CENTS AND NONSENSE

2 0 6 Y C E N T S A N D N O N S E N S E J A M E S T O B I N Vol. 83, no. 4, October 1995 Five of the seven chapters of Viviana A. Zelizer’s book The Social Meaning of Money are devoted to three topics: the roles of husbands and wives in controlling the spending of family incomes; social conventions on the use of cash in gifts, tips, and other extracommerical transactions; and to what extent and how donors to the poor should and do control the uses to which their assistance is put. On these subjects Zelizer’s scholarly histories of opinion and practice in the United States over two centuries are fascinating. I comment on them in turn. Most readers will be surprised to read, as I was, that the centuriesold financial subjugation of wives by their husbands became as early as the late nineteenth century an active front in the crusade for women’s rights. Yet until the 1930s men were generally dictators over the disposition not only of their own earnings, but of their wives’ incomes. Many husbands still are, though both law and convention have slowly advanced toward recognizing women’s equal status. After World War II the trend, led by ‘‘more egaliT h e S o c i a l M e a n i n g o f M o n e y by Viviana A. Zelizer (Basic Books, 286 pp., $24.00) 2 0 7 R tarian couples,’’ was toward pooling of funds and informal cooperation on their allocation. At present, Zelizer says, domestic financial arrangements ‘‘remain somewhat of a mystery.’’ With most women employed outside the home, many couples living together unmarried, and marriages themselves predictably fragile, conflicts over finances are more likely. Consequently, segregation of funds and formal agreements on partners’ rights become more popular. Sociologists, following Zelizer’s lead, would do us all a favor by conducting serious research on intrafamily economics. My own profession, economics, treats households largely as black boxes. We assume that by some process families make rational spending and saving decisions, but we rarely look inside to see how the diverse interests and preferences of members are reconciled. Are gifts of cash acceptable on birthdays, anniversaries, weddings , graduations, other rites of passage, and holidays? Are they appropriate between spouses, sweethearts, friends, parents, and associates? If they are acceptable, should cash gifts somehow be dressed up to do justice to the occasion and to soften the apparent crassness and laziness of the donor? Tips likewise: in some relationships it is insulting to o√er them, in others it is insulting not to. Zelizer’s accounts of the changing social mores on these matters make sociological sense out of conventions and etiquettes that look arbitrary. Again, the economics profession leaves a void for other social scientists to fill. In 1993 a young Yale economist made national headlines at Christmastime by pointing out that cash gifts are optimal for both giver and receiver, because they save the giver time and e√ort, and the cash can be dedicated to the receiver ’s true preferences. An issue of more moment for public policy is whether charity and public assistance should be given in cash or in kind. As in the case of other gifts, the economist’s presumption is that receivers will gain more per dollar transferred if they are allowed to decide themselves how to spend it. But taxpayers and United Way contributors assert interests of their own. Can the recipients be trusted to decide for themselves their needs of highest priority? Can the adult heads of families be trusted to take care of children and other dependents? This question is the more reason for investigating the internal financial management of households. Should donors make sure that their bounty goes for nutritious food and 2 0 8 T O B I N Y sanitary homes, and not for alcohol, drugs, and gambling? Donors’ motives are not just paternalistic: bad management of funds by poor recipients may mean greater burdens on private and public transfers in future. Zelizer tracks the cycles of opinion and debate on...