May 30, 2006

Childbearing compensation.

Here's a Slate piece about offering women money to have another child -- which is the approach to the problem of the declining birthrate that Vladimir Putin is taking in Russia. Could it work in the U.S.?
Extremists on the left (Marxists) and right (supply-siders) believe firmly in the power of economic incentives to change behavior. But the sums involved are generally rather small. According to the CIA, Russia's gross domestic product per capita in 2005 was $10,700, compared with $42,000 in the United States. So giving a Russian $9,200 in cash is like giving an American $36,112. Would that be enough to convince lots of Americans to assume the financial responsibilities associated with an additional child? For most, probably not. The U.S. Department of Agriculture has data on the price of human husbandry. According to the latest estimates, depending on your income, it costs anywhere from $139,110 to $279,450 to raise a child to age 17. And that doesn't include college, or graduate school, or help with the down payment for a starter home. Phillip Longman argues that these are lowball estimates, because they don't account for the forgone wages of a mother. "For a middle-class couple in which the wife works, but takes some time off, I came up with a total per-child cost of $1 million in direct and indirect costs."

For many, of course, having children has nothing to do with financial calculations. Having children fulfills powerful psychological, human, and religious needs. There are some people whom you wouldn't have to pay anything to have another child. And there are some people who are so entirely satisfied with the two wonderful children they already have—and who, given their age, energy level, and real estate prices in the Northeast—would require a Trump-sized incentive to embark on the adventure of parenthood again.
So how much money would it take to change your mind and cause you to have one more child that you had (or plan to have) on your own? I mean, quite aside from whether you approve of bribing people into parenthood or you worry that the wrong people would take the money and produce the extra kids, how much would it take?

45 comments:

PatCA said...

I think we're already doing this by admitting all comers from underdeveloped nations and anchoring them to the US by granting citizenship to children born here and then awarding them a huge safety net. Europe's nations are doing the same, although now are starting to reverse their position.

The money wouldn't convince me. What would convince me is free child care with someone of Mary Poppins caliber and increased tax exemptions.

Jeff said...

The welfare state did just this for 30+ years.

A lot pf babies were produced but not so many families...

Ann Althouse said...

Yes, but assume the government wanted to convince typical Americans to have more children. Put aside the problems you're perceiving that the wrong people would take the money and so forth or that the money is or was already available in less conspicuous ways. Purely as a thought exercise, try to answer my question about the dollar amount.

BJ said...

Australia had a maternal benefit in the 70's when I lived there. Women received a monthly govt. stipend per child and at a time when women's wages were rather low, many of my friends with two or three children netted the family more income than by working, not to speak of the immeasurable benefit to their children.

I don't know if the benefit still exists. When I left in 1980 women who stayed at home were being roundly sneered at by the fembots as frumps in flowered frocks and motherhood was being devalued as it has been in the US.

Mack said...

If I were poor, any amount would be worth consideration, although I suppose anything less than at least a few thousand (3-5 maybe?) would seem pretty silly.

Wouldn't necessarily make me have a kid I didn't want, but could impact the financial considerations enough to allow for the possibility.

To actually affect me, it would probably have to be something that would actually put my hypothetical family in a better bracket of living. 500k? That might make me think. Who knows how many kids I wanted anyway?

Marghlar said...

Ann: like PatCA, it would take a lot for me, because my primary reasons for being hesitant to have children have less to do with money, and more to do with career and lifestyle sacrifices. My wife and I enjoy our lives without children a great deal, and are reluctant to embark on a multi-decade long committment like that without a lot of careful thinking. Also, neither of us are eager to hobble our early careers by being the one to stay at home with infants, but neither of us like farming that work out very much, either.

All that being said, we do also like the idea of being parents, and would enjoy having older children quite a bit. It's largely the first five years that we dread.

But if we were going to do a hard dollar value on it (having chatted about it with my wife):

We'd want to have our debts paid off = $350K.

We'd want to fund childcare for a few years, until we can make adequate income to afford it ourselves. Let's say $50K.

Finally, we'd need compensation for having to do this at a time in our lives when it really doesn't make sense, and to help us get a better place to live ASAP (our third-story, stairs-only place is not a great place to be pregnant or raising an infant). Conservatively, let's say $300K.

Now, that is leaving out costs of education, because by then we'll be making enough that we can afford it.

So, anyone want to pay two law students $700K to immediately become parents? I thought not.

Michelle said...

