Contrary to popular belief, the elderly financially support their kids, rather than the other way around.  This was true in hunter-gatherer and peasant societies.  A neat piece in the JEP shows that it was also true in the U.S. in the 1980s.  Using the Survey of Consumer Finances for 1983-5, the authors look at who gave and who received gifts of $3000 or more.  Survey says:


Donors and recipients agree: Money flows from old to young.  According to donors, parent–>child giving is almost ten times as big as child–>parent giving.  According to recipients, parent–>child giving is over twenty five times as big as child–> parent giving.

Scholars in this area often say that people exaggerate how much money they give.  But that’s not quite what we see in the data.  For child–>parent transfers, reported giving is much larger than reported receiving.  For parent–>child transfers, however, the pattern reverses: Recipients say they got more than donors claim to have given.  In each case there is roughly a 10 percentage-point discrepancy.

This could just be sampling error, but I’m tempted to interpret.  It looks like older people feel a bit embarrassed to either subsidize their adult children, or accept their kids’ charity.  Younger people, in contrast, feel better about both helping and receiving help from their parents.

When I mentioned this to Alex Tabarrok, he observed that parents are proud to put their kids through college.  That sounds right to me.  But in terms of stigma, there’s a world of difference between paying your son’s tuition and helping a grown man pay his bills.