Years of Household Existence

A family's life cycle may be defined as the period from marriage to the death of both husband and wife. Total income during this cycle includes income of the head of household plus income of other household members who earn during any particular portion of the family's life cycle and whatever is received from accumulated savings²⁵⁷.

However, the possibility to send a fully employable male adult to earn non-farm income

257 The income generated from the productive investment of the accumulated savings.

depends on the household’s development regarding generation and sex.²⁵⁸ In the case of an ideal family consisting of parents and five children, two or three of whom are sons, ALBRECHT (1976:60) divided the life cycle of a rural household in Pakistan into the following four phases:

„I II III

IV

from marriage until the first son begins work;

from the time the first son begins work until his marriage and departure from the family;

from the marriage and departure of the first son to the marriage and departure of the last son (gradual disintegration of the family)

from the departure of the last son until the death of the parents.“

The above-mentioned four phases show that, in a nuclear family household, it is only in the second and third phases that household income combinations become possible and the saving potential improves, when the sons start to earn. It is only then that sufficient labor units are available, as is shown by the following excerpt from one of ALBRECHT’s diagrams.

Diagram 16: Development of labour units in the life cycle of a rural nuclear family household with two sons in Pakistan

I II III IV

6 5 4 3 2 1

1 5 10 15 20 25 30 35 40 45 50

Source: Adapted from ALBRECHT (1976:58)

If both partners work at the time of marriage and the wife leaves her job before the birth of the first child, the family income will fall to the current level of the husband's earnings, but consumption expenditure will increase because of the child. The household budget will keep on increasing because of the children’s education and upbringing expenditure.²⁵⁹ The pattern of total expenditure is essentially a combination of

258 Cf. KLENNERT (1988:325).

259 Every marital relation has to fulfill a social expectation of child birth, which secures the family in the long run, according to a general understanding. The patrilineal line of a family is continued with the birth of sons (LUCHESI 1983:37f).

Years of Household Existence

Labour

Units Phases of household

Life cycle

two distinct patterns that can be differentiated along functional lines: the patterns of daily outlays for food, clothes and other miscellaneous expenses and the pattern of discrete expenditure for furniture, machinery and other durable consumer goods. Some years later, when the family income rises again because of grown-up children, a period of highest consumption due to children’s wedding expenditure starts, and the children start leaving the parental home when the father's income also decreases as he grows old.²⁶⁰

The "Life Cycle Income Hypothesis" of MODIGLIANI / BRUMBERG (1954)²⁶¹ incorporates the notion that consumers attempt to spread their consumption evenly over an extended period of time. In our case this is lifetime. Initially, households are confronted with a long period of high consumption, which is typical during the early years of household formation. During the middle years of life, household units engage in high levels of saving due to impending retirement, and latter periods of life are characterized by dissaving in an effort to maintain consumption near pre-retirement level. According to this view, dissaving is likely to occur early in life and after retirement, because the current income tends to be less than the required lifetime resources.

The most important feature in this regard is that the pattern of large discrete outlays has no inherent relation with the fluctuations in income in different periods of life. By subtracting the total expenditure in different periods from the total income received in these periods, we may obtain a family's life cycle pattern for saving. This has to be calculated from different households currently at different stages of a life cycle which live somehow or other under the same conditions.

Table 30: Total years of establishment of a household and different forms of saving in twelve case study households

Case 2 30 60,000 15,000 - 2,000 77,000 16.6

Case 11 30 - - 14,000 - 14,000 44.5

Table 30 shows twelve case study households at different stages of family life. The year of marriage of the household head has been taken as a unit to measure the age of a household.

The influence of the life cycle may only be seen in the case of cash savings, which are

260 See also Section 2.1.3.1.

261 Three stable stages of families for analysis have been selected. Families with grown-up children are defined at young stage, because families with small children either show an instability of income or very few assets to have a stable income-consumption and saving balance.

either done at an old or at a young stage. The reason mentioned by respondents is the similarity in need of cash income at these two stages. Old families require cash savings for the education, marriage or business of grown up grandchildren, which may partly be contributed by them as well. Exactly similar needs arise in a family at a younger stage for their own grown-up children. Middle stage families, in contrast, have got their own children married and grandchildren are too small to have such needs.