Different River

”You can never step in the same river twice.” –Heraclitus

January 19, 2005

Economics, and Having Kids

Filed under: — Different River @ 12:03 pm

Lots of people think that having kids is an economic burden, not only on the parents, but on the whole society. After all, if your measure of standard of living is “GDP per capita” then you decrease your standard of living when increasing the number of “capitas” (people) among whom to divide that GDP. But this is wrong, for many reasons.

Julian Simon made a whole career of pointing out the obvious fact that adding people produces more GDP too (i.e., you increase the numerator as well as the denominator), and the not-so-obvious fact that some types of products (e.g., cures for rare diseases, music only a smaller percentage of people like) are profitable only when there is a large enough total population that the small percentage of people who benefit large enough to make the product worthwhile. One great example: If 1 in 10,000 people has a certain fatal disease, then in a population of one million only 100 people have it and they all die. In a population of one billion, 100,000 people have it and it may well be worth someone’s trouble to find a cure. In essense, the 100 people in the smaller population who died, died of living in too small a world.

Steven Landsburg has made another arguement — if you don’t have enough children, Social Security will go bankrupt, so it’s good for society of people have more children. He also pointed out that if you have more children, each of them will inherit less from you, implying that if you have one child, it’s not in that child’s interest to have more since his or her inheritance will be smaller.

Personally, I’ve always thought that was a really dumb arguement, since you are also depriving your children of siblings, and that can be worth a lot more than any inheritance. My parents don’t have enough money for me to worry about an inheritance, partly because they spent it raising and supporting their five children (including me). But while I’ll inherit little if any money, I have four brothers and sisters who are my friends for life, and that’s worth more to me than any amount of money.

Now, Bryan Caplan, guest-blogging at EconLog, has another reason — based on the parents’ self-interest — to have more children

There is however a purely selfish argument for making another baby that most people overlook. I know a lot of parents who pull out their hair on a daily basis who are sure to disagree. But they are guilty of a grave error: Focusing exclusively on the present. When your offspring are ages 4 and 2, adding a newborn seems like a tough burden. And it is.

But think ahead to your golden years. How many kids do you need to get as many visits, phone calls, and grandkids as you would like? 5? 10? An old saying tells us that “One parent can care for five children, but five children cannot care for one parent.” It could happen to you.

Basic microeconomics recommends a simple strategy. Have the number of children that maximizes average utility over your whole lifespan. When you are 30, you might feel like two children is plenty. But once you are 60, you are more likely to prefer ten sons and daughters to keep you company and keep the grandkids coming. A perfectly selfish and perfectly foresighted economic agent would strike a balance between these two states. For example, he might have four kids total – two too many at 30, six too few at 60.

Trust me – you’ll thank me later. Your third child ought to thank me too, but we all know better than to expect gratitude from the young. Now all you have to do is convince your spouse!

I’d also like to add that I’ve noticed that after a certain age, perhaps shortly retirement, lots of people lose touch with their friends and lose the social outlets by which they used to acquire them — and if you get old, your are by definition likely to have outlived friends of the same age anyway. Thus, you are likely to be very lonely unless you have both had children, and raised them in such a way that they like to keep in touch with you. And I’m sure having siblings helps in this regard as well.

One Response to “Economics, and Having Kids”

  1. Karl Says:

    One of the things I like about the Los Angeles Science Fantasy Society (LASFS) is that members are in all age groups, and make friends across generational lines. It is far from uncommon for 16- and 18-year-old kids to count among their best friends 61- and 81-year-olds.

    Having kids who want to keep in touch is great, but in our mobile society, I think it’s better to develop the ability to befriend people who won’t (as likely) die off and leave you lonely.

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