Given the purely financial cost of raising the child, at least $500K and probably more like $1,000,000, to account for the non-monetary incentive.

John(classic) said...

so ...why not establish "personal childbearing accounts" at birth. Give the child 36,000, invest it , and let them draw the money out when they have a child. By the time they start a family it ought be large enough to pay the costs of the children.

It would be the Bush "personal ownership" way wouldn't it?

Jim Gust said...

Looking back, now that my youngest is about to leave for college, we could have had another child without a financial incentive. But it really didn't look that way 18 years ago.

We wouldn't have considered having another child just for financial compensation, but in the spirit of a thought experiment: For an 18-year annuity of $5,000, we might have given it much more serious consideration. For $20,000 per year (tax free, I presume), I believe that we might have done it.

Goesh said...

If I weren't past my prime, I would be more interested in a top-dollar-for-top-seed incentive from the government. As a practical matter, 36K would knock a nice hunk out of mortgage principle.

Nels said...

I wonder how many women are holding off on motherhood a year or two, just until their financial situation improves. Even a modest amount of money - perhaps a year's salary - could persuade them to have children a little earlier than planned, increasing the chances of success and leaving more time on the backend (of fertility) to have additional children.

MadisonMan said...

I'm thinking something like $30K. Put that into a money market, and use the income generated for incidental expenses.

I think it's a really bad idea, incidentally, for the government to tinker this way. As near as I can tell, the US is in no danger of depopulating.

Pogo said...

If the issue is simply having kids by any means necessary, paying for them makes sense. And kids you shall have.

But who will raise them? More daycare? Well, the monetary amount clearly suggests someone stays at home. Might work.

But adults who curtail employment to care for children face reduced pension benefits and limited career advancement. The opportunity costs and economic vulnerability related to caregiving undermine its availability in ways not addressed by the mere subsidization of childhood.

Specializing in the care of one’s children may have become an unsafe investment, as it leaves one with few marketable skills in the event of divorce. She (as it is more often she) is then forced to support herself and her dependents, and faces old age with fewer assets or pension rights. Current Social Security policy, for example, does not credit unpaid family caregiving. Those years caring for children and parents “are simply registered as ‘zeros’ despite the often overwhelming need for this unpaid care and its inarguable social value.” (cf Laura L. Carstensen, Aging in the 21st Century; Difficult Dialogues ) In starker terms, “motherhood is the single biggest risk factor for poverty in old age ”. (cf Ann Crittenden; The Price of Motherhood )

It might appear that “the only way a woman can protect herself from the threat of destitution over a lifetime is to bear few children (preferably none)” and meticulously avoid any unpaid caregiving role. (cf Shirly Burggraf; The Feminine Economy and Economic Man)

As a result, such a proposal just nibbles at the edges of why women quit having kids in the West.

Tibore said...

Any chance the compensation is variable, to cover extraordinary situations? What if, for example, the new child has a birth defect or some congenital disease that would require higher than average levels of care? That would sort of erase whatever compensation you'd get, I would think.

This is pretty much why I grimace at governmental sponsored initiatives like this. The intent may be good -- my jury is out on this specific instance -- but the unintended consequences can completely undo whatever good is intended.

Word verification: bcgvt. Close to "beget". Just thought it was funny, given the topic...

Bissage said...

How about I answer a different question: How much would the government have to pay for me not to have another child?

The answer: One million, sorry, 100 BILLION dollars.

(To be said just like Dr. Evil.)

Muuhahahahahahah!

INMA30 said...

I think I'd take a kid for $500k. I could probably invest it and still net a profit after all of the expenses, create a fund for the next generation.

jult52 said...

I can't believe the trenchant comment by Jeff (2nd down) has been ignored so thoroughly.

Christy said...

I just learned that my eggs would bring a premium price of $35K on the open market. So wouldn't I be better off just getting paid for someone else to have my children?

I'd suggest that we don't want to pay folks who weren't interested in having children without the incentive. So what we are looking at is the marginal rate. What would it take to bribe a couple to have one extra child they wouldn't normally have planned for? Much less that what it would take to talk someone into a first child.

Anyone read Heinlein's short novel, Methuselah's Children or his tome Time Enough For Love lately? The fictitious Howard Foundation paid couples with family longevity to have children together.

Simon Kenton said...

