Changing families: How technological progress at home and the market place affect our lives

Nezih Guner (ICREA-MOVE, Universitat Autònoma de Barcelona and Barcelona GSE)

Consider how different households in the U.S. and other industrialized countries look today relative to decades ago. First, a smaller proportion of the adult population is married today than it was in the past. A smaller number of people ever get married; if they do marry, they do so later in their lives; and they are more likely to divorce. The retreat from marriage was more dramatic for the less educated. There has also been an increase in assortative mating. Second, the amount of time allocated to market work by married households has increased markedly over the post-war period. This was critically driven by a rise in labor-force participation by married females. As a result, today’s households are very far from traditional breadwinner husband and housekeeper wife paradigm. We live in a different world. What are the economic forces behind this dramatic shift in household characteristics? People marry for both economic and non economic reasons: material well-being and love. On the material side of things, a woman’s labor is important for both home production and market production. Over time the value of a woman’s labor in household production has declined, due to technological progress in the household sector. At the same time, the value of a woman’s time in the market and her incentives to obtain education increased as a result of a lower gender wage gap and a higher skill premium. Therefore, love and the value of a woman’s labor on the market have come to play more important roles, relative to the value of a woman’s labor in home production, in the decision about whether or not to get married and whom to marry.


Measures of Rationality and Welfare for Behavioral Decision-Makers

Jose Apesteguia (ICREA, UPF and Barcelona GSE)

    The standard economics model of individual behavior is based on the maximization principle, in which the alternative chosen by the individual is the one that maximizes a well-behaved preference relation over the menu of available alternatives. This model (1) provides a simple, versatile, and powerful account of individual behavior, and (2) suggests the maximized preference relation as a tool for individual welfare analysis. Over the last decades, however, research has produced increasing amounts of evidence documenting systematic deviations from the notion of rationality implied in the maximization principle. This evidence raises at least two important questions: (i) How severe are the deviations from the classical theory?, and (ii) What is the best way to extract relevant information from the choices of the individual for the purposes of welfare analysis? This opuscle (a) reviews the modern view of rationality and welfare in Economics, (b) presents the main findings in the behavioral economics literature challenging the standard model of decision-making, and (c) discusses several measures that the literature has put forward to address the measurement of the rationality and welfare of behavioral individuals.

 Mass Media and its Influence on Behavior

Ruben Enikolopov (IPEG, ICREA, UPF and Barcelona GSE) and Maria Petrova (IPEG, ICREA, UPF and Barcelona GSE)

    Mass media is the important source of information at the macro level in most of the countries. Information provided by mass media can affect variety of outcomes ranging from results of the voting, to public policies, to ethnic violence, to teenage pregnancies. This opuscle reviews recent literature in economics that studies how mass media affects the behavior of people. It first discusses recent theoretical models that can help to understand both incentives of media outlets and, correspondingly, people’s responses. It then provides an overview of the empirical evidence that document the effects of mass media on a variety of political and social outcomes.