- The Washington Times - Saturday, August 13, 2005

A new school year is rapidly approaching. The sale signs and displays are already up. Therefore, millions are about to re-run the annual gauntlet of parent-child conflict that is back-to-school shopping. But understanding the economics of this traditional family crisis can provide comfort to stressed parents who feel they must “abandon hope, all ye who enter here” when they hit the mall.

At heart, economics reduces to the proposition that incentives matter. Larger benefits or lower costs cause decision-makers to want more of something, even when they are children whose rationality you question. As a result, when large differences in costs and/or benefits face parties who must jointly decide on purchases, disagreements will arise. But that is back-to-school shopping in a nutshell.

Who pays is the biggest source of conflict. Parents footing the back-to-school bill weigh the value they perceive against a good’s price. But children paying none of the bill will weigh the value they place on a good against the zero price they will pay (the relevant price to them is the cost of wheedling, whining, complaining, blackmailing or arguing their parents into it).

Because many back-to-school things are worth less than their cost to parents but worth more than zero to children, children want to spend more than their parents do. They want more, newer, better and “cooler” things. And parents trying to teach their child “the value of a dollar” will have little luck convincing them otherwise, because it is the parents’ money, not the child’s, on the line.

Parents and children are often far apart on the benefit side, as well. Parents see clothing, shoes and backpacks largely through utilitarian eyes. But their children’s perspective is dominated by where those items will put them in their school’s social pecking order. So parents, who see many good alternatives to a particular purchase, often end up in disputes with their children who, feeling the enhanced peer pressure of returning to school, insist there is no substitute, in conversations liberally punctuated with “you don’t understand.”

The back-to-school shopping crisis is often one of the year’s most strident confrontations because of the large gaps between the values parents and children place on the items in question and the larger than usual amount of money involved. But it doesn’t signify anything nefarious. Rather, it is different in scale but not in kind from many other conflicts that arise from the differing incentives facing parents and children.

Why are young children more likely to misbehave in a store checkout line than at home? Because their benefits (candy, gum) are higher and their costs are lower (they are less likely to be punished in public). Why are older children so eager to borrow Dad’s car? Because they get the benefits without the costs (illustrated by how frequently the car comes back with the gas tank empty).

Why do kids want to eat out, despite the fact that it costs more? Because it’s not their money. Why do some want their favorite clothes washed almost daily? Because it’s not their time and effort. In contrast, why are they so resistant to doing chores, cleaning their rooms or washing dishes after dinner? And why do their parents want them to study more than they do? Because these things involve the child’s time and effort.

Understanding the back-to-school shopping crisis as just a temporary, annual peak in parent-child conflicts will not make them go away. But it can help parents think about ways to minimize such conflicts (such as giving your children a fixed budget for new clothes, which means they are spending their own money, rather than nagging you to spend more of yours). And it can help maintain parental sanity and reduce despair about what has happened to formerly “good” children.


Gary Galles is professor of economics at Pepperdine University, Malibu, Ca.

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