The Not-So-Empty Nest: The economic decision to move back in with my parents

An economic choice that is close to my heart at the current time is my decision to live with my parents, and more importantly, their decision to allow me to live with them while I attend graduate school. When this decision is broken down into the basic economic principles it holds up as a good choice for both parties. The situation is good for both parties individually, known as optimization. And we are also both benefiting with the interactions that we have within the household, known as equilibrium. It can be argued then, that there is optimization and equilibrium going on under my very own roof!

The first example of optimizing this situation for me would be based on the principle that resources are scarce. This economic principle was strikingly evident looking at living expenses in Boston. Resources are scarce indeed, and I had a choice to make as to how I was going to spend those resources. Was I going to take the little money I had and put it toward rent in an expensive city? Once school started, was I going to use my limited free time and find a job in order to pay the rent? Or was there another solution? The scarcity of both time and money as resources helped me gravitate toward the living situation with my parents.

There is, of course, a certain amount of opportunity cost in living with my parents. I am saving the money that would have gone toward rent. I am also saving time that would have gone toward a job. But there are other things that I have to give up. We live in the country, which requires more use of my car. There are also some social costs as most of my friends have moved away from my hometown and I have to adjust my behavior slightly since I’m living around my parents and not my peers. However, the financial benefits of living with my parents are worth the small number of opportunity costs.

My parents also had to consider the opportunity costs of this situation. My parents have put their plans of selling the house on hold until after I move out and they have to change their behavior slightly since they have their daughter living at home again. For instance, if they want to go away for the weekend it is common courtesy to let me know. If they were still living on their own, they would not have to include anyone else in on their plans. In that way, we have both lost some freedom as part of the opportunity cost.

I am using this living situation to make myself better off financially than if I had to live on my own and pay rent. Beyond the financial benefits, I am also relieved of the stress of having to get a job during my time in graduate school. However, the incentive to remain in this situation will wear off once I obtain my master’s and get a job. The incentive to be independent, earn my own paycheck, live somewhere exciting, and also to let my parents have their own space will push me to move into a new living situation once my education is completed.

The incentive for my parents allowing me to live at home rent-free is based on their belief in further education as an investment in my future. They believe that in supporting me now I will likely be making more money when I finish this year and a half and will be less likely to need to come back and live with them in the future. My parents are also making themselves better off with the interactions that we have within the household “economy”.

The interaction between my parents and me does include trade within the household. I am living here rent free, so I am getting a monetary break from living expenses. In exchange I am expected to clean the house once a week, do the grocery shopping for my mother and also cook at least 3 nights a week. When my folks leave for the weekend I am expected to be the house and cat-sitter. My father, who works at home, has also acquired a tennis partner in the exchange – which we both benefit from.

I think that as my parents and I figure out what each of our roles are in the household, we are reaching equilibrium where both parties are benefiting from the situation. My parents would not be happy with the living situation if I did none of the chores we had agreed upon, and in that case, they may wish they didn’t have a roommate at all. Similarly, I would not be happy with the situation if my mother suddenly told me I had to pay $600 rent a month. However, the equilibrium we have come to in this living agreement has been beneficial so far, and no unexpected issues have arisen.

This example shows that resources are being used as efficiently as possible. If I was living in an apartment in Boston, I would be struggling to pay my bills, I would have to work while attending school full-time and I would be dealing with the mental stress of that situation. My parents would likely have to come to my rescue financially and they would be at least somewhat emotionally invested in my stresses. By living with my parents I am eliminating the stress of an expensive apartment, and the possibility of having to ask my parents for rent money.

As with any situation in economics, this living situation is constantly changing. There are always agreements, exchanges and ideas moving between my parents and me. In the near future there may be another living situation that is even more economically beneficial for everyone involved. Even though all decisions may not require textbook definitions, they do all require consideration as outlined by the basic economic principles of optimization and equilibrium.



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