Lawyers and legal scholars understandably tend to focus on domains of life where law is central. There is much to be learned, however, from domains where people deliberately structure their affairs to minimize formalities such as written contracts and legal entanglements. Just as studying conditions of anarchy helps illuminate the effects of government, so studying domains that people intentionally keep casual can shed light on the merits of more legalized arrangements. In an article recently published in this Journal, I analyze one of the most important human institutions in which informality traditionally has prevailed: the household.

Although the household lies at the core of everyday life, economists and legal scholars have yet to give it the attention it deserves. The members of a household (that is, its owners and occupants) together manage a real estate enterprise that makes use of inputs of land, capital, and labor in order to provide shelter, meals, and other services. Members of an intimate household, through their repeated interactions, typically generate a set of norms to govern their behavior, including their duties to supply household inputs and their rights to share in household outputs. This short Pocket Part Essay identifies the institutional niche of the household, describes some strategies that individuals pursue to reduce the transaction costs of their home lives, and identifies opportunities for future work on the structure of domestic arrangements.

I. The Household as a Distinct Social Institution

It is important at the outset to distinguish the household from both marriage and the family, two closely related (and much more studied) social molecules with which it commonly is conflated.As just suggested, a household is a set of institutional arrangements, formal or informal, that governs relations among the owners and occupants of a dwelling space where occupants usually sleep and share meals. By this definition, a studio apartment with a single owner-occupant is a household, and so is a kibbutz where hundreds of members dine communally. A study of the household thus is an investigation into the allocation of property rights in a specific physical setting.

Marriage, by contrast, denotes a legal relationship between two people that is not specific to any one location. Much of marital property law addresses entitlements to assets other than the marital home—to children, financial accounts, and the spouses’ human capital, for example. In that sense, a marital relationship is broader and more multifaceted than a household relationship. Conversely, marital law does not directly govern some important household relationships, such as those involving non-kin or kinfolk other than a spouse.

Family denotes a kinship relationship by blood, adoption, or marriage, but not necessarily a household relationship. Family members, even more obviously than spouses, need neither cohabit nor co-own, and cohabitants and co-owners need not be kin. Nonfamilial households appear in a wide variety of incarnations—for example, university students or young professionals living together as roommates, unmarried heterosexual partners, gay and lesbian couples, welfare recipients or recent immigrants clustering to economize on rent, and idealists teaming up in a commune.

The household is eminently worthy of study as an institution distinct from marriage and the family. Even in industrialized nations, households are still the sites of a large fraction of economic and social activity. The norms that govern household affairs, moreover, have had Promethean influence. The rules that our ancestors developed to resolve problems arising around their hearths provided templates for achieving mutually advantageous solutions in settings outside the home. Even today it is typically within the household that children first learn how to recognize and deal with problems posed by common property and collective enterprise. Study of the household therefore promises to shed light on the origins of more complex institutions.

II. Reducing Transaction Costs by Consorting with Intimates

Basic questions about the nature of household institutions abound. Why are the occupants (and also, for that matter, the owners) of a dwelling unit so often related by kinship? Why don’t all adults live alone, or, conversely, all in one huge household? How do household members obtain the rules that govern their relationships and what sorts of rules are they likely to favor? Although cultural variables also unquestionably affect how individuals set up households, my central thesis is that individuals, across cultures and historical eras, tend to structure their households with a close eye to reducing the transaction costs of their domestic interactions.

Household relationships are rife with possibilities for an opportunist. A bad occupant can abuse common spaces, pilfer personal property, neglect household duties, and evade duties to landlords. A bad co-owner may shirk on management duties and siphon off assets. An individual entering into a household relationship would want to minimize these sorts of risks. One strategy would be to rely on the legal system to impose sanctions on a domestic malefactor. Most people in contemporary liberal societies, however, instead prefer to take advantage of informal social controls. To reduce the transaction costs of achieving mutually advantageous outcomes in their home lives, most individuals adopt the strategy of consorting with intimates. To achieve intimacy in a domestic relationship, it is helpful to keep the number of persons involved low, to associate with persons who share one’s tastes, and, in particular, to keep company which individuals with whom one anticipates having continuing relations. It is well established that a prospect of future interactions is conducive to trust and cooperation. The establishment of a trusting home environment, in turn, is highly advantageous because it enables household members to spontaneously trade services, a method of coordination far more efficient than formal bilateral contracting.

