Arnold Kling  

Have More Children?

PRINT
Social Security Incrementalism... The Forgotten Men...

The incentive to have children is reduced in a welfare state, according to Pavel Kohout.


To put it straightforwardly, and perhaps a little cynically, in the past children used to be regarded as investments that provided their parents with means of subsistence in old age...whereas today's anonymous system makes all workers pay for the pensions of all retirees in an utterly depersonalized manner.

This system enables huge numbers of "free riders" to receive more than what would correspond to their overall contribution in their productive life. Those with incomes way above the average, on the contrary, are penalized, as the system gives them less money than they contributed to it. This is referred to as the "solidarity principle". In terms of birth rate, this arrangement is discouraging for both the low-income group and the high-income one. The latter feel that they are not going to need children in the old age, while the former believe that they can't afford to have them.

Today, children no longer represent investments; instead, they have become pets - objects of luxury consumption. However, the pet market segment is very competitive...today there are many young couples that have consciously decided to have a dog instead of a baby.

Apparently, guest-blogger Bryan Caplan's argument for the selfish reason to have more children is not persuasive.

For Discussion. Does the claim that the welfare state reduces natality go beyond casual empiricism? Has it been tested rigorously?


Comments and Sharing


CATEGORIES:



COMMENTS (13 to date)
spencer writes:

The problem is how do you tell what is due to the welfare state and what is due to economic development. If children can not work until they are in their 20s the economic benefit of children
drops sharply from an environment where children start contributing to the family economy at an early age.

If a persons primary economic asset is their education the value of that drops sharply as one ages. The old model in rural America is that one child got the farm in return for taking care of the parents in their old age. But the parents economic asset -- education vs the farm -- can
no longer be passed on. Is that due to the welfare state or economic development?

Eli writes:

This phenomenon has little to do with the welfare state, and far more to do with the development of capital markets and technology.

Children can be a form of saving. In undeveloped countries today, people might have 9 children, estimating that 5 would survive through childhood, and estimating that 2 of these would be successful enough to care for them in their old age. With the introduction of stable capital markets, however, they would have fewer children and use the savings to invest in financial instruments.

Technology has increased the returns of those financial investments and has increased the lifespan of the remaining children.

One would posit that in a developed economy, even one with zero welfare spending, the average parents would have fewer children than in the undeveloped world. And in fact, this is what we find.

Lawrance George Lux writes:

It has not been rigourly tested, as far as I know. I do know that the Cost of Social and Economic placement of the Individual in Society has been going up with the development of the Economy. The Costs of giving birth, provision of Food,Shelter, and Clothing, cost of Education, and provision of a Job outside the Household rise with every Generation; and the Costs all basically devolve upon the Parent. lgl

Joshua Allen writes:

Agreed with Eli. In fact, people having fewer children can lead to demands for a welfare state; not the other way around. With developed capital markets and opportunities for savings, nobody makes child-bearing decisions based on welfare considerations.

Conchis writes:

"If a persons primary economic asset is their education the value of that drops sharply as one ages."

Not in any of the age-income data I've seen. The income profile for the educated increases more with age than that for the uneducated. (Though I guess this could potentially be large enough for income effects to kick in and drive the same anti-natalist result.)

"Nobody makes child-bearing decisions based on welfare considerations."

You might want to replace "welfare" with "monetary". Having children around in old age has a variety of other benefits. :)

Jon writes:

Where is the evidence that the welfare state results in lower fertility. The people who benefit least from the welfare state (high income people) tend to have fewer children.

Also where is the evidence that people view children as expensive pets.

Ken writes:

"Also where is the evidence that people view children as expensive pets."

To what other use are they put?

"The problem is how do you tell what is due to the welfare state and what is due to economic development. If children can not work until they are in their 20s the economic benefit of children
drops sharply from an environment where children start contributing to the family economy at an early age."

The phenomenon of children being unable to work until their 20s isn't due to "economic development", but to a failure of public education to adjust its offering to a changing world, and the use of universities as a kludgy work-around. I guess you could lump public schools in with the "welfare state"...