The opportunity cost here is the caregiver's; for the sake of tradition, permit me to use the M word: Mommy. If you assume a mother from the professional class, and a ROI of 8%, an investment of $900K would yield an annual income of $72,000. Barring financial idiocy (even speaking of the professional classes, I grant this is an assumption so broad you could run an 18-wheeler through it) the return on an investment of this size should be sufficient to fund care and savings for the child, keep the mother on her retirement track, and keep her share of the family expenses well-covered.

Sloanasaurus said...

I don't think paying people to have more children will work. However, I commend Putin on trying to solve a nasty problem in Russian culture. I read somewhere recently that at the current growth rate, Russia will have half their population in just a few generations. This will lead to catasrophes such as whole tracts of abandoned cities and worthless real estate, which will compound the problem by causing more emigration.

I think American culture and having children is actually rebounding from a low point in the early 1990s. I have more and more friends having 3-4 children families, when 10-15 years ago the trend was towards smaller famalies.

When you look at Hollywood, its baby news almost all the time. Not just for out of wedlock couples like Brangelina, but for young married actresses such as Brittany Speares and Kate Hudson. Imagine Madonna having kids in 1988......

Pop culture is oozing with young women giving birth, and often giving birth while married. I think that is a good thing.

Richard Fagin said...

Enough to pay Racehorse Haines to defend me from charges of injury to a child for the occasional essential spanking (spanking, not bludgeoning, dammit!)and to pay my attorney fees to defend Childrens Protective Services suit to terminate my parental rights for the same necessary conduct,and to compensate me for the lost income having to spend so much time defending myself for what used to be considered within the scope of ordinary parental discretion.

That's proably a million or more.

DAO said...

People who are willing to have children tend not to much credence to the financial factors, and people who are unwilling to have children overemphasize the financial factors. Hence, many would want $500,000 or more to have a child, while others would demand payment not to have children.

Given that my spouse and I have seven children, it may be clear on which side of the equation I land. (But I would have appreciated the extra $252,000!)

A few people who want children might start having them earlier; it is at the beginning, not the end, of the child-bearing years that this policy might have some impact.

Of course, as many have implied, the devil is in the details. To produce children in legal marriages with legal residents, the policy wuld have to address these matters. If the goal is a stay-at-home parent (which seems not to be a factor to the Russian government), the payments would probably have to be spread out over time (five years to eighteen years, depending on one's definition of a stay-at-home parent).

Steven said...

So how much money would it take to change your mind and cause you to have one more child that you had (or plan to have) on your own?

Hmm. Okay, working out the costs invlved in haing a kid, how much does a fertile bride run these days? I know the traditional unit was livestock . . . .

Oh. Not done anymore? Okay. How much money would I need to get an attractive (preferably zaftig), pleasant, young, fertile, and reasonably intelligent girl who wants to have kids to marry me for my money? Because that'd probably be enough.

Troy said...

36K seems about right. 3 extra (without tax deduction would cover, the diapers, baby food, extra gas and car payment for bigger car, and our time -- and the trips it takes to reconnect with my wife after putting little critters ahead of us for much of the time.

Damn breeders.

Actually, I could afford the kids I have (which I can already mostly) and a couple of more on my current salary if we stripped all current taxation and went to a 10-15% flat tax.

Bob said...

My wife and I have fertility issues. We have a wonderful daughter and are trying to have at least one more child, but so far we've been successful on one treatment cycle out of four, at approximately $5500/cycle. Insurance covers none of it (didn't even cover diagnostics to figure out where the problem was on my wife's side). We're doing OK financially, but it stings a bit to shell out that kind of cash! Still, we're going to go at least one more round. If someone was to pay for the treatments we'd be happy to continue until the doc said "stop."

peter hoh said...

I'm not doing the math carefully, but I think $100,000 would be enough incentive for us to have a third child.

jas said...
This comment has been removed by a blog administrator.
Sloanasaurus said...

Fertility treatments is an interesting issue. You only ever hear out there about the successes. You never hear about the failures. It leads people to believe that they can have kids at any age at any time. It just isn't true. I think it is a fraud perpetrated by the media.

There are have some celebrities, like Gina Davis, refusing to explain how it was they were able to have two kids at age 48. When it is obvious that she most likely used donor eggs for the pregnancy. The media culture hates to be truthful about fertility because it is dominated by working women who do not want to report the downsides of having kids too late (i.e. having no kids).

Gerry said...

Supply siders are extremists on the right? Comparable to Marxists?

I think we can guess the political leanings of that writer!

bearing said...

