a16z Podcast - a16z Podcast: The Macro and Micro of Parenting

Episode Date: September 5, 2017

We tend to talk about tech and parenting through devices and artifacts -- screen time, to code or not to code -- but actually, there's a bigger, macro picture at play there: game theory, economic incentives, culture, and more. So in this back-to-school episode of the a16z Podcast, two economists -- Kevin Zollman, game theorist and philosopher at CMU and author of The Game Theorist's Guide to Parenting; and Fabrizio Zilibotti, macroeconomist at Yale working on a book called Love, Money and Parenting -- share their expertise on parenting through the lens of economics. The hallway-conversation (with Hanne Tidnam) covers how these theories play out in practice -- for example, when the kids are bickering in the back seat of the car -- to how parents can balance altruism vs. paternalism when it comes to thinking about their kids' future vs. their kids' reality of living in the now. And then finally, how do different parenting styles, corporal punishment, education, and of course, technology, play a role in how we parent?

Hi, and welcome to the A16Z podcast. I'm Hannah, and today's episode is a hallway-style conversation in honor of back-to-school season on the economics of parenting, but not in quite the way you'd think. So much of the discussion around parenting and tech today is about the use of specific products or devices. So in this conversation, we wanted to broaden the context and instead explore what it means to use economics as a framework for understanding the nature of parenting. For example, using game theory to think about parenting in terms of our interaction. our choices, incentives, but also the way broader economic environments change parenting styles in different cultures. And last but not least, how tech might be impacting all of that.

The first voice you'll hear is Kevin Zulman, professor at CMU, a game theorist and philosopher and co-author of the recent book, The Game Theorist's Guide to Parenting. And the second voice is Fabrizio Zilabati, a macroeconomist at Yale, working on a book called Love, Money, and Parenting. One of the real central struggles for parents, I think, is making this balance between, you know, what makes life easy today, what gets your kid to stop crying or to stop fighting with you or whatever, and what makes a good kid in the long run. You know, you can give them an extra cookie now and they'll stop bugging you for it, but also you're not teaching them good eating habits. We try to find ways of planning and designing their interactions with their kids so that they can get their kids to do things that are both in the long-term interest of the child, but also make life easy on the parents. And that's where game theory comes in. And that's exactly where game theory comes in. Yeah. We describe game theory as the science of strategic interaction. And the idea here is that any time you've got two different people

whose interests aren't exactly the same, you know, you have a child who wants another cookie for dessert and a parent who wants their kid to finish their vegetables. And so one of the focuses of game theory has been on how can you create strategic interactions, games, between two different individuals, so that both individuals can come out in a way that's good for both of them. Can you give us an example of the ways in which that tends to play out in sort of real concrete daily parenting dilemmas? You're driving on vacation. The kids are harassing one another in the back seat and dad turns around and says, if you guys don't behave, we're canceling the vacation. Right. Which is you're never supposed to do because

then inevitably it happens. And what do you do then? Yeah. Exactly. Every parent knows you're not supposed to do it, but they all, but everyone finds themselves doing it nonetheless. In game theory terms, this is called a non-credible threat. And the reason that it's a non-credible threat is because the kids, if they're sophisticated enough, and most kids are, will realize that mom or dad doesn't want to cancel the vacation any more than the kid does. Right. You're in the car. It's packed. You're on your way. There's no way. Exactly. And by not designing the interaction in the right way, you end up putting yourselves in a no-win situation.

The kids have called your bluff. You don't want to cancel the vacation, but you also don't want to establish a reputation with your kids that your threats mean nothing. And so one of the things that game theory teaches, you want to design punishments or rewards for your kids that are possible for you to follow through on and that you want to follow through on. So instead of going to the amusement park in the morning, maybe you'll go to a, uh, uh, museum. That's a threat that's credible because the kids know you'll want to go to the museum, but that you would be happy to follow through on if the time come. Fabricio, as a macro economist, your work kind of telescopes out and looks at parenting from that macro level. In your work, you talk about, just to set a little context, the three major parenting styles, authoritarian,

where parents really strongly determine what's allowed and isn't and don't give kids much opportunity for feedback or backtalk, really. Permissive parenting, which is really, the opposite, where parents give kids lots of freedom and choice and even sometimes kind of allow them to be the leaders. And then authoritative, which is a kind of positive middle ground and the way that we're, I think, being told now to parent, where parents are in charge but allow kids some agency as well. So how do those different styles play out in different situations and different contexts? We think that parents have some common goals in different part of the world, but the environment and the constraints they are subject to are different,

