviour called for in Chapter 1, It is then shown that leisure could be included in the model as a commodity, given the right sort of macroeconomic data.

CHAPTER 9 In conclusion, the possibilities of such an integrated mode ere further considered. An attempt is made to assess what data would be required to complete the model; how it incorporates the ideal types of the family budgeting system developed in chapter 5 and the findings about the determinants of the family's labour supply in Chapter 6; end what further work needs to be done to find out how generally valid are the sociological assumptions on which the model is based. Finally, I examine the question of what simple demographic indicators are available of the sociological variables used in the model.