Altruism and Exchange in Intergenerational Transfers: The Demand for Children Emergency Room

In this paper, we analyze the role of income as a determinant of parents’ care for children. We show that the answer depends on whether Altruism or Exchange motives are the factors that explain intergenerational transfers. We then develop a test to discriminate between these alternatives. Unlike previous approaches, this test focuses on measures of parents’ efforts on child care that are essentially non-monetary. Using data from the United States, we find a negative relationship between family income and the frequency of children’s emergency room utilization which cannot be explained by several alternative controlling factors. In our framework, this is interpreted as evidence against the null of prominently altruistic behavior.