In the previous articles I pointed out two elements that allow an improvement in well-being from generation to generation, understanding this in a broad conception that includes, in addition to a higher family income that allows the acquisition of more and better satisfiers, of a higher quality of overall life.
The first is that the economy experiences a sustained growth process; Without an increase in GDP per inhabitant, there is no way for the well-being of the general population to increase, for which an institutional arrangement is required that offers legal certainty and the correct incentives that promote greater investment in physical and human capital, as well as such as technological change that increases the productivity of production factors and their real remuneration.
The second is the environment in which each family lives and whose quality depends primarily on the quantity and quality of public goods that the government offers, for which it is essential to strengthen municipal public finances with the collection of property taxes. Citizens would be willing to pay this tax if and only if the government is efficient and honest.
The third element that is decisive for there to be an improvement in intergenerational well-being is related to the decisions that are made within the household, in particular those that concern spending on children. Having made the momentous decision to have children, it is necessary to decide how to allocate family income between the acquisition of goods that satisfy some of the needs of family members, how much to allocate to the children’s accumulation of human capital, and how much to save.
It is to be expected that fathers and mothers derive satisfaction not only from the goods they consume, but also from the level of well-being of their children and that is why they will be willing to sacrifice their own consumption in order to allocate those resources to their children for food. clothing, health and education. Furthermore, since they do not expect that in the future their children will repay them what they spent on them, their attitude can be described as selfish-altruistic. Of special importance to have an improvement in intergenerational well-being is what is allocated from the total family spending to the accumulation of the human capital of the children in three particular items.
The first is the quality of the food; cannot expect a “healthy” life and a full academic performance without adequate nutrition; Here it should be noted that the greater the human capital of the fathers and mothers, the food within the home will be one of higher quality. The second is related to health care, which in addition to being directly related to food and the intake of drinking water, must include attention from health services, in particular not neglecting the application of vaccines, either in the public or private health sector.
The third and most important is education. In the aggregate, the accumulation of human capital is constituted as the element that reduces the costs of introducing technological changes in production, this being the main source of long-term economic growth and hence the importance of an educational policy that guarantees high-quality education, both in public and private schools. An education that rewards knowledge, curiosity and research, not ideology.
But beyond the quality of education provided in schools, it is a fact that the greater the human capital of parents, the greater the value they give to their children’s education and therefore they will be willing to spend more in this area, including complementary goods to the education provided in schools (living space within the home, books, puzzles, computer equipment, etc.) and, above all, time. Education is ultimately the main element behind greater social mobility, better quality of life and improved generational well-being.
There is no doubt, the most profitable investment that parents can make is in the human capital of their children; they and their grandchildren will thank you.
Economist and professor
Point of view
Knight of the National Order of Merit of the French Republic. Medal of Professional Merit, Ex-ITAM.