Key insights and ideas for thirteen core topics in economics, organised by selecting the most relevant theoretical approaches per topic and contrasting them with each other.
This chapter provides a map through the complex jungle of economic theories. There are many different theoretical approaches, and each aspect of the economy has been analysed by a number of different ones. However, it is neither feasible nor productive for students to engage with every possible angle for every topic. Hence, the chapters on different topics, together with Building Block 8: Economic Theories, sets out an alternative approach: pragmatic pluralism. Rather than pursuing the extreme of either only focusing on one approach, or including every possible strand of thought for every topic, we propose a pragmatic middle ground: teaching a select number of approaches for each topic. In this way, it is possible to introduce students to the variety and diversity of economic thinking, whilst still having enough time and space to properly discuss each of the insights in detail with them.
‘From the homicidal bitchin’ / that goes down in every kitchen / to determine who will serve and who will eat’. Leonard Cohen knew it: the household is the locus of complex economic struggles. Much of our economic life plays out inside households as we care for ourselves and each other, decide how to live, what to consume, how to relax but also do the housekeeping. Are gender relations a main driver of these decisions, or is it best understood as utility maximization?
Main opposing perspectives
■ Feminist economics: Unequal division of unpaid labour
■ Neoclassical economics: Rational utility maximization within the household
Main complementary perspective
□ Cultural approach: Household relations vary strongly between cultures
Additional perspectives and insights
+ Marxian political economy: Class fundamentally shapes the meaning of gender
Main opposing perspectives: Feminist economics and neoclassical economics
There are two dominant ways of looking at what happens in the household, one emphasizing choice and the other stressing constraints. The feminist view emphasises social relations in which power asymmetries and gender roles play an important part. The neoclassical view assumes rational decision making through which utility is maximized.
Feminist economics analyses how patriarchy shapes the economy and gender relations inside households play a key role in this. Gender inequalities have both material aspects with unequal income and wealth distributions, as well as cultural aspects, with gendered notions of ‘good’ behavior. While self-interested behavior, for example, is more often encouraged for men and seen as masculine, altruist behavior is often imposed on women and seen as feminine.
Relatedly a key insight of feminist economics is that unpaid labour, often seen as altruist behavior, is disproportionately performed by women. Furthermore, time budget studies show that many women work double shifts, one paid and the other unpaid, while this is less the case for men. Unpaid labour, such as caring for others, is critical to human wellbeing, the development of human capabilities and the functioning of the economy as a whole. But while these unpaid economic activities are largely ignored in national account statistics, estimates suggest that they may even amount to about half of all economic activities (OECD, 2018).
In contrast to feminist economists who emphasize unequal economic bargaining power between men and women, some neoclassical economists suggest the gendered division of paid and unpaid labour is efficient. Because of natural differences and individual characteristics, women are assumed to be (inherently) more productive in unpaid labour tasks, while men are better at performing paid labour, explaining the gendered division of paid and unpaid labour.
Within neoclassical economics, households can be modelled as unitary actors in which the head of the household is assumed to maximize the collective utility. Another option within neoclassical economics is to see households as places where rational game theoretical bargaining, in which everyone maximizes one’s own utility, takes place. These models try to model how contextual institutional factors and differences in individual assets can explain intra-household negotiations and decisions.
A key characteristic of the neoclassical approach to households, sometimes referred to as the new home economics, is that they conceptualize household labour divisions as rational market transactions. As such unpaid labour, such as raising children, in this approach is understood as ‘production of human capital’ and marriage decisions are understood akin to negotiations about the business contracts resulting in an efficient division of labour. Becker (1976, p. 10), for example, wrote: “According to the economic approach, a person decides to marry when the utility expected from marriage exceeds that expected from remaining single or from additional search for a more suitable mate. Similarly, a married person terminates his (or her) marriage when the utility anticipated from becoming single or marrying someone else exceeds the loss in utility from separation, including losses due to physical separation from one’s children, division of joint assets, legal fees, and so forth. Since many persons are looking for mates, a market in marriages is said to exist.”
Main complementary perspective: Cultural approach
Economics is not the only discipline studying households and families, as they have been core topics of the discipline of sociology. Within the sociology of families, there are various theoretical frameworks, from structural-functionalism and life course theory to symbolic interactionist, or cultural, approach. There are also feminist and social exchange theories, which largely overlap with respectively feminist and neoclassical theories about the economics of the household.
A key insight of the cultural approach is that conceptions about what the family is and how it should function are subject to socio-historical change and are crucial determinants of what goes on in the family. Over the last decades, developments such as the rise of women performing paid labour, divorce, cohabitation, and same-sex marriage, have fundamentally changed how families look. Besides the traditional nuclear family, other family structures such as the single parent, step, foster, adoptive, extended, informal, and transnational family, have become more prevalent. Accompanying these changes in family structures, it is found that the gender conceptions of men change at a slower pace than those of women, giving rise to discrepancies of expectations and preferences. These gender conceptions relate to ideas about the “breadwinner”, motherhood, work and relationship quality, household utility, gendered separate spheres, and male privilege, and influence decisions concerning relationship timing and childrearing as well as education and employment.