especially the changes in economic inequality. Yes. And we look at variation across nations over time, so comparing the 70s with the 90s or the turn of the century, comparing Sweden with the United States or China. So on the one hand, we think that most parents want their change. children to be happy, this altruistic concern. At the same time, you know, happiness is a concept that refers to the present and to the future. So you can have a very happy child and a less happy adult, depending also on some choices that are made during childhood or when a

youngster. So we postulate that parents somehow think the good for their children, but with with a stronger emphasis on their future. Children also care about their own future, but somehow they are a bit more present-oriented. And that's the part we call paternalism. That's the reason why parents try to influence the choice or the views of the world of children. Interesting. So you're describing the interaction of parenting basically as this combination of paternalism and altruism, but really having to do with whether you're thinking about the now or the future. I mean, but aren't those different ways of seeing things, basically kids really thinking about the now and parents thinking about their kids' future and what's best for the future? Isn't that kind of just the definition of parenting?

There is an element of common interest between parents and children, you know, to drive to success. And then there is an element of dissonance and diversity of views for parents care more for their children when they will be adult. whether it's more the economic part of it or other way of enjoying life when we think about parent and children, if we think that parent and children value them differently. So if both parents and children think that, you know, being a great painter is a good thing, this type of conflict does not arise. It's really about whether they're aligned with their children or have a different point of view. Absolutely.

So where do these two ways of interacting meet then, this sort of large, picture of parents and children being aligned or not about the future and the now, and the more micro-daily strategic interactions that Kevin described? Game theory typically stipulates that payoffs are essentially given. Cultural economics have tried to put a new level of elaboration on that. So the idea that one of the investment an agent can make is in changing somehow the payoff of the other. we reason that way, when we try to persuade children, you know, the children are fighting

on the back of the car. Another way some parents act is to try to convince day-by-day children that fighting in the back of the car is not worthy and it has some negative moral aspect. If you go back once in a century or more, my grandparents, my grand-grandparents' generation, most of the interaction between parents and children was regulated by restrictions. So parents were telling children what they could do and what they could not do. We think they were doing it on the ground, again, on this altruism and paternalism. Right, the same driving factors, but it was coming out another way. One of the changes that we have seen in the way in which parents strategically influenced

the way children behave is driven by this change in the system of incentive and also in how much control and monitor parents can exercise. We think that this is one of the reasons why a certain way of authoritarian parenting style has declined, corporal punishment. We see decline everywhere in the world. One of the reason we think is its effectiveness is lower in the new environment, in a new economic environment. Oh, interesting. It's not because our cultures have changed, but because it's actually less effective

in what we want the outcome to be. Yes, there is two ways interaction between culture and economics. Once a certain set of behaviors become more or less acceptable, then they become also ingrained. Kevin, do you see these parenting styles also in sort of how you think about your game theorist lens of looking at parenting interactions? Or I guess a bigger way to ask that question is, what do you see the role of culture playing in these particular dilemmas and conflicts that parents and children have? I think culture plays a huge role. I think that, you know, the fact that children are in a lot of respects much more independent of their parents these days than they were in the, you know, much, much distant past. Do you think so? I feel like they're actually less independent. They don't roam around town on their bikes the way we did when we were kids. They've all got phones. We know where they are all the time.

Well, they're more independent in the following way, let me say, which is that there's a lot of interactions that kids have where the parents aren't present. You know, essentially. or two centuries ago, kids weren't going to school. They weren't leaving the house. They weren't interacting over at friends' houses as much. One of the fundamental problems that modern parents faced is the fact that in some respects, kids know more about what's going on in the kids' lives than the parents do. So, you know, your child is doing poorly in school and comes home and says, I'm working as hard as I can, you know, but I just can't manage to do well. Well, here are parents face a real struggle. Because on the one hand, if the child is deceiving them, is really not working that hard, the parent would like to do various things to encourage the child to work harder.