V. thought provoking question!

I take it you're looking for our real answers to our personal situations? I expect that for us, the primary limiting factor over which we have discretion isn't a pre-decided number of children, but the amount of space we like to put between 'em. (a bit more than 3 yrs) So for us to have one more child than we'd have otherwise, we'd have to agree to space children more closely.

And that's a hard one to answer! How much money would it be worth it to tandem-nurse for extra months? To be diapering two at a time instead of one at a time? To worry that the baby won't get enough time to be the baby?

I got it. You can give us enough money to match the lost income and benefits if my husband were to go down to working 70-80% time. I'm not going to put a dollar amount on that, for privacy reasons, although I know what it is, but there ya go.

Meade said...

Simon Kenton's formula sounds reasonable to me. $900K I could accept (that is, if I were capable of bearing a child, which I am not). By the way, would that come with an entire village to help me rear the child? Because, as we all know, that is what it takes.

Also, could I possibly have another $900K to bribe the kid when she's old enough into producing a grandchild for me? (well, for me and the rest of the village of course.)

Thanks in advance.

Roger Sweeny said...

The figures for how much a kid costs are partly ridiculously high (they assume all clothes are bought new and all kids get their own rooms right away) and partly ridiculously low (they are out of pocket costs, not opportunity costs, so they don't show the income producing options that many people give up when they have kids).

We've got two kids, a boy and a girl, and I don't think any amount of money could get us to have another. The kids are great, but they're going off, and we're ready for life without kids.

Jim said...

Just give a couple grand to mormons and they will churn out kids like crazy.

But why encourage folks to ruin their lives by having kids at our great expense when we can get free potty-trained young workers from Mexico?

Tom said...

My wife and I would have had a second child for no more financial incentive than the extra $1,000 Child Tax Credit, but biology said it was not to be. Fortunately we have the first one, and our lives are better for it.

Bruce Hayden said...

The problem is, to be blunt and politically incorrect, is that the kids that you would have with any sort of feasible payment for more kids are not the kids you want to have as a society.

You want the Best and the Brightest having more kids. The types of kids most likely to ultimately end up with the types of incomes that can be effectively taxed. But any lump sum is far less likely to appeal to them, in comparison to appeal ing to those who are much less likely to have smart accomplished kids.

The reason for this is that, for example, $10,000 for having one more child is a lot of money to someone who dropped out of high school and has no really good job prospects. It is not that appealing to someone with an MD or JD degree and is wavering. After all, the former is likely to have the state help her raise the kids anyway (WIC, AFDC, etc.), whereas the later is more likely to want private schools, etc., where $10k won't pay for a single year's tuition.

And note that kids born of women who didn't graduate from high school are highly likely, from a societal point of view, to not do well financially, because they significantly more unlikely to pursue education. Part of the point is that while the retirement demographics problem is portrayed as merely a numbers problem, it isn't. Rather, someone earning not much above minimum wage is not going to contribute that much towards Social Security, Medicare, etc.

I think the money would be far better spent on advertising, etc., to promote a more child-friendly society. To some extent, this is why we had the Baby Boom in the first place - the MSM and govt. promoting women giving up their war-time jobs to raise families, freeing those jobs for returning vets.

Jeff said...

I have no clue about the economics of raising children. The astronomical figures per child that I've seen bandied about seem to assume that the Swedish au pair will need her own Mercedes SUV in order to ferry the kids to and from their Montessori school.

Noumenon said...

Cost of child-care: Dept of Agriculture visits 4000 families and does a survey.

My sister just had a new baby who appears to take 80 hours a week of holding and hugging. You'd have to pay me at least $10 an hour for that, $40,000 a year. Plus I want to be compensated for not being able to play PlayStation. Give me $200,000.

The Mechanical Eye said...

Many points.

First, this brings to mind the Soviet Hero Mothers.

Also: Extremists on the left (Marxists) and right (supply-siders) believe firmly in the power of economic incentives to change behavior.

Only extremists firmly believe that economic incentives change behavior! And supply-side economics, radical as Marxism!

And: I believe our hostess pointed out in an earlier post about the costs, both economic and social, of raising a child today compared to decades past - that what was considered extraordinary years ago might almost be considered child neglect in many circles today.

Those costs wouldn't disappear if the government simply gave out some lump sum of cash. The sum likely wouldn't be large enough to convince people to start raising 5-child families

Anyone who would fall for the money would be thinking for the short term: not exactly ripe qualities for stellar parenthood.

