Obviously something isn't quite right here. It may be worthwile to redo his model with an eye on realistic fertility choice and intergenerational persistence properties. That only works well if shocks are small. Some observations suggest that this is not true empirically. For example, elections are sometimes lost because of recent recessions.
Financial transfers are probably much smaller than non-financial ones.
It may be possible to develop a dataset from the PSID that is more comprehensive. The 1988 supplement contains detailed data on financial transfers. By matching children with their parents' records, one could measure education expenditures and coresidence. This would be a messy project, but with a potentially very large payoff. This could be evidence for paternalistic behavior.