Bryan Caplan  

Wax's Behavioral Economics of the Family

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Morning Roundup... Teen Pregnancy...
Scott Beaulier and I argue that behavioral economics explains a lot about poverty; indeed, the poor deviate from neoclassical assumptions to an unusually large degree.  Consider, for example, the fact that the poor are far more likely to be single, even though being single is an expensive luxury

Law professor Amy Wax has a nice piece on poverty and the family that coheres well with a behavioral economics of poverty.  Wax's main building block is the distinction between local and global choice, but it's easy to interpret her story through a behavioral lens.  Here are some highlights from her "Diverging Family Structure and 'Rational' Behavior: The Decline in Marriage As a Disorder of Choice."

Her strategy:
[M]y model rejects the notion that group disparities can be explained by positing a unitary "rational" response to the peculiar circumstances confronting distinct sociodemographic groups. Instead of linking choices directly to external conditions (either economic of social), this model turns inward to examine modes of thought and action that inform the decisionmaking process... The proposed explanation does not turn on external conditions, but looks to what is going on in people's heads. How people think about costs and benefits - specifically as they relate to sexual and related conduct bearing on the quality of interpersonal relationships - is what matters most.
The "crummy boyfriend" problem:
[T]he single mothers the authors interview complain most consistently about their male partners' infidelity, which often leads to the birth of children outside the relationship. But infidelity is only one factor impeding the formation of lasting unions. The women also describe a range of other shortcomings, including poor impulse control, violence, financial
profligacy, drug use, and poor work effort. These women's observations strongly suggest that their failure to marry, despite a professed desire to do so, is a function of their men's anti-social behavior - what Edin and Kefalas dub the "crummy boyfriend" problem.

...It can be argued that what makes boyfriends crummy is a tendency to think locally. The decision to engage in many of the complained-of behaviors would appear to involve a tradeoff between satisfying immediate desires and securing long-term benefits. The choices may minimize costs in the short run, but often wreak destruction in the long run.
Behavioral econ and contraceptive use:
One key behavior that affects reproductive patterns is the effective use of contraception. Although the failure to use birth control may not directly undermine relationship stability, conscientious contraception is critical to reducing out of wedlock childbearing. The evidence suggests that differential patterns of contraceptive use, with resulting variations in rates of extramarital pregnancy, are an important component of observed race and class differentials in extramarital childbearing... Because effective contraception requires anticipating the long-term costs of unprotected sex, groups that think globally can be expected to use control fertility more effectively and conscientiously, and those that think locally less so.
What went wrong:
[T]hese developments are best understood as the product of moral deregulation. The rise of individualism in the wake of sexual liberation weakened the moral and institutional conventions that dominated before the 1960s. The sexual mores embodied in these conventions were designed to guide most people to stable choices. By establishing "simple rules for simple people"... these strictures functioned not so much by encouraging global thinking as such, but by obviating the need to think, or to think very much, about family formation and sexual choice. Rather, all that was necessary was to follow the script, and the script was simple.
This makes sense as far as it goes, but I say that a lot of the "moral deregulation" wouldn't have happened if the welfare state wasn't around to foot the bill for irresponsible behavior.  Remember my critique of Charles Murray?
Imagine the welfare state were completely abolished.  Does Murray really think that this wouldn't make it considerably harder for lazy men to sponge off the women in their lives?  Convince a lot of men to swallow their pride and take a low-wage job?  Change the way that women look at a macho but habitually unemployed man?  And that's only the short-run impact.  In the medium-run, what's socially typical changes what's socially acceptable.  Murray has been wisely saying so for decades.  Why on earth should he fatalistically assume that this interaction only moves in one direction?
I say this works equally well for Wax.  If the welfare state were completely abolished, unprotected unmarried sex would immediately be a lot scarier.  And in the medium-run, what's socially typical changes what's socially acceptable.  When more of their peers delay child-bearing until marriage, even kids who ignore incentives will revise their behavior out of sheer conformity.

Will the whole process take decades?  Then we'd better get started today.



COMMENTS (20 to date)
Saturos writes:

Is Bryan saying that he's against the moral deregulation that took place since the 60's?

rapscallion writes:

Are you advocating cutting welfare so that it reduces birth rates among the poor? I thought encouraging fertility was a good thing because of the huge positive externalities to creating new life.

chipotle writes:

rapscallion,

I think that Professor Caplan is implying (if not saying) that having children is good for people who can afford it.

(Having a Mercedes is also good for people who can afford it. We would not go out and subsidize the purchase of a Mercedes.)

It would be nice if Professor Caplan would confirm that that is what he is saying.

An egalitarian would have a ready follow-up question: does this mean that poor people should have fewer children or none at all?

Roger Sweeny writes:

Edward Banfield (The Unheavenly City) meets Daniel Kahneman (Thinking Fast and Slow).

MikeP writes:

...the huge positive externalities to creating new life.

There are huge positive internalities to creating new life -- especially to the new life himself. There are mild positive externalities to creating new life.

The consistent point is that purported negative externalities come nowhere close to outweighing the internalities of a new life for his family and himself.

David R. Henderson writes:

@Bryan,
Great post.
@Roger Sweeny,
Great line.
@chipotle and others,
I never got the idea that Bryan thinks the government should subsidize child-bearing.

Trespassers W writes:
There are huge positive internalities to creating new life -- especially to the new life himself. There are mild positive externalities to creating new life.

No, I think rapscallion had it right the first time, unless you want to argue that the dramatic increase in human welfare over the last few millenia was in spite of the equally-dramatic increase in population. If there were positive externalities to creating new life, presumably we [the few of us, anyway] would have been better if we'd only maintained population at, say, 6000 B.C. levels?

