Two presenters spoke about the role of the family in times of recession. Kathleen McGarry suggested that it is useful to think of the family as a potential provider of insurance against financial shocks. The family may be able to insure against some risks more efficiently than the market (e.g., they may have lower monitoring costs and more complete information) and help correct for market failures. Insurance may have important behavioral effects even when a risky event does not occur and a “benefit” is not paid. For example, someone could go to school or take a new job in a higher risk occupation or industry because they know that the family will be there to assist if necessary. It is therefore important to remember that looking at actual transfers in the data misses the (implicit) transfers that would exist if someone were to need them; the insurance role of the family will be underestimated accordingly. One participant commented that family insurance may also be important for mental health, as the “stress buffering hypothesis” in the sociology literature suggests that social support can be effective in buffering the effects of stress on mental health (see, e.g., Wethington and Kessler, 1986). What matters is whether there is someone that people could call on for help, rather than if they actually received help. The importance of family insurance for physical health is less clear.

McGarry went on to note that inter vivos transfers (i.e., transfers between living persons) are relatively common, with approximately 30 percent of HRS respondents making a transfer to at least one child in any wave and 15 percent of children receiving a transfer in any wave. Transfers are also relatively large, at approximately $1,500 per child and $3,000 per family; these amounts are even larger when summed over many years. Not surprisingly, these transfers are positively related to the income and wealth of the donor and negatively related to the income of the recipient—although parents do not entirely make up for the lost income of their children with these compensatory transfers. According to data from the HRS, financial transfers for college are also common, with approximately 60 percent of parents making such transfers and 40 percent of children receiving them. These transfers are large: the average contribution covered approximately half of total tuition and room and board, with total transfers per child averaging $11,445.

When making transfers to older parents, according to McGarry, donors in the highest income quartile were more likely to give cash than time (which may be regarded as an in-kind transfer): 6.8 percent in the highest income quartile gave “only time” to elderly parents, 11.6 percent “only cash,” and 1.3 percent “both.” The opposite was true for donors in the lowest income quartile: 5.9 percent in the lowest income quartile gave “only time” to elderly parents, 4.5 percent “only cash,” and 0.6 percent “both.” The increase in coresidence after welfare benefits were reduced by welfare reform is an example of the role played by in-kind transfers in the lower part of the income distribution.

McGarry indicated that according to data from the PSID, older people who live alone had the highest incomes, followed by those living with children, those living with children who never left home (who may be disabled), and those living with others; concerns about the potential endogeneity of income (in which the level of income is affected by the choice of living arrangement³) are alleviated by the fact that similar patterns existed when these same individuals were younger (age 58). Comparing older people’s own incomes with the incomes of the households in which they reside (relative to the poverty line) also suggests that coresidence may reduce poverty among the older population.

According to McGarry, older people who were less affected by the economic crisis might be expected to provide assistance to their adult children, some of whom may have returned home to live with them—that is, “boomerang” children. For other parents, the increased need for cash transfers to their adult children may be a drain on their resources. Those nearing retirement who lost jobs and/or assets may reduce cash transfers, invest less in the schooling of children (which raises the question of whether grandparents make up any of the difference), reduce bequests, or experience an increase in coresidence at later ages. The recession may also have delayed effects: parental support of adult children may affect the availability of resources late in life, bequests may decline, and schooling investments for the next generation may decrease. There could also be delayed positive effects, if boomerang children practice reciprocity or families grow closer. For a comparative perspective on economic shocks on family transfers, one could look at such events as the reunification of Germany (e.g., many experienced huge windfall gains as pension plans in East Germany were made identical to the pension plans in West Germany, whereas younger workers were likely to experience a positive shock in terms of lifetime labor income) and the financial crisis in Indonesia, which resulted in many families moving in together (see Thomas and Frankenberg, 2007).

McGarry observed that the current recession makes it necessary to analyze all types of transfers (cash, time, coresidence) and in all directions. One can expect to see differences across the income distribution with, for example, high-income families being more likely to give cash and low-income families being more likely to coreside and make other in-kind transfers. The HRS is a good source of information for cash transfers to family members, although it does not contain information on transfers between siblings. There is also a measurement issue with regard to reciprocity, as more people report making transfers than report receiving them; it would therefore be useful to interview both parents and children.

With regard to coresidence, McGarry thought it desirable to know not only the current situation but also potential alternatives. Who else could people have lived with, and why were those options not chosen? Another question is how resources are shared within the household—who pays for what? As with cash transfers, there are issues related to reciprocity—when people are asked whom the relationship benefits, they tend to report that it benefits the other person. It would therefore be useful to interview both parents and children to get information from both perspectives.

It is also important, McGarry said, to measure the potential for assistance. The HRS has questions about whether someone is available who could be counted on for help. It would also be useful to find out whether children and parents share expectations, whose beliefs “win out,” and whether expectations change over time in response to financial and personal changes. More could also be learned about the preferences of both older people and their children for formal care and whether the care provided by children was a last resort because formal care was not affordable.

The presentation by Linda Waite focused on the resources, demands, and environment associated with the living arrangements of older adults. Homeownership is high among older adults, and one of the obvious responses of younger adults affected by the economic downturn is to move in with them. At the same time, according to Waite, older adults who have been laid off may have a harder time finding work and may move in with their middle-aged children. Adding more people to living arrangements affects crowding, disorder, and the resources available and demands made (in terms of time and money). The National Social Life, Health, and Aging Project (NSLHAP), a nationally representative sample of adults ages 57–85, contains useful information on the living arrangements of older adults; interviews were carried out in 2005 and 2006, and the same respondents reinterviewed in 2010 and 2011.

In the first wave of the NSLHAP, the most common living arrangements among older adults were living with a spouse (47.2 percent) and living alone (28.6 percent). Other living arrangements included living with a spouse and children (8.7 percent); children (4.3 percent); others (3.6 percent); a spouse and others (2.6 percent); a spouse, children, and others (2.6 percent); and children and others (2.5 percent). Perceived social support and demands varied greatly across living arrangements. The worst off (in terms of low perceived support and high perceived demands) were single people living with children and single people living with children and others (most of whom were presumably grandchildren); spouses, in contrast, were a big source of support and did not make many demands. Interviewers also rated the rooms in which the interviews were conducted according to noise, disorder, dirt, smell, clutter, and the repairs that needed to be made. People who lived only with their spouse had the most ordered households, while people who were single and lived with their children and others had the least ordered ones. Household disorder was highly correlated with C-reactive protein levels, so that people in the most disordered households had higher levels of systemic inflammation.

Waite listed a number of questions raised by the economic downturn. How many older adults moved in with others? How many older adults took in others? Did home environments change and how? How many older adults lost family resources? Did relationships deteriorate in families under financial stress? (The NSLHAP also contains information on elder abuse.) Did social networks became smaller or change composition?⁴ How many older adults lost lobs, lost homes, or declared bankruptcy? How many older adults had family members who lost jobs, lost homes, or declared bankruptcy? Did financial transfers to and from family members change? What were the characteristics of family members most likely to be affected by these changes?

During the general discussion, it was suggested that kin availability has been changing and is about to change even more rapidly, raising the question of whether people in the future are going to have fewer daughters and daughters-in-law (who are currently the primary caregivers) and whether stepchildren would provide equivalent care. African American men are particularly disadvantaged in kin availability because they are less likely to be married and less likely to have lived with their children. It was also noted that the PSID allows one to infer the amount of time stepchildren spend with their stepparents when growing up.