Unpacking the household: informal property rights around the hearth.

AuthorEllickson, Robert C.

ARTICLE CONTENTS INTRODUCTION I. HOUSEHOLD FORMATION AND DISSOLUTION IN A LIBERAL SOCIETY A. Three Distinct Relationships That May Exist Within a Household B. Foundational Liberal Rights That Enable Individuals To Fashion Their Own Households 1. Private Property 2. Freedom of Exit: Of Households "At-Will" 3. Freedom of Contract C. Household Surplus and Its Distribution Among Members II. THE PREDOMINANT STRATEGY OF CONSORTING WITH INTIMATES A. Favoring Those with Whom One Will Have Continuing Relations B. Limiting the Number of Persons in the Relationship C. Favoring Homogeneity of Tastes and Stakes III. A HISTORICAL OVERVIEW OF HOUSEHOLD FORMS A. Occupants of Households: The Predominance of Small, Kin-Based Clusters 1. Number of Occupants 2. Family vs. Non-family Households 3. Varieties of Larger Households B. Owners of Dwelling Units C. Residential Landlord-Tenant Relationships IV. ARE THE HOUSEHOLD FORMS THAT ENDURE NECESSARILY BEST? A. Utopian Designs of Unconventional Households B. Possible Imperfections, from a Liberal Perspective, in the Process of Household Formation 1. Illiberal Background Conditions 2. A Liberal State's Duties To Control Externalities and Protect Incompetents 3. Perverse Government Policies C. Is Liberalism Overly Destructive of Solidarity? D. The Unpromising History of Experiments with Unconventional Household Forms V. CHOOSING WHICH OF A HOUSEHOLD'S PARTICIPANTS SHOULD SERVE AS ITS OWNERS A. Basic Concepts in the Theory of the Ownership of Enterprise 1. Residual Control Decisions 2. Residual Financial Flows 3. Ownership: The Amalgamation of Control and Financial Residuals B. Why Suppliers of a Household's At-Risk Capital Tend To End Up Owning It 1. The Various Patrons Who Might Own a Household 2. The Advantages of Conferring Ownership on Contributors of At-Risk Capital VI. THE MIXED BLESSINGS OF JOINING WITH OTHERS A. Adding Co-Occupants B. Adding Co-Owners C. Choosing Between Owning and Renting a Home VII. ORDER WITHOUT LAW IN AN ONGOING HOUSEHOLD A. The Tendency Toward Welfare-Maximizing Substantive and Procedural Rules B. Sources of Household Rules: In General 1. The Array of Potential Sources of Household Rules 2. Internal (Second-Party) Sources of Rules: Of Gift-Exchange 3. External (Third-Party) Sources of Rules C. Rules for Co-Occupants 1. Co-Occupant-Created Contracts and Hierarchies 2. Co-Occupant Adherence to Ambient Norms and Laws 3. Two Specific Substantive Challenges for Co-Occupants D. Rules for Co-Owners E. Rules To Govern the Landlord-Tenant Relationship 1. When Landlords Also Are Occupants 2. When Landlords Are Not Occupants CONCLUSION INTRODUCTION

Lawyers and legal scholars understandably tend to focus on domains of life where law is central. There is much to be learned, however, from domains where people deliberately structure their affairs to minimize formalities such as written contracts and legal entanglements. Just as studying conditions of anarchy helps illuminate the effects of government, so studying domains that people intentionally keep casual can shed light on the merits of more legalized arrangements.

This Article analyzes one of the most important human institutions in which informality traditionally has prevailed: the household. Although the household lies at the core of everyday life, economists and legal scholars have yet to give it the attention it deserves. (1) The members of a household (that is, its owners and occupants) together manage a real estate enterprise that makes use of inputs of land, capital, and labor in order to provide shelter, meals, and other services. Members of an intimate household, through their repeated interactions, typically generate a set of norms to govern their behavior, including their duties to supply household inputs and their rights to share in household outputs. The chief goals of this Article are to provide a structure for thinking about the household, to systematize and augment what is already known, and to stimulate legal scholars and other analysts to devote more attention to the structuring of the home. (2)

It is important at the outset to distinguish the household from both marriage and the family, two closely related (and much more studied) social molecules with which it commonly is conflated. As just suggested, a "household" is a set of institutional arrangements, formal or informal, that governs relations among the owners and occupants of a dwelling space where occupants usually sleep and share meals. (3) By this definition, a studio apartment with a single owner-occupant is a household, and so is a kibbutz where hundreds of members dine communally. A study of the household thus is an investigation into the allocation of property rights in a specific physical setting.

