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Business, 10.09.2019 18:10 rayniqueamee2002

In the mid-1970s, the united kingdom made an interesting policy change in its "child allowance" policy. this program provides a fixed amount of money per child to every family, regardless of family income. traditionally, the child allowance had been distributed to families by withholding less in taxes from the paycheck of the family wage earner—typically the father in this time period. the new policy instead provided the child allowance as a cash payment to the mother. as a result of this change, households have the same level of income and face the same prices in the market, but the money is more likely to be in the mother's purse than in the father's wallet. should this change in policy alter household consumption patterns? basic models of consumption decisions, of the sort that we examined in this chapter, assume that it does not matter whether the mother or the father receives the money because both parents seek to maximize the family's utility as a whole. in effect, this model assumes that everyone in the family has the same preferences. could you guess what happened in reality?

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