Bryan Caplan  

A Natalist Provision

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Medicare Kills a Program... My take on Reinhart and Rogoff...
In Selfish Reasons to Have More Kids, I advise people to "privatize natalism."
You don't have to be Bill Gates to strategically design wills, trusts, and one-shot gifts. A middle-class income is more than enough. Compared to the out-of-pocket cost of raising a child to adulthood, the baby bonuses in Quebec and Austria were small. They worked anyway. Since most people intrinsically desire children, modest incentives are often enough to convince them to have an extra baby.

You don't need to openly tell your children that their inheritance partly depends on how many grandchildren they give you. Don't hurt anyone's feelings. Just give generously to your children each and every time they enlarge your family. Then write a will that gives each of your children equal shares of whatever's left.

Another diplomatic way to reward fertility is to set up trusts for your grandchildren--and make your children the trustees. The parents will eventually use the trust to pay for expenses like college that otherwise would have come out of their own pockets. You're
effectively giving more to the children who gave more to you. Yet officially, you're treating your children equally.
I'm following my own advice in my will.  The vast majority of wills evenly divide the residuary estate between children.  Mine evenly divides the residuary estate between (children and grandchildren).  The draft text:
(2) If my spouse fails to survive me, I direct that my residuary estate be divided into as many equal shares as may be necessary in order to provide (i) one share for each of my children living or dead and (ii) one share for each of my grandchildren surviving at my death and, subject to the provisions of Article 2, I dispose of such shares as follows:

(a) One of such shares shall be paid over and distributed to each of my children and grandchildren surviving at my death; and

(b) One of such shares shall be paid over and distributed to the issue of each of my children who has predeceased me leaving issue surviving at my death.

As usual, a trustee handles the funds for underage heirs.

Will my estate planning get me any additional grandchildren?  I'll never know for sure, but I expect my eccentric incentives to bring at least one extra Caplan into existence.


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COMMENTS (15 to date)
Sam Hardwick writes:

Doesn't this rather stick it to any grandchildren who haven't been born yet when you die?

ChacoKevy writes:

Hah, Sam, I was wondering the same! What a terrible incentive for the eldest grandchild!

Justin Ross writes:

Rather than increasing the number of Caplans, I suspect it shifts the timing of when said Caplans are realized relative to your death. If you value meeting your grandchildren before death, then this remains a nice incentive.

Finch writes:

Divide the relevant estate among trusts for your children. Have each trust distribute 1/2 (choose a fraction here) of its remaining value with the birth of each grandchild. Have the remaining sum go to charity at your child's 50th birthday or death, whichever comes first.

The trust's control over distributions can go on after your death if it's well designed.

Hazel Meade writes:

What about grandchildren born after you die?
What if one of your children marries late and doesn't start having kids until you are in your 70s. You kick the bucket and then a year later he has twins.

Maybe hold something in trust to be distributed to unborn grandchildren, to be dissolved when your children get to old to have more babies?

Sid writes:

What about great-grandchildren? I would divide equally between all descendants.

Glen writes:

I'm not sure what assumptions you're making about your children's preferences about the well-being of their own children, siblings, and nieces/nephews. But to a first approximation, your scheme provides a *disincentive* to create grandchildren, because each new grandchild dilutes all the other shares, including their own.

Say you have 4 children with 2 children each. Then if you died now, there would a total of 10 shares, and each person would get 1/10. Now suppose your oldest son is considering having another child. Doing so would reduce the shares to 1/11 each. If your son values his own and his children's wealth equally, then the total share (for his branch of the family) goes from 3/10 to 4/11. That's 0.3% versus 0.36%, so the latter might seem better. But wait! The money will also be spread over four people instead of just three. It's not obvious this is better after all.

If your son is a "total utilitarian" with respect to his immediate family, then he might well prefer the larger total share. But if he's a total utilitarian, he should already be having as many children as possible anyway. Maybe the slightly larger inheritance will enable more childbearing.

On the other hand, if your son is an "average utilitarian" with respect to his immediate family, then he sees that having another child reduces each person's share to 0.09% of the inheritance -- which is worse than without the extra child. In this case, he would not choose to have more.

And what if your son cares for relatives outside his immediate family? Then he will surely notice that having more children only dilutes the shares of his brothers, sisters, nieces, and nephews. It's not obvious that the incentive goes in the right direction; again, it depends on what kind of utilitarian calculus your son is doing.

Chico Smith writes:

I wonder: suppose I am a wealthy philanthropist hoping to improve humanity by preventing the births of sociopaths and imbeciles. If you offer your children $x to have a child, what if I offered them $2x for not having a child? Would the incentive be enough to persuade them not to inflict more Caplans upon humanity? Would $5x be enough? Since everything can be explained in terms of economics, perhaps we can engage in that discussion and figure out the right amount, and perhaps we can find some philanthropist to dole out the required dough.

Brian writes:

I agree with Glen that this could be a disincentive. Why would I want my kids to get itcould go to me? I'll probably end up spending it on them anyway, but at least it's mine to decide.

The better incentive would be to divvy up your estate among your children according to the proportion of your grandchildren they have. That is, a child who produces, say, half your grandchildren would get half of the estate. Such a provision could ignite a veritable arms race of Caplans!

Finch writes:

Another point worth raising is that your will may not be the best vehicle for pro-natalism, particularly if you don't use trust mechanisms that survive beyond your death.

If you and your wife live normal lifetimes, the last to die will probably pass when your children are in their 50s, which means you can no longer influence their reproductive decisions.

Consider giving each child $100k, or whatever sum you find affordable and compatible with your tax situation, on the birth of each grandchild. Keep it going until you run out of money to give away. Money at the time of the child's birth is likely to do a lot more to encourage child-having than the promise of money decades down the road.

Finch writes:

By the way, any thoughts on this longitudinal study of parental happiness? It's slightly different in focus from the one you cited a few years ago:

http://www.scu.edu/business/economics/research/upload/Manuscript-Parents-Herbst-Ifcher.pdf

Someone from the other side writes:

Maybe it's just me, but the aforementioned 100K would be nowhere near enough to get me to consider having a child...

If anything, you would have to give me a significant premium over whatever we come up with as the costs of raising a child. I guess my particular brand of misanthropy (to refer to that other post) focuses on children, especially.

Anonymous writes:

Not much of an incentive when you can always revoke your will. An irrevocable inter vivos trust might provide more real incentives.

Also be clear whether you want this provision to apply to adopted children. (Or adopted "children".) A natalist would care, right?

Finch writes:

Anonymous raises an important point. I think the term of art is bloodline planning, which is essentially concerned with conveying your estate to your grandchildren and not your ex-daughter-in-law's second husband's children.

To sftos's point, 100k might not turn a 0 into a 1, but it might turn a 3 into a 4. Further, it might make the first kid come a little bit earlier, which usually means more kids in the end.

Chip Smith writes:

Memo to antinatalists with kids: You can do the opposite, and let them know.

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