Who’s paying for the party?

A recent study by BYU professors (see here and here) tells us that when parents pay for their children’s college, those children are more likely to engage in risky behaviors like alcohol abuse than those who pay their own way, in full or part. Such a finding is consistent with our intuition that when we remove consequences for actions, those relieved of responsibility will often act in irresponsible ways.

Government spending policy could take some cues from what we are learning about parental spending practices. When the government subsidizes unwise choices, whether in homebuying or family formation, we are likely to see those unwise choices becoming more common. The mortgage crisis and the startling rise in unwed parenting seem to confirm this.

Perhaps a good start for the family budget and for entitlement reform is to stop picking up the bar tab.