On the other hand, if the kid really is working as hard as they can, and this is just the best that they can do, it's counterproductive for the parent to criticize them for getting a C or a B or whatever. Well, and I'm really glad you bring this up because I wanted to ask, where does truth and fiction fit into these models? You know, are we assuming that we have a basic understanding of the facts. And are we actually assuming that children are rational players here in these strategic interactions? I definitely think kids are rational. One of my favorite stories, I've got it secondhand, but was of an economist son who ran into the store and came out holding two candy bars and said, Dad, can I have two candy bars? And dad says, no, no, no, you can only have one. And the kid gets

this giant smile on his face because, of course, he only wanted one, but he knew that if he asked for two, that compromise would be at one. Right, right. Kids are sophisticated strategic reasoners in figuring out how to get what they would like to from their parents. And that truth and lies fits into that then because they're using it ultimately to get what they want. Absolutely. I mean, every parent has to go through the struggle of teaching their kid why lying is wrong. Because kids will figure out at some point that they can get what they want by deceiving their parents. That it's useful. That lies are useful. Kids have access to all sorts of information that parents can't observe directly themselves, right? All parents here is the fight between the siblings in the next room.

They don't know who started it because they weren't there. In situations where parents are worried that their children might be facing an incentive to deceive them, how can parents sort of design the social interaction to minimize the consequence of that deception or the incentive to do it? If in the end, parents and children had exactly the same view of the world, there would be no game. So we go to the root of what makes parent and children see things differently. The interesting thing is that love that creates a common interest. Oh, that is really interesting to think of the emotion of love as actually serving as a kind of common ground that aligns these interests and these different goals. Education is also a powerful instrument for parents in exercising some.

control through influence and moral persuasion on children. So if parents want to try to change the payoff in the game, so they try to change the way children behave by making them think different in the game, well, more educated parents may have access to higher sophistication. But that's not to say that less educated parents are irrational. They may just have more limited set of instruments at disposal. which comes to the point also why education is negatively correlated with punishment, with corporal punishment.

And one of the answer is that, well, the set of strategy that more educated parents can play is more sophisticated and that leaves somehow parents who have less time and lower education with a more simple way of intervening. I thought it was really interesting that you said that we know less of what kids are experiencing than we once did? Because I think in a lot of ways, it feels like we actually know far more, right, with the technological tools and the way kids use technology, the way parents use technology, GPS data and texting and being always in touch and the way that schools, you know, send home information. There's ways in which we know a lot more. So how do you see that

impacting different parenting styles? Children make many more choices than they used to be. And the same access to technology you mentioned per se, if unmonitored, opens up a variety of potential action contacts that parents may or may not approve. So parents work very hard in trying to grow their children responsible and make their choices. If I think about the wrong type of thing I could have done when I was myself a child, there were somehow obvious type of things my parents could check. But if my daughters, which is now 18, when she was younger, she would have engaged in some type of activities, well, then it wouldn't have been so easy for me to figure out unless I engaged myself in a very extensive type of monitoring. On the one hand, this perception of risk as something completely intolerable, But this together with the fact that technologically you can do more control, there are instruments for doing that.

Society has created this cluster in which, you know, making the right encounter, going to the right school, giving the right answer in that particular interview, everything tends to be so important that parents feel that they have some sort of duty. to be there and to intervene and to protect their children, although in the end, they come back fired a section. I think that they're the same issues. They're just in slightly new clothing. I mean, parents could always keep track to greater and lesser degrees. Technology opens up a new avenue for them that wasn't there before. You know, you can keep the Facebook password or follow your kids on Twitter or something like

that. But if kids want to hide their behavior from their parents, they still can. And so I think that the question of how to use technology, is, in a certain sense, it just is the same questions all over again, just with new options available. We talk a lot about, in the media, about helicopter parenting. I would think that Fabrizio, in terms of how much of a role technology is playing in sort of different socioeconomic frameworks and countries must have an effect on parenting styles, or has it not? Well, if I think of technological change as a driver of economic inequality, then we find a large effect.

If I look at the effect of technology on inequality in different countries that has resulted in some countries, very large increasing of skill, premium, educational premium, et cetera, in others less so. In Sweden, the proportion of parents that we classify as permissive has remained pretty, much constant over time and is about 75% of the respondents, whereas in the United States, that percentage is as low as 18%. And if I go to those we classify as authoritative parents, again, in Sweden, it has been low and it does not change much over time. It's around 7%.

