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1
Economic Decisions within the
Private Household
Hanoi, Vietnam
October 2006
Erich Kirchler
(economic decisions within the
private household)
Well-being
Money and tax (€)
Leadership, advertisement, consumer loyalty etc.
Group decision making (economic decisions within the
private household)
2
Economic decisions within
the private household
15 years of studies
on expenditures and
other economic
decisions within the
family
3
Decisions within private
households
• Normative (rational) model
Identifiable decision-maker(s)
Complete knowledge about all available alternatives
All the consequences are clear and evaluable
Evaluation on the basis of clear, stable goals
All consequences have known probabilities
Relevance of information can be evaluated, information can be collected
• Description (K. Weick)
Isolation of decisions
Multiple goals
Tiredness and simultanous solving of problems
4
Questions
• Who is/are the decision maker(s)?
• Which decisions can be taken?
• How do decisions proceed?
• How can decisions be analysed?
• Who has got influence and why?
• Are decisions isolated incidents?
• Which tactics do partners use?
5
Who are the decision makers?
Power structure
Patriachy
Matriarchy
Egoism principle
Equity
principle
Credit
principle
Love
principle
Egoism principle
high
low
H
a
r
m
o
n
y
in
t
he
r
e
la
t
io
n
s
h
ip
6
Interaction characteristics
(a) Interdependence vs independence of partners: People in relationships that can be
described using the love principle are dependent upon one another in their feelings, thoughts and actions and are
considerate on each other.
(b) Long-term vs short-term credit: In ad hoc groups or economic relationships, give and take
are directly linked (principle of reciprocity).When partners trust one another, they look for experiences that satisfy
both partners and distribute the available ressources according to needs. Balance is sought over the long term. If
the relationship progresses harmoniously, then in the end „book-keeping“ – to use a banking analogy – is no
longer necessary.
(c) Joint maximisation of profits vs cost-benefit analysis:Unhappy partners whose
relationship has become an economic relationship seek to exploit their opporunities for profit to the full.The more
harmonious the relationship, the less interest a partner has in concluding a trade with their partner.
(d) The distribution of rewards using rules of need vs equity rules.
(e) Abundance vs scarcity of ressources:
Whilst in economic relationships only certain types
of ressources are traded, which are mainly universalistic in terms of the concept of Foa and Foa (1974), in close
relationships also particularistic ressources besides universalistic ones are exchanged.
(f) Spontaneous altruism vs control of demands and obligations: Happy partners
do not seek to keep an account of demands and obligations. They act spontaneously in an partner-oriented manner.
(v. experiments of Clark, 1984).
7
Which decisions are there?
Purchase decisions
Money management
Savings decisions
Capital investment
management
Non economic
decisions
Economic
decisions
Decisions in private
housholds
8
Interest
Social
visibility
CollectivistIndividual
Unimportant Symbolic
Habitual
decisions
Spontanous
decisions
Autonomous
decisions
Syncratic
decisions
R
e
a
d
y
D
e
c
i
s
i
o
n
s
c
r
i
p
t
N
o
n
e
x
i
s
t
e
n
t
L
o
w
Fi
n
a
n
c
i
a
l
c
o
m
m
i
t
m
e
n
t
H
i
g
h
9
Interpersonal
conflict
Probability
conflict
Value conflict
Distribution
conflict
Agreement
Syncratic
decisions
10
How do decisions proceed?