Additional perspectives and insights
Marxian political economy: Despite its often acknowledged central role in the economy, the household has had a relatively marginal role throughout the history of economic thought. A key exception is the innovative group of (female) consumer and household economists at the University of Chicago during the early 20th century with Hazel Kyrk, Margaret Reid and Elizabeth Hoyt. Although they themselves were often critical of the ability of neoclassical theory to explain consumption and household decisions, for example because of the influence of advertising, their theoretical and empirical work was a key source of inspiration for the new home economics that was later developed at Chicago. Various Marxian scholars, sometimes called Marxist-feminists, also for an important exception as they looked at the household, and, in particular, how class and gender inequalities are similar and different, and interact with each other. A key insight from this literature is that class, as well as race, fundamentally alters the meaning and implications of gender, as later also emphasized by intersectionality scholars discussed in more detail with the topic ‘Inequality’. What being unemployed means is for someone’s career, family life and wellbeing, for example, highly different for men and women, but so for working and middle-class women.
A core argument of early Marxian thinkers, such as Bebel, Engels and Luxemburg, was that the gendered division of labour is not ‘natural’ and, instead, is socio-historical specific, being a core element of how the economy is organized. As such, they theorized that overthrowing capitalism would also result in the undoing of patriarchal institutions as well as class domination. Domestic labour was assumed to become increasingly commodified under capitalism and socialized under socialism. Raising and educating children would be done outside of the household by childcare and educational institutions, and housework would be done by communal facilities, rather than by women inside individual households.
Chapters & Papers:
- Economics After The Crisis by Irene van Staveren, from 2015, chapter 2. This well-written textbook which in one chapter sets out the neoclassical, post-Keynesian, social economic and institutional perspectives on households.
- Alternative Ideas from 10 (Almost) Forgotten Economists by Irene van Staveren, from 2021, chapter 5. This book emphasizes often ignored and neglected ideas and contains a chapter on the ideas of Barbara Bergmann on gender biases.
- The Routledge Handbook of Heterodox Economics: Theorizing, Analyzing, and Transforming Capitalism by Tae-Hee Jo, Lynne Chester, and Carlo D’Ippoliti, from 2017, chapter 13. This broad and diverse book sets out a variety of theories on households.
- The Handbook of Economic Sociology by Neil J. Smelser and Richard Swedberg, from 2005, chapter 27. This extensive and yet accessible book for non-sociologists, provides an impressive and useful overview of the field of economic sociology, including a chapter on the role of gender in the economy.
- Gender ideology: Components, predictors, and consequences by Shannon N. Davis and Theodore N. Greenstein, from 2009. This review article discusses the literature on how ideas about gender come about and how influence people’s choices in the household and labour market.
- “Never Intended to be a Theory of Everything”: Domestic Labor in Neoclassical and Marxian Economics by Therese Jefferson & John E. King, from 2001. This article summarizes the history of how unpaid housework was, and was not, treated in neoclassical and Marxian economics.
- Unpaid Care Work: The missing link in the analysis of gender gaps in labour outcomes by Gaëlle Ferrant, Luca Maria Pesando and Keiko Nowacka, from 2014. This OECD paper discusses how gender differences in unpaid care work helps explain gender gaps in labour force participation, wages and job quality.
- Sociology of Families: Change, Continuity, and Diversity by Teresa Ciabattari, from 2016. This useful textbook introduces students to the vast sociological literature on families, with its different theories and aspects.
- If Women Counted by Marilyn Waring, from 1988. This book is often regarded as a founding document of feminist economics as it drew attention to the ways in which unpaid labour and nature were generally ignored in economics and national accounts.
- A Treatise on the Family by Gary Becker, from 1981. This influential book describes the neoclassical approach to households and gender differences.
- Beyond Economic Man: Feminist Theory and Economics by Marianne A. Ferber and Julie A. Nelson, from 1993. This influential book introduces students the key ideas in feminist economics as well as describing its varieties.
- Economics of Women, Men and Work by Francine D Blau, Marianne A. Ferber, & Anne E. Winkler, most recent edition from 2013. This textbook introduces students to mainstream and neoclassical ideas and research on households and gender differences.
- For the Family? How Class and Gender Shape Women’s Work by Sarah Damaske, from 2011. This book applies an intersectional approach to households by looking at how gender and class interact with each other and help explain observed patterns in behavior.
- The Oxford Handbook of Women and the Economy by Susan L. Averett, Laura M. Argys, and Saul D. Hoffman, from 2018. This impressive collection of essays covers many of the different aspects of the role of gender in the economy and focuses in particular on marriage, fertility and the labour market.