It would boil down to the government making parenthood in general a stronger social expectation.

Not a big liklihood - unless you want to go to the Mother Hero route.


DU

RHodnett said...

My wife and I have no kids, because of a mix of selfishness and, at least on my part, a sense that I can barely get just myself through the day and that it would be a bad move to be responsible for young people as well. Whether that attitude is just a convenient cop-out is a discussion for another day.

There's no amount of money -- not millions, not tens of millions, or more -- that would have induced us, when we were younger, to have one child as opposed to zero. (On the other hand, if our own siblings with kids died suddenly, we'd step up and raise their kids as best we could. I'm just saying that the money would not be an inducement, though other things could be.)

In general, I'd think that the threshold number Ann's asking for -- how much money would it take to make you willing to have one more child than you already have or plan to have -- would be higher for people whose "natural" number of kids is lower, and much higher for people who otherwise wouldn't have had kids at all. And like Mackan said (10:56 AM, May 30, 2006), all other things being equal, I'd imagine that the threshold number for someone whose income is several times more than someone else would be much more than several times the other person's threshold number. $9,200 to a person whose annual income is $10,700 would probably mean more than $36,112 would to a person whose income is $42,000.

When I first read this post, I thought the idea of paying people to have kids was completely wrongheaded. But Nels (11:17 AM, May 30, 2006) brought up a good point: it could encourage people who were going to have kids anyway to have them a year or two earlier. Even so, in real life, such a program would cause far more serious problems than it would solve. Not everybody should be parents, and too many of the people who shouldn't be parents would be motivated to have kids when it would be better that they didn't.

Finn Kristiansen said...

The same young women who get pregnant now, with little income, perhaps living with a boyfriend, would be the types who would probably jump at the chance for that amount of money.

Then too, I don't accept these figures as it pertains to the cost of raising kids. There are so many variables, that any such number cannot apply in any meaningful way. It all depends on what one wants to "dump in" to child production: nanny or no nanny, expensive clothes or hand me downs, private or public education, the best of everything or just good enough, etc.

As for me, and since I ultimately plan to have a child anyway, (and am relatively poor), I would take the money, and then, invest it in a broad basket of emerging markets, natural resource, asian, and financial stocks. (Okay not that broad a basket, it's only 36K or so).

Then I would tell little Minnie Me, when he hits 18, that communicty college is a great bargain and use that now grown to $250K for my own selfish purposes.

Head of Royal Intelligence said...

$250,000.

Context: I'm a childless old maid working in a career that I love but that doesn't pay well, so I'd need enough money to cover most of the child-raising expenses, including full-time child care, to make having a child even remotely financially feasible. Also, because of unpleasant genetic diseases that run in my family, I'd be adopting--there's not enough money in the world to convince me to create a child that will live its life in constant physical pain. (Would adoption count for the incentive?) Adoption is a pretty expensive process, so the incentive would need to cover a good chunk of that, too.

But, yeah, take those financial considerations out of the picture with $250,000 and I'd adopt a kid. Maybe two.

michael a litscher said...

Jeff: The welfare state did just this for 30+ years. A lot pf babies were produced but not so many families.

Beat me to it. Not to mention, it was an unmitigated disaster.

Unless, of course, the whole purpose of the welfare state was to breed a proletariat class prone to dis-education, drug abuse, government (or at least political party) dependancy, violence, and the destruction of the nuclear family, in which case it was a huge success.

michael a litscher said...

Oh, and to answer Ann's question as to how much of an incentive would be enough?

Probably enough to cover half the costs of a crack habit, as well as the requisite malt liquor. The rest of the crack habit could be subsidized by selling the government issued food stamps (no need to actually feed the children when the state is more than willing to pick up the additional costs of feeding them breakfast and lunch at school).

Cycle Cyril said...

I believe that paying people to have children will not work because people will look beyond the short term benefits of the income and look to the long term costs, both monetary and nonmonotary, of raising a child.

I think that a more effective way to encourage child rearing is to make it beneficial to the parents in the long run by a method that will probably not be enacted. Eliminate Social Security. By eliminating state financed pension plans people will have to not only self-finance their pensions but will have an incentive to have more children to ensure one or more of them will attend to them in their infirmed years. For some this might be an incentive to not have children but to salt away as much money as possible for their retirement years but this will probably not be a large number.

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