Lancelot Finn writes:

"Rigorous" testing needs to be driven by an underlying theory. I don't see how there can be any doubt that a trans-national regression of birthrates on government welfare spending would turn up a highly significant coefficient. But welfare will be correlated with many other factors, such as level of development and religiosity.

In an essay I wrote last fall, "Work, Service and Worship," I argue that God made us physically needy and vulnerable to death in order to force us to surrender our pride and live in community with one another. Pain and death are "God's bluff," afflictions that are not nearly as bad as we imagine them to be, the opposite of pride and alienation, which seems pleasant yet leads to utter misery. I argue that work, though we embark on it through economic necessity, is a stern teacher of the ethos of service to our fellow men; and service to our fellow men in the right spirit is, in turn, worshiping God. Socialism, despite its professed belief in community, in fact destroys community by taking away the ultimate physical needs and fear of death by starvation that force us to surrender our pride and form community; it leads not to community but to alienation and social disintegration.

Within this philosophy, one could argue that capitalism forces people to work for their survival; through work, to discover the ethos of service; and having discovered the joys of service and the resulting community, losing the fear of serving their children. In this case, one might expect religion and the welfare state to be at odds with each other, and religion and capitalism mutually to raise the birth rate.

Joe Deely writes:

The article - Where Have All the Children Gone was poorly written. It drew oversimplified conclusions based on sketchy information.

His inferences on Muslim countries was weak at best. Populations are declining in many Muslim countries. In fact one of the examples cited by the author as suffering from a "population explosion" - Azerbaijan - has a population growth rate of 0.52% and fertility rate of 2.39. Also, both of these numbers are declining. It looks to me as if this country may have a declining population by mid-century - this is hardly a population explosion.

As far as we welfare state reducing natality... how does that work in the 50+ countries where growth rates are declining and there is no welfare state?

There are a lot of other reasons for population decline...

In developing countries - improving economies, education of woman, declining infant mortality,less need for farm labor etc...

In developed countries you can add - people are getting married later thereby having kids later. Also, women who want to have kids but have postponed because of their career find out that it is hard to conceive when they reach their late 30s.

jaimito writes:

a trans-national regression of birthrates on government welfare spending would turn up a highly significant coefficient Without doing the work of actually calculating coefficients, one gets the impression that strongly socialist countries have the highest population decline: Italy and Spain, and former communist countries like Russia, Hungary, East Germany. But it is education and career opportunities for girls, that is secular modernism, the main factor in the population collapse we are experimenting. In traditional societies, there is a strong element of compulsion acting on girls to marry and have children. There are almost no traditional agricultural village communities left anywhere.

jaimito writes:

In order to promote self-replacement of the population, it would make sense - also from a strictly economic point of view - to disincentivate higher education of girls, forbid them in the military, etc. It could be suggested that Summers should re-impose sex discrimination at Harvard, but he is not man enough for that.

anon writes:

"Does the claim that the welfare state reduces natality go beyond casual empiricism? Has it been tested rigorously?"

Brilliant question, Arnold, just brilliant. No idea what you mean, but that just confirms my hypothesis that you are a very, very sharp cookie.

jaimito writes:

anon, if you need confirmation of the thesis that money affects reproductive decisions, there are several studies in Israel (in Hebrew) about how Social Security payments act on the number of children of different groups. During the last ten years, under Labour and Shas "social" policies, there was a differential scale of payment, where the first 2 children got minimum payment, and as the number of children increased, the per capita help increased. A woman having 5 or more children under 18 y.o. received more than the average salary. This system did not affect middle classes, but the beduins quickly saw the opportunity and took wives from neighbouring countries (they are Muslim, poligamy is allowed) and their fertility rate hit the top rate in the world, something like 5 - 6% growth per year.

The progressive social benefit payments also increased the fertility of very poor Jewish fundamentalist groups, already living on social security payments. As said, working middle class - Jew and Arab - was unaffected and their fertility continues to collapse.

The system is now being abolished. But it has been proved that groups where the welfare state direct payments are an important part of the total income, you can easily affect their decisions.

Comments for this entry have been closed
Return to top