super freakonomics chapter 3 Levitt and Dubner describe two

super freakonomics chapter 3 Levitt and Dubner describe two studies, which provided empirical support for Gary Becker’s prediction that even family members would engage in what might be termed strategic altruism. The first study showed that an elderly parent in a retirement home is more likely to be visited by his grown children if they are expecting a sizable inheritance. The second study produced evidence that the number of visits increases when there is competition between siblings for a parent’s estate. Use marginal benefit-marginal cost analysis to explain these observed outcomes.

Solution

Marginal cost of visiting parents in retirement homes is not as high as is the marginal benefit. First outcome is more acceptable because in this case a higher marginal benefit is expected and accordingly, a person will keep visiting retirement home until margianl cost of visiting retirement home is less than the merginal benefit expected.

In case of more siblings, the property is expected ot be distributed equally amongst siblngs but if parents are given emotional comfort, they may give his entire property ot one child but it is situation base.d Acccordingly, there is lesser marginal benefit expected. hence marginal cost of visiting retirement home being same, a person will visit more frequently when there is sizeable inheritance.