Informationssuche
egoistische
Bewertung der
Alternativen
Harmonie
Machtrelation
Präferenzordung
Person A
Harmonie
Machtrelation
Produkttyp
Informationssuche
Harmonie
Machtrelation
Präferenzordung
Person B
Harmonie
Machtrelation
Produkttyp
Umwelt
(z. B. Marktgeschehen,
Referenzpersonen)
autonome
Entscheidung
autonome
Entscheidung
Vergleich der
Übereinstimmung
Wert-
konflikt
Sach-
konflikt
Verteilungs-
konflikt
Harmonie
Machtrelation
Konfliktlösungs-
versuche
intra-
individueller
Konflikt
Nutzens-
regelung
synkratische
Entscheidung
Meinungen
Konflikt
Bedürfnis
Set von
Alternativen
Bedürfnis
Set von
Alternativen
Spontan- oder
Gewohnheits-
entscheidung
Spontan- oder
Gewohnheits-
entscheidung
egoistische
Bewertung der
Alternativen
altruistische
Bewertung der
Alternativen
altruistische
Bewertung der
Alternativen
[...]... materials 33 Decision- making roles (Davis & Rigaux, 1974) Dominance of women 3 cooking utensils (saucepans etc.) female-dominated decisions relative influence of men (=1) and women (=3) cosmetics food living room furnishing Men’s clothing 2 Dominance of men 1 syncratic decisions leisure plans garden tools holiday balanced decisions savings types car male-dominated decisions 0 50 100 Percentage of joint decisions... Machtrelation Übereinstimmung Verteilungskonflikt Power intraindividueller Konflikt Nutzensregelung Power Harmonie Konfliktlösungsversuche synkratische Entscheidung Autonomous decision Autonomous Harmony Harmony Product type Product type decision Comparison of opinions Conflict Agreement 12 Umwelt (z B Marktgeschehen, Referenzpersonen) Person A Person B Bedürfnis Spontan- oder Gewohnheitsentscheidung Bedürfnis... Konfliktlösungsversuche synkratische Entscheidung Agreement Conflict Value Probability Power Distribution Intraindividual conflict Regulation of benefit Harmony Syncratic Resolution of conflict The end decision 13 How can decisions be analysed? • Observation in the laboratory and in private settings: • • Ad hoc small groups: In close relationships, processes develop that are unique Typically small groups were... University, 14:17 Secondary • Working hours: 14:38 full time, 15:1 non-working • Monthly houshold income: slightly above the Austrian average 29 Questions • Benefit debts: – Influence of decision- making history on current decisions • Models of book-keeping: – Time frame & budgetierung: last incident, moving average, specific last incident, specific moving average • Moderating variables „satisfaction“ and... Konfliktlösungsversuche synkratische Entscheidung Person A Person B Need Spontansous or habitual decision Need Set of alternatives Set of alternatives Inform search Inform search Egoistic evaluation of alternatives Egoistic evaluation of alternatives Power Power Harmony Harmony Altruistic evaluation of alternatives Spontaneous or habitual decision Altruistic evaluation of alternatives Preferences Preferences Comparison... co-operation; presenting own needs/subjective importance) 10 Presenting false facts (suppressing important information; distortion) 11 Indirect coalition (referring to other people; emphasizing utility of the decision for others) 12 Direct coalition (discussion in the presence of others, hoping for their support) 13 Trade-offs (book-keeping; reminders of past favours) 14 Integrative bargaining (search for the... "good-looking car with no engine" (Kemp, 1970, p 30) 14 • Interview techniques • • • • Who is the informant? Davis (1970) reports that the perceived pattern of influence of partners in discussions about purchasing a car or furniture is a near-perfect match if the information provided by men and women is taken across the sample as a whole At the aggregated level, differences between individual couples'... conflict 3 % f o Other topics 4% conflict - 31 Determinants of influence – Sex x topic (Davis & Rigaux, 1974; ) – Knowledge, importance of the topic (Seymour & Lessne, 1984; Burns & Granbois, 1977; ) – Decision- making history (Corfman, 1987) 32 Influenc in relation to the product type Who has got influence and why? Autonomous influence of the woman -1.0 Insurance Car Camera Alcoholic drinks Bank loan... fortnight ( ) twice a week ( ) once a month ( ) once a week ( ) less than once a month ( ) less than once a week ( ) never 21 Diaries • • • • • Time-sampling diaries Events diaries Interval diaries Partner decisions diary Etc 22 23 24 Instructions for completing the diary Together with your partner, recall all the conversations you have had together today, and what topics were discussed in these conversations... Shampoo 3 Biscuits Clothes Mid-morning snack Cereals Snacks Sweets Frozen food Chocolate/cocoa 2 Toys Bicycle Pet food Watch Records Coffee Radio/ Cassette recorder Camera 1 1 2 3 4 Child‘s wish 35 Are decisions isolated incidents? 100 E E 75 P L C E E 50 CC E P E E E WW EE Influence (%) E E E C P P E E E P E W P 25 E E 0 0 Days 90 180 270 360 36 . 1984).
7
Which decisions are there?
Purchase decisions
Money management
Savings decisions
Capital investment
management
Non economic
decisions
Economic
decisions
Decisions. private
housholds
8
Interest
Social
visibility
CollectivistIndividual
Unimportant Symbolic
Habitual
decisions
Spontanous
decisions
Autonomous
decisions
Syncratic
decisions
R
e
a
d
y
D
e
c
i
s
i
o
n
s
c
r
i
p
t
N
o
n
e
x
i
s
t
e
n
t
L
o
w
Fi
n
a
n
c
i
a
l
c
o
m
m
i
t
m
e
n
t
H
i
g
h
9
Interpersonal
conflict
Probability
conflict
Value