International Review of Economics

, Volume 63, Issue 3, pp 281–303 | Cite as

Welfare-enhancing parental altruism and children’s habit formation

Research Article


We propose a model of parental altruism in relation to children’s habit formation, as children are unaware of their developing habits while young and only become cognizant with age. We show that an altruistic mother (1) maintains the amount of income transferred to her child lower than the child would desire and (2) reduces further income transfer upon an exogenous increase in case of a particular negative habit of the child. The child, when grown, may end up being grateful for the small income transfer if the mother is sufficiently altruistic and has a relatively high income: When evaluated by the realized habitual preferences, a small income transfer leads to greater welfare. This implies that parents from richer families tend to appreciate the authoritative parenting practice.


Habit formation Parental altruism Welfare-enhancing Time preference 

JEL Classification

D10 D60 D91 J13 



We thank Koichi Futagami, Tatsuro Iwaisako, Masao Ogaki, Yoshiyasu Ono, and Tadashi Yagi for their comments. We are also grateful to the two anonymous referees for their valuable suggestions. We acknowledge financial support from: Grants-in-Aid for Scientific Research (C No. 26380239) from the Japan Society for the Promotion of Science; the Global COE Program of Osaka University; the Joint Usage/Research Center Project of ISER from the Ministry of Education, Culture, Sports, Science and Technology; and Research Subsidy of Kanazawa Seiryo University.


Shinsuke Ikeda has received Grants-in-Aid for Scientific Research (C No. 26380239) from the Japan Society for the Promotion of Science; the Global COE Program of Osaka University; the Joint Usage/ Research Center Project of ISER from the Ministry of Education, Culture, Sports, Science and Technology. Lin Zhang has received Research Subsidy from Kanazawa Seiryo University.

Compliance with ethical standards

Conflict of interest

We have no conflict of interest.


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Copyright information

© Springer-Verlag Berlin Heidelberg 2016

Authors and Affiliations

  1. 1.Faculty of EconomicsKanazawa Seiryo UniversityKanazawa-shiJapan
  2. 2.The Institute of Social and Economic ResearchOsaka UniversityIbarakiJapan

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