"Marriage," by contrast, denotes a legal relationship between two people that is not specific to any one location. Of course, when marital partners cohabit a home they jointly own, their household relationships are deeply intertwined with their marital relationship. The domain of their marital relationship, however, differs significantly from the domain of their household relationship. Much of marital property law addresses entitlements to assets other than the marital home--to children, financial accounts, and the spouses' human capital, for example. In that sense, a marital relationship is broader and more multifaceted than a household relationship. Conversely, marital law is unlikely to directly govern some important household relationships. First, when marriage partners cohabit, other kinfolk and non-kinfolk commonly are present in their home. In the United States in 2004, for example, married couples were the sole occupants of less than 39% of multiperson households. (4) Second, a married couple need not cohabit. Indeed, in the United States roughly 7% of married persons do not live with their spouses. (5) Third, marriage partners who cohabit are not necessarily also the co-owners of their dwelling unit; others may join them as co-owners, they may lease their dwelling from others, or their home may be owned by only one partner. Marital law, in sum, fails to cover significant household relationships. To emphasize the institutional distinction between marriage and the household, much of the discussion to come features relationships within nonmarital households.

"Family" denotes a kinship relationship by blood, adoption, or marriage, but not necessarily a household relationship. Family members, even more obviously than spouses, need neither cohabit nor co-own, and cohabitants and co-owners need not be kin. In the United States, the number of multiperson households in which none of the occupants shared family ties increased almost sixfold between 1970 and 2004. (6) These nonfamilial households, which contained 12.3 million people in 1998, (7) appear in a wide variety of incarnations--for example, university students or young professionals living together as roommates, unmarried heterosexual partners, (8) gay and lesbian couples, (9) welfare recipients or recent immigrants clustering to economize on rent, (10) and idealists teaming up in a commune.

The household is eminently worthy of study as an institution distinct from marriage and the family. Even in industrialized nations, households are still the sites of a large fraction of economic and social activity. In 1985, according to a leading study, American women, irrespective of their marital and employment status, were spending an average of 30.9 hours a week on housework, while men were spending 15.7 hours. (11) In the United States, recent estimates of the value of within-household production (most of it unpaid) have run from 24% to 60% of GDP--that is, to several trillions of dollars per year. (12)

The norms that govern household affairs, moreover, have had Promethean influence. The rules that our ancestors developed to resolve problems arising around their hearths provided templates for achieving mutually advantageous solutions in settings outside the home. (13) Even today it is typically within the household that children first learn how to recognize and deal with problems posed by common property and collective enterprise. Study of the household therefore promises to shed light on the origins of more complex institutions.

While legal scholars and institutional economists have largely neglected the household as such, numerous demographers, sociologists, and social historians have examined the institution. Aristotle devoted the first book of The Politics to analysis of the household, which he envisioned as the basic building block of political life. (14) Plato, Thomas More, Charles Fourier, B.F. Skinner, and other utopian thinkers have imagined new institutional arrangements for providing housing and meals. There have been incessant experiments with unconventional households, such as monasteries, kibbutzim, and, more recently, co-housing developments that enable nuclear households to engage in congregate dining several times a week.

Basic questions about the nature of household institutions abound. Why are the occupants (and also, for that matter, the owners) of a dwelling unit so often related by kinship? Why has the average number of occupants per household fallen, particularly during the twentieth century? More fundamentally (and to redirect questions Ronald Coase famously asked in another context), why don't all adults live alone? Or, conversely, all in one huge household? (15) How do household members obtain the rules that govern their relationships, and what sorts of rules are they likely to favor? This Article offers tentative answers to these questions. Although cultural variables also unquestionably affect how individuals set up households, the focus here is on the influence of economic considerations. (16) The overarching thesis is that individuals, across cultures and historical eras, have tended to structure their households, even ones sustained by love and...

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