In the United States, it is as high as 45%, and it has increased significantly over time. where this authoritative element, I think, captures part also of this phenomenon of helicopter parents. Oh, you do think it's authoritative, that helicopter parenting. Well, if I had to capture the element of this continuous presence of parents in the life of their children, I would say it's a mixture of authoritative and authoritarian. where authoritarian since we sort of captured by the value of obedience

is probably more of a traditional way of being authoritarian parents. I see. To me it seems that the element of control that is implied, it would make it more authoritarian that style. It depends also on how these are defined

and here we define as authoritarian parents that value among the most important value, obedience. Now, it's not necessarily the case that an overprotective parents requires blind obedience in the way in which, you know, the traditional farming family's fathers typically require children to obey to them. You can be overprotective and still be offering your child lots of choices. That's right. I would say that they are not the old style authoritative parents. They are rather, you know, very engaged parents, but also obsessed with

their children not making mistakes and providing an excess support that in the end goes more into the control part. Helicopter parenting is one of these things, which it's always a little tricky, I think, because I've never met anybody that claims to be a helicopter parent. Nobody wants to be, right? Nobody ever wants to admit that it's them. And so you're sort of criticizing a straw person? I don't know. I mean, I feel like I'm aware. of those tendencies in myself. I think it's Peter Gray who talks about how we're not exposing our kids enough to fear and risk and that they need these things to sort of

inoculate themselves against, to learn that it's okay and how to deal with it. And so I constantly am aware of this battle, right, where I'm like, well, I don't want to say be careful, but please be careful. You know, and it's like the helicopter urge of following your kid around when they're, you know, on a skateboard, on a cement, skate ramp or whatever it is. So I think we all have those tendencies in different degrees.

You're not universally a helicopter parent. No, I definitely agree with you. And we talk about this because this is one of those cases where there's this really sort of bizarre connection that you would never think of unless you thought about it from an economic standpoint. There's this connection between

this concept that economists have long worried about called moral hazard and helicopter parenting or exposing your kids to risk. What does that mean? The idea of moral hazard is familiar from bank bailouts. If a bank knows that it's going to get bailed out, if things really go south for them, that encourages them to engage in higher risk activities because they know that there's a certain sort of safety net. Well, and it's not that

risky, really. It's not that risky, right. What looks like risk is not risk because in the end, if things go badly, the risk will be borne, the downside of the risk will be borne by the government or by the public, rather than the banks themselves. And so if the existence of insurance or the availability of a bailout is there, it actually encourages more dangerous behavior by the bank because it knows that in the really catastrophic events, it doesn't have to deal with the consequences. And the same thing is exactly the same tension that you feel, that if you're always there warning your kids about danger, protecting them from bad things. If you're always there to sort of

provide them with a safety net, the kids themselves might start engaging in higher risk activities precisely because they know that mom or dad is always there to bail them out. Absolutely. My youngest is a major accident magnet. And I'm sure that it's because, weirdly, I'm there to catch him. So he never learns, like, don't jump off the top of the side. Exactly. But of course, the, exactly the other side is felt by governments and parents alike because you don't want to let your kid risk his life, you know, and so if you see him doing something that's really dangerous, it's not as though, you know, I would want to wag my finger at you and say, uh, uh, uh, moral hazard, you know, right. Yeah. Kids need to learn how to internalize,

you know, what risk is. And if they don't ever experience the downsides, the failures, the, the, the, the, the bad things that can come about from taking risks. Right. Their perception of risk is going to be skewed. And when they become adults, they'll engage in risky behavior. And then you as parents are no longer there to protect them. And it could be really catastrophic. But so how do we actually avoid creating that kind of moral hazard while still, you know,

like reasonably making sure our kids are safe? It's sort of hard to know where to tow that line. It's important to kind of think about, you know, sort of two ways that parents can be over involved in in their children and two ways that they create. moral hazard for their kids. One is by being over-involved in terms of protecting their kids from bad things and steering their kids towards what the parents see as good things. But I also think that there's a way that parents can be over-protective with their kids,

and that is involving themselves too much in the kid's decision-making process. So I can still, as a parent, say, let my kid define for him or herself the life that that child would want, but be very involved in asking the kid questions and telling and suggesting things that they might do. And I think that that can be dangerous too. Even just helping the decision making. Even just helping the decision making, because one of the real skills that children need to learn in order to be functioning adults in our society is how to evaluate the options they're in front of them, how to figure out what options they really do have, and how to decide which options to pursue. And if the parents are sort of too involved in that process, kids don't learn how to make

decisions on their own. And so it can feel like for a parent that you're very hands off. You know, I'm not telling my kid what decision to make. I'm just helping them make their decisions. You can actually become a crutch, essentially. Exactly. You also want to raise children into adults that will become adults that are self-sufficient, at least insofar as they can make decisions on their own rather than with the help of their parents. That's kind of a self-fulfilling. I mean, it's nice to feel needed. So there's an incentive for parents to keep doing that beyond just the child's best interest.

