Children are inferior goods

Katherine - posted on 07/03/2011 ( 9 moms have responded )

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Sorry, Bryan Caplan. You may think there’s a compelling economic argument for having a big family, but people aren’t buying it.

Literally. A column in the New York Times makes the case that children are what economists call “inferior goods”. The richer people become, the less of them they want. This is the opposite of most things. In general, the more resources you have, the more of something you want to acquire.

But there are some goods, “inferior goods”, that people buy less of as they become richer. Rice is the example given in the article. Once you can afford other food, you buy less rice.

Similarly, the wealthier a country or individual becomes, the fewer children they tend to have.

Economist Justin Wolfers started this discussion with a post on Freakonomics explaining why he thinks kids are “inferior goods”. Wolfers rounds up an impressive quantity of data from many sources, all showing the same thing: that the wealthier people become, the fewer kids they have. This is true even when the people in question don’t have access to modern contraceptive methods. Wolfers says:

In a related paper, Alice Schoonbroodt and Michele Tertilt say that, “There is overwhelming empirical evidence that fertility is negatively related to income in most countries at most times.” They are right. Whether you cut the data across countries, through time, or across people at a point in time, the same fact arises: The richer you get, the fewer kids you have.

Bryan Caplan’s argument is that kids needn’t be as resource intensive as many affluent families make them. They don’t really need as much undivided attention as parenting handbooks and popular opinion would have you think. A little TV time won’t break them. And all those baby yoga classes and private piano lessons are really optional.

Given that kids are cheaper than we think, Caplan argues that everyone should have more of them. And if children were “normal goods”, that’s how it would work: people with more resources would have more kids. You’d have as many kids as you could afford.

But Wolfer’s data shows just the opposite, that the rich want smaller families. One of the privileges of becoming affluent seems to be having fewer children and pouring more resources into each individual child.

That doesn’t mean kids are a bad thing. Just that they’re not a “normal good” that people simply want more and more of, like steak instead of rice. Instead, it looks like the data show that when people have sufficient control over their own circumstances and life choices, they choose to have fewer children.

But once people rise in affluence, they often choose not to buy more of something they like. My family has one car. We could afford two, but we don’t want another one. Ditto TV sets, the example in Caplan’s story. We could keep buying more TVs, but why? We have one. Just because we wanted to have three kids doesn’t mean we need to keep having more of them. We have the family we want.

What do you think? Are kids an “inferior good”, or should we all have as many as we can afford? Why do economists think they know so much about family size anyway? There’s a lot more that goes into the choice to have a kid than just the economics of it.

Photo: M Glasgow

How do you feel about the article referring that our children as goods?


Data: http://economix.blogs.nytimes.com/2011/0...

Source: http://blogs.babble.com/strollerderby/20...

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How do the rich get rich? Some are born into it, but the majority work...hard. If I was spending every waking moment earning money, I wouldn't have much time for baby making and child rearing. Maybe the causation is the other way around...instead of rich don't have tons of kids...those without tons of kids get rich...I dunno.

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Stifler's - posted on 07/03/2011

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I agree with Laura, people who make more money have a better lifestyle which they;d have to cut back on if they had 10 kids vs. 1 or 2. And also with Sara that if you're always at work making money you'd be less inclined to want to childrear and personally I like going out to expensive places and having a new car, things I couldn't do if we had lots of kids vs. 2.

Isobel - posted on 07/03/2011

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They are also more educated so accidents are less likely to happen...and they can afford a pleasurable lifestyle that "may" be less conducive to large families.

That's my guess anyhow

Lady Heather - posted on 07/03/2011

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That's what I think Sara. I probably won't ever have lots of money because I spend my time having babies and raising kids instead of working to make lots of money. If we had no kids and I had a career like my husbands, we'd be rolling in it. I'd rather have the kids though.

Merry - posted on 07/03/2011

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I think those who have lots of kids probably have to be fairly rich to be able to afford their big family right? I'd love a bunch of kids, I'd love to adopt, but I just don't have tons of money to do so right now, if adoption was cheaper I'd adopt for sure, but it's quite cheaper to birth your own kids.
If I was rich I'd still want a big family!

Lady Heather - posted on 07/03/2011

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Dude, if I won the lottery I would fill my house with as many kids as an adoption agency would give me. Haha. Maybe I'm not rich because I prioritize kids. Who knows?

But wtf - why would you eat less rice just because you have money? Rice is awesome. nom nom nom.

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