26 April 2023

The Gender of Capital

How Families Perpetuate Wealth Inequality

Céline Bessière and Sibylle Gollac
2023, Harvard University Press, 344 pages,
ISBN 9780674271791

Reviewer: Ian Bright

Families play a critical role in the way societies are organised. They have an important role in determining how individuals allocate their time between formal paid work, informal, typically unpaid work such as caring for children or elderly parents, and leisure. They can also play an important role in determining marriages and inheritances.
Families are also difficult to define. As societal norms and laws change, families can take different forms. Different cultures can also have different family forms. Studies of how families organise themselves are difficult not only because of these differences but also due to the informal nature of the relationships within and between families. These relationships can be difficult to measure or even observe.

Social scientists have tried to analyse relationships within and between families using a variety of methods. Gary Becker’s 1981 book “A Treatise on the Family” adopted approaches dominated by economic analysis. Economists and other social scientists have built on this and have used time use studies to get a better understanding of how families organise themselves. Nowadays, administrative data is beginning to give some insights into how families and households – a term that is sometimes used almost interchangeably with families - organise their finances.

The authors of this book, both sociologists, use a combination of “ethnographic materials, with original statistical analysis of household asset surveys and legal archives.” They write that “Only the combination of all these forms of data made it possible for us to understand how the reproduction of the social order is rooted in the family.” (p. xii). Some may sniff at this as mere story telling but it is a legitimate and revealing approach. Because understanding and defining families is so difficult, this approach helps demonstrate ways in which wealth is passed between generations and within families. This has implications for inequality both at a societal and a gender level, typically to the disadvantage of women.

The concentration by the authors on wealth is welcome. Much has been written about gender inequality in pay. Less has been written about differences in wealth. It is becoming clearer that the distribution of wealth plays an important role in society. This has been highlighted by Thomas Piketty’s work, which provided the inspiration for the book, as evidenced in its title.

Two forms of wealth transfer – inheritances and the dissolution of cohabiting couples (essentially divorce) – are covered. The authors are from France and most of their material is from there. Nevertheless, their observations can be generalised to other countries.

When it comes to inheritances, this may not occur only at the death of a parent but may be a gift during the life of the giver (inter vivos gifts). The effect of inter vivos gifts should not be ignored when it comes to wealth transfer in France. “Less than 10 percent of all households receive such gifts but they represent more than half of all asset transfers. The upper class also offer the most financial assistance to family members, prefiguring future gifts and inheritance, in the form of making an interest-free loan, providing collateral, helping with housing costs, and the like.” (p. 27). However, there is at least anecdotal evidence that males, and especially the first-born son, are favoured in these arrangements. It can also be difficult to value a gift, such as taking over a family business or ownership of a property, when it comes to understanding the inheritance of wealth.

The difficulty in valuing inter vivos gifts can affect inheritances at death. The book summarises some interviews outlining the difficulties families have had in distributing assets after the death of a parent where family businesses and property have been previously gifted to some individuals in the family. In determining the value of these gifts, notaries play a special role in France. Only five percent of successions are settled in court rather than under the secrecy of notarial offices (p.134). A desire to ensure family peace and to minimise tax appears to dominate many arrangements, even if some members of the family are advantaged compared with others. Interviews with notaries outlined in the book show that values of inter vivos gifts can be reversed engineered to get the solution that is agreeable to the letter of the law but is questionable in assessing total wealth.

In divorce, similar issues in valuing assets arise. However, some additional issues need to be considered from a French perspective. As elsewhere, a “compensatory allowance” may be paid on separation of a couple. Ninety six percent of compensatory allowances are paid by divorced men and a payment in cash has become the norm. Women appear to lose compared with men in these arrangements. “In divorce rulings where a compensatory allowance was not granted, the standard of living between ex-spouses is 32 percent after separation: when a compensatory allowance has been granted, the gap is 52 percent (excluding the allowance) and 40 percent including the allowance.” (p. 163). A similar story can be told in the UK. A 2022 guide to good practice on divorce by the Financial Vulnerability Taskforce, notes that, on average, divorced women retire with £26,100 of savings compared with £103,500 for men. (see page seven)

An interesting twist in France is that three out of four family court judges are women and family court judges appear to have a lower status than in common law countries (pp 157-158). This situation is in marked contrast with common law countries where only a minority of judges are women (see footnote 25, p.307). Despite this, there still appears to be a bias against women in divorce proceedings, deriding women for cupidity and suggesting that compensatory allowances are outdated in the era of professional equality between men and women (p. 171). This example provides an interesting angle on diversity. Despite the predominance of women judges in French family courts, a case is made by the authors that because these judges have a secure income and high levels of education, many are unable to understand the circumstances of women coming from less fortunate and less secure backgrounds.

Because the distribution of wealth rather than income plays a dominant role in determining inequality, more attention will need to be paid to the gender distribution of wealth. This book shines a light on this under-researched area. Although largely limited to examples from France, it forces the reader to think more widely. It is an easy read having been translated well from its original French.

Listen to Ian Bright read his review.