It's because it actually feels good to the parent, right, to be needed in that way. From a more macro perspective, when you ask parents in different parts of the world, what values are, in their opinion, most important. Well, again, in Sweden, you have as many as 80% of them that regard independence as one of the Cardinal. value. If you take the United States, that percentage is just about 50%. Wow. I think if I may say this is one of the virtues of the permissive parenting style. By letting children learn from their own mistake and take their decision their instinct would drive them to, people develop the capacity to make decision. In some of these countries, like Scandinavian countries, people develop an

extremely good capacity to cooperate, to work in team, because on the one hand, there is less competitive pressure, and at the same time, people somehow become more adult and independent driven earlier on. Well, and I liked that you said this is possibly one of the benefits of the permissive style, because we tend to think right now that authoritative is probably the best blend and, you know, too permissive is not good, but actually here's one, you know, large cultural side effect or benefit of having this more permissive style is this value of independence that comes out. How is parenting style tied to education systems, the organization of the school systems, especially within different countries? In a very competitive and segregated system

like the United States or the United Kingdom, the success in school opens a door of success in the labor market. In other systems like in Sweden, there is much less of an emphasis on grades, admission to high league school, and the system is altogether more homogeneous. And so this makes somehow the system of incentive provided by the school very different. China has this very dramatic examination called Gao Kau at the end of high school. And everything in the school system gets geared towards preparation. Drives towards that. So this, of course, generates a system of incentive in parents, which is very particular, also in children, of course, in trying to prepare and succeed because, you know, getting a top spot and ending up in Beijing University or in Tsinghua University is very different from going to a small provincial university.

I'm going to actually ask a kind of pessimistic question now, which is ultimately how much does this really matter? Don't some people argue that parenting styles don't have as much impact as we think? What's the real relationship between cause and effect here? And I guess how do we know? I do think that parenting styles matter. Evidence suggests that parents that interact with their children in a certain way tend to lead, for instance, to better results in school. If you take the piece of study and look at the questionnaire about how much time people spend reading books, talking politics with their children, well, you see a significant effect. I think we have a sufficient number of empirical observation that suggests that parenting styles.

I also think that the way parents interact with their children is a very important predictor of how future society is shaped. I want to make clear that the alternative is to believe that the genetical factors are the most important element of the play. Right. The transmission of value I think is important. I do not believe that successful people have good genes and less lucky people, as I call them, have worse genes. Right. And also because it makes us a better parent to believe that we have some impact. Well, it gives us also a mission to fulfill. Otherwise, well, we have fulfilled it in the first day

by bringing out genes and then we can relax. I think there are so many stories of faith or parents to behave that way. And how about you, Kevin? Do you think that we really can improve our outcomes in a systemic way by thinking about game theory in terms of these interactions? Or is it sort of one by one sometimes it works? Sometimes it doesn't. Well, so here's the thing. I don't really necessarily know that the extent to which a good or bad parent is going to improve or not improve how their child performs long term at their life. But what I am very confident about, and I think probably no parent would disagree, is that the way that parents interact with their children is going to affect the day-to-day interactions between the parent and the child,

which is going to affect the parent and the child's relationship at the very least for the rest of their life. If you have positive interactions with your kids that are mutually rewarding, for both of you, it's going to make the experience of being a parent better for you, and it's going to make the experience of being a kid better for your child. And so even if at the end of the day, it does or doesn't affect the adult that your child becomes, there's still reason to focus on how to figure out how to have positive, mutually rewarding interactions with your kids. And in the end, that seems like good enough reason to me. To Fabrizio's kind of earliest definition of the difference between parent and child, even if it's really about just the child's and the

parents now, not the future. It's worth figuring out. Thank you both so much for joining us on the A16C podcast. Thank you very much for having me. Thank you very much.