Steve Skutnik writes:
If the welfare state were completely abolished, unprotected unmarried sex would immediately be a lot scarier.

Doesn't this contradict your immediate prior point about "local" thinking? i.e., aren't the same people who fail to account for long-term consequences also going to be the ones who fail to perceive the "scariness" of unprotected sex?

Again, the whole thesis seems to be here, "moral conformity worked because people respond better to universal rules than balancing long-term costs vs. short-term benefits." In other words, premarital sex being perceived as "wrong" is more effective than cost-benefit planning, particularly for those who otherwise exhibit a high degree of impulsiveness.

The only critique here seems to be that people will conform for the sake of conformity. But this still ignores Wax's point - people weren't conforming for conformity's sake, they were conforming because of a specific norm that implied this behavior was "immoral." Concern over morality trumped impulsiveness.

Looking at "conformity" right now - what is the rate of use of contraception among the broader population? Has widespread use of contraception introduced a "conformity effect?" From the above, it certainly would not appear to.

I don't think you can simply conflate an actual moral stricture with conformity on its own.

FredR writes:

What does the global/local dichotomy add to the basic idea of time-preference?

Mark writes:

And to bolster Bryan's argument, Medicaid funds upwards of 50% of all births, up to 64% of births in some states.

http://www.statehealthfacts.org/comparemaptable.jsp?ind=223&cat=4

[bitly url changed to full url. --Econlib Ed.]

MikeP writes:

I think rapscallion had it right the first time, unless you want to argue that the dramatic increase in human welfare over the last few millenia was in spite of the equally-dramatic increase in population.

Curiously enough, the dramatic increase in human welfare was mostly experienced by humans themselves. The marginal human far more benefits himself and his immediate family than he benefits humanity as a whole. That means the internalities are much greater than the externalities.

I don't deny that there are positive externalities, or that our own personal internalities in the first world are much greater because of the billions of humans who lived before us. Nonetheless, if you are going to say "huge positive externalities", you will need to use some truly hyperbolic adjective to describe the internalities. And with regard to "encouraging fertility", the internalities, positive or negative, outweigh the externalities.

chipotle writes:

Dear Dr. David Henderson,

Thanks for your response. (And please encourage your colleague Dr. Caplan to make the occasional foray into comments!)

I'm afraid I wasn't being clear. Here's what I was trying to say:

I think that Prof. Caplan is usually maximally blunt (but friendly) and his weakness is oversimplification.

However, I think that Caplan, uncharacteristically, is less-than-straightforward in his goal of having rich and well-educated people have more babies while discouraging poor people from doing the same.

It is the last part (hoping that poor people have fewer children) wherein I think Caplan is most ... cagey.

Floccina writes:

Steve Skutnik writes:
"If the welfare state were completely abolished, unprotected unmarried sex would immediately be a lot scarier."

Doesn't this contradict your immediate prior point about "local" thinking? i.e., aren't the same people who fail to account for long-term consequences also going to be the ones who fail to perceive the "scariness" of unprotected sex?

In that case wouldn't you expect to see much more abortion absent the welfare state?


Also on another issue:
I am sure that Bryan is not so much encouraging the rich to have more children but the responsible. You can be poor but responsible.

Collin writes:

Bryan,

1) Would you agree to allow birth control pills to be over the counter and not prescription?

2) I suspect Murray loved the old 'local theology' model where the church was the moral center of the community in 1960. The church leaders would have assisted 19 year old Jimmy finding a suitable job if he did the right thing and married 17 year old Jenny. As Douthit suggests, local churches no longer do this and people don't grow up in feeling as locally bound anymore. (16 and Pregant women seem to have no church involvement) What are solutions?

Steve Sailer writes:

"the poor are far more likely to be single, even though being single is an expensive luxury."

Perhaps, but being married to a poor person can be very expensive

Steve Sailer writes:

"The "crummy boyfriend" problem:"

Interviewing the boyfriends might lead to a realization of the complementary "crummy girlfriend" problem. In fact, sexual infidelity among women, especially women who are not prudent about contraception, is more destructive, because it introduces uncertainty of paternity. Why should a man invest in a woman if he can't be confident that her children will be his?

Glen Smith writes:

Steve,

Being single is the default status. No one has ever made a solid case that being single is an expensive luxury. Marriage can somewhat be thought of as an investment with front end costs, risks that can't be fully managed and high maintenance costs.

David Jinkins writes:

Bryan,

Here is a paper related to your work with Scott which has recently created a lot of buzz:

http://www.nber.org/papers/w15973.pdf

Bryan Willman writes:

And what is the prize for conforming? You avoid contributing to the medicaid bill? Now there's a non-incentive.

It is not just "what is the norm" or "how much pressure supports the norm". It is also "what prize/reward/incentive" is granted for the norm?

That is, it wasn't just "people were supposed to be married before they had kids" but also "married people raising kids could count on ...." from society.

Where is the positive incentive counterbalancing the disincentive?

Bryan Willman writes:

Having now read Bryan's paper, I shall point out an issue related to "well off have access to advisors, ..."

A really big issue may be that the well off are exposed to very many constructive examples of reasonable behavoir. What's more, even those examples who engage in, say, dubious sexual behavoir, will be rational in most every other way, and probably in every way observable in the work place.

A poor child in a poor neighborhood will often, it seems, be surrounded by "crummy boyfriends", "iffy moms", drug addicts, and assorted other non-examples.

The same child in a working class neighborhood will be surrounded by many reliable commited people who do things like save money for better cars.

There was an attempt to mitigate this in which welfare famalies were moved out of projects into normal housing relatively far away. And it failed because the people in question had no connections to the new neighborhoods - so they travelled back to the old to socialize.

So it would seem that connections to groups of people who naturally have lots of positive examples would be helpful.

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