The Cost of Family Break-down

by Stein Ringen (1)

Prof. Stein Ringen

The decline of the traditional family unit has far-reaching, economic as well as social penalties.

For centuries Europe's peoples have lived their lives in families. But in one generation, European societies have gone halfway to eliminating stable family households.

New unions (cohabitation included) are now more likely to collapse than survive for a lifetime. Today's children are the first generation to grow up under the influence of profound family instability.

The breakdown of the family is causing damage to the social and moral fabric of society. But there is also an economic cost, which is much higher than is often recognised.

When a family sits down to a meal, its members enjoy the product of a range of activities, which are carried out in the market and in the household.

From the market, they benefit from farming and fishing, processing, packaging, storage, transport and retailing. The family contributes by shopping, preparing ingredients, cooking, setting the table and washing up afterwards.

In all these, labour and capital go into production: the farmer's time and the use of a tractor, the cook's time and the use of tools, stoves, and dishwashers. Families could of course have their meals without any work of their own if they went to restaurants, but much of the time, and for good economic reasons, we make our own meals.

A great deal of production is done by families: the production of a clean home (unless there is a paid housekeeper); cleaning clothes' (unless a laundry is used); caring for children (perhaps helped by a nanny); caring for the, sick, frail or old, again, this is sometimes done with paid help).

All these activities are production every bit as much as when similar activities are provided in the market for payment; and they all contribute to the family's standard of living by adding to the goods and services purchased in the market.

In the process from market goods to consumption, value is also added in the family by co-operation: the shared use of common goods. A single man living alone enjoys the benefit of his home. If he is joined by a woman, she will also enjoy the benefit of the home without the man having to give up his housing. Through co-operation, two people (or more) can, share the benefit of one house - and similarly its equipment, television, hi·fi, car and so on.

Now suppose everybody lives on their own (no house-hold co-operation) and adds nothing to the goods they buy in the market (no house-hold production). In conventional economic terms, this would have no impact on their standard of living, as measured by gross domestic product per capita. But undoubtedly there would be a loss for individuals in terms of the goods and services they could consume.

Families thus add value to market goods and services and it is possible to estimate the amount they add. The value of domestic production can be estimated from the time spent on household work, while that of co-operation can be estimated using economic techniques that account for the economies of scale involved in sharing.

Using conservative assumptions which deliberately keep estimates low and down to earth, my calculation is that domestic production increases household income in the UK by about 50 per cent on the average. Domestic co-operation is another third on top of household income and domestic production.

Taken together, domestic production and co-operation more than double the value of household income. In other words, the material standard of living would be more than halved if it were not for the effects of living in households. In the national economy; households contribute as much as market institutions. This is an astonishing result for a country where the family is often believed to have become marginal in economic terms.

But there is another finding that may offer a clue to what politicians see as the absence of the feel-good factor - the fact that, despite economic growth, voters do not feel better off. In the 10 years to 1986, the value added by domestic production and co-operation declined - in 1976, it had increased household income by 126 per cent, a decade later this figure had dropped to 113 per cent.

Over this period, economic growth in terms of income per capita was 31 per cent. But the standard of living, measured in terms of the goods and services finally consumed by individuals, increased by only 23 per cent. More than a quarter of economic growth was absorbed by a fall in household production and co-operation because households became smaller and families more unstable.

It would be reasonable to assume that what was previously provided by households is now provided by the market. This would mean that about half the growth in income per person has, in fact, gone to replacing domestic production and co-operation. Real growth in the standard of living between 1976 and 1986 was therefore less than 15 per cent, rather than the headline figure of 31 per cent.

The reason why people do not feel better off, therefore, is that there is not much to feel better off about. Even with reasonable economic growth, most people have not seen much improvement in the amount of goods and services they consume.

Family decline is not all bad news, of course. Young people are now able to leave the parental home earlier, the elderly are able to live on their own longer, families can afford to eat out more often.

But trends, such as an increasing incidence of divorce, a larger number of single parents, more cohabitation and more children growing up in family instability, have considerable economic costs, as well as more widely known social costs. Politicians who worry about the elusive feel-good factor should look as much to the family as to the market.

Footnote 1: The author is professor of sociology and social policy at Oxford University. This article draws on material from his forthcoming book, -Citizens, Families and Reform (Oxford University Press, November 1996, E30).