These advantages of intimacy help explain the prominence of kinship ties in household relationships. Individuals of course tend to enjoy the company of family for its own sake. Consorting with kin, however, also tends to reduce the transaction costs of domestic interactions. A kinship tie enhances prospects for future interactions, partly because a kinship network is irreplaceable and thus a person is apt to want to avoid expulsion from it. In addition, innate altruism toward kin can motivate a person to act cooperatively without external prodding. Family members who live together thus can arrange for productive activities that otherwise would be extremely difficult to monitor, for example, infant care or the cultivation of a delicate crop such as raspberries.

A complex household has within it three distinct relationships—that among occupants, that among owners, and that between these two groups (the landlord-tenant relationship). To reduce the transaction costs of domestic interactions, household members tend to consort with intimates in each of these relationships, mainly by keeping the number of participants small and seeking to associate with kinfolk. Eighty-five percent of Americans reside in multiperson family households, which contain 3.2 persons on average. Of the individuals who don’t live in a family household, 90% live either alone or with only one housemate. The owners in residential real estate tend to be even fewer in number and closer in kinship. Close to 90% of the private dwelling units of all types in the United States are owned either by a single individual or by a married couple. Finally, to avoid the potential frostiness of an arms-length landlord-tenant relationship, 75% of Americans arrange to have an intimate landlord, usually because they either reside in a self-owned dwelling or in one owned by a relative.

Beginning with Plato, countless utopian thinkers dissatisfied with conventional family-based households have imagined more complex arrangements for the provision of housing and meals. Efforts to implement these utopian visions generally have flopped. The kibbutz movement in Israel, for example, has been imploding. The co-housing movement, which seeks to enable nuclear households to engage in congregate dining several times a week, remains tiny. Even a weakly communal blueprint for dwelling and dining, such as co-housing, tends to founder on that most mundane of shoals—the high transaction costs of coordinating domestic life among a large number of non-kin.

III. Future Scholarship

Much scholarly work on household institutions has been undertheorized. Transaction cost economics and the theory of the firm can enrich the work of demographers, social historians, anthropologists, sociologists, and family-law specialists, many of whom have paid too little attention in particular to the roles of owners in the governance of domestic spaces. Conversely, scholars who study the structure of business and governmental organizations can learn from Aristotle’s basic insight that social arrangements that succeed within the household commonly inspire creators of more complex human institutions.

The role of law—especially of background legal principles—in shaping household institutions has been inadequately appreciated. When a traditional society first embraces the basic liberal principles of private property, freedom of exit, and freedom of contract, it transforms its dynamics of household formation. In addition, by establishing the rule of law a society makes it easier for household members to trade with outsiders, a development that reduces the scope of internal household production.

The household is an especially fruitful setting for empirical work on systems of social control within small groups—a topic of interest to, among others, game theorists, sociologists, and legal scholars. How commonly do participants in a household relationship employ tit-for-tat sanctions, pay money to one another, or enter into written contracts? When do co-occupants informally privatize particular spaces within their abodes? How do the founding members of communes and other intentional communities raise capital, confer ownership, and make collective decisions?

Finally, study of the household promises to illuminate central positive and normative questions about the role of small-bore private law. Legal centralists assume that private law influences events not only after things go wrong, but also before they do—that is, when people prepare for that possibility. One of my central factual premises, by contrast, is that most people, wishing to minimize involvement with lawyers, structure their household arrangements beyond the shadow of private law. Some legal commentators, on the other hand, have urged participants in household relationships to enter into more written contracts with one another. In a few domestic situations, this indeed is wise counsel. When the participants are intimates enmeshed in what is likely to be a long-lived relationship, however, formalization usually is a mistake. Attorneys who contribute to the legalization of home relations typically not only waste the fees that their clients pay them, but also debase the quality of life around the hearth.

Robert C. Ellickson is the Walter E. Meyer Professor of Property and Urban Law at Yale Law School.

Preferred Citation: Robert C. Ellickson, Unpacking the Household, 116 Yale L.J. Pocket Part 336 (2007), http://yalelawjournal.org/forum/unpacking-the-household-informal-property-rights-around-the-hearth.