on the origins of insurance; Helen Andrews on American decay; The Zvi on higher ed; Alice Evans on Boomer hanger-ons compressing gender pay differences
"And at least faking those things is deeply tied to your admission to those schools and to your social life and experience in class and administrative rules set once you arrive."
So selective schools are at least in part selecting for people who excel at faking certain emotions and lying about their beliefs, or at least can tolerate doing so. I'm sure that has no negative implications for the future.
Moreover, the Admissions process invites -- indeed requires -- applicants to sing their own praises. On the one hand, teen applicants are expected to have been "agents of change." On the other hand, they are promised "a transformative experience."
The psychology of the process is unhealthy.
It would be refreshing to receive an application statement that says something like: "Please see my transcript for my academic record. I don't pretend to be special. I'm grateful to family, teachers, neighbors, and friends who helped and encouraged me. If you give me a chance, I promise to work hard, behave responsibly, help others, and do my level best to repay your confidence."
Moses had a truly outstanding post on the effects of healthcare inflation on employment. Linked below.
I will add something to this analysis. When I look at fertility rates they are replacement at the bottom and replacement at the elite level. They fall as income rises until you reach "fuck you money".
My own view is that not just healthcare but everything is designed to ring as much value as possible out of middle class people who have enough to be worth stealing from but not enough to make the system work for them. So they all get two jobs and try to buy the right real estate and keep their heads above water and its so exhausting that they have fewer children to try and get an edge over on the other people doing the same.
In general we need to:
1) Stop exploiting this group so much (to rich for poor people welfare, to poor for rich people welfare).
2) Normalize the after tax income of the child bearing and childless within this group so that the decision to have children is based on wanting/not wanting children rather then a backdoor way have higher take home income.
I don't have an easy solution though because its just really easy to exploit middle class families, they are too busy to do politics all day.
"Employers do, in fact, see those rising insurance premiums because they have to pay those premiums as part of employer-insurance plans. But since employers can’t exactly force people to “consume less healthcare” (or be better, smarter or more discerning about the healthcare they consume), what can they do to push back on rising prices?
Employers can fire people, when premiums get too high, that’s what they can do."
"Researchers claim that a 1% increase in local hospital prices lead to ~40 lost jobs, $5M in reduced wages, and ~$1M in reduced tax revenue:
Higher coverage costs had a far greater impact on middle income workers than anyone else (so says the research).
The reason is pretty straightforward: from the employers perspective, the cost per employee is the same, so insurance premiums reflect a far larger tax on lower income workers, as a percentage of salary. If premiums are ~10K/employee, than that is a 20% tax on a $50K worker, while only a 10% tax on a $100K worker, so naturally the middle income worker gets the ax.
Why not the lowest income workers? Well, they’re covered by Medicaid, so the taxpayer handles those.
So, to summarize, as a result of higher healthcare costs—which are rising because more and more people consume a relatively dwindling healthcare supply without any idea of how much it costs—people simply get fired, for no other reason than their share of the cross-subsidy was too high.
Yup, that’s going to solve the problem, for sure."
As someone in his mid-twenties who wants to wait to have kids, along with most people I know at my age and education level, I can say confidently that it has little to do with money alone. The financial aspect of not wanting children at this age is just an extension of a general unwillingness among Millennials and Zoomers to fully embrace the responsibilities of adulthood that involve doing things that are not solely beneficial to themselves. I have noticed this, particularly among people my age who are very conscientious. The primary concern for intelligent and ambitious men and women in my generation is securing comfort and stability in life through a career, good health, and a home. Having children early is generally seen as disruptive to these goals.
It definitely can be. A major difference between every generation before the Boomers and every generation after them has been the willingness to put up with that disruption. It was much easier when it was standard to have a homemaker in every nuclear family. With two working parents, it requires a significant sacrifice from both.
It was also much less disruptive when parents weren't expected to constantly supervise their children, or drive them around to be supervised by others.
"The fertility decline is a much bigger problem. It can be seen everywhere liberalism touches."
Why is this a mystery? If young couples truly believe the progressive narrative, people - especially white people - are a cancer on the planet. Worse, there's an even chance that a couple could produce a male offspring who, after all, would not only be toxic but also responsible for slavery, women's oppression, climate change, colonization, worker exploitation, and transphobia.
Fertility is declining pretty much everywhere above the bottom fifth, in plenty of places that are neither white nor woke. When something is happening in most places it is due to causes that are also affecting most places, like new technologies or global trends in work, education, law, and shared perceptions about which people are high status and what they are doing.
The answer to the mystery is simply that having kids early has an enormous opportunity cost, especially for women, especially those who are smart and potentially high-earning. People without kids have -tremendous- advantages in the labor market in all kinds of ways, which is why practically all the elite females where I work have zero kids before 35 and some have one afterwards.
It is socially undesirable to forthrightly admit this is the reason - it's considered odd if a women doesn't want kids and so only normal for her not to have them if she is compelled by circumstances - so people give (and even believe) false but socially acceptable excuses as cover stories. There is nothing to be done except to reduce the opportunity cost by reducing opportunities for the childless. "No kids, no college," is one of my proposals. Most governments won't realize this, and most of those that do won't have the balls to do anything about it. My money is on China to get it, and to get it done, and if I'm right and the AIs don't get us all first, then they win the future.
I wonder if I can get Mike Judge or Judd Apatow interested in my 'Govt says "Have Two Kids By 30 To Discharge Your Student Debt"; Hilarity Ensues' movie script.
You are thinking too small. Satire should go far past what is actually necessary, but student loan stuff is far too short of the mark. To fix fertility, childlessness will need make one a second class citizen ineligible to attain privately or publicly any of the signals, credentials, rank, income, or benefits of having high social status. For those who aren't going to be in the running for high status anyway, the opportunity cost of having kids will remain high. For those with a shot at high status, they will do whatever the system asks them to do and start popping out kids after graduating high school. When everyone going to college is married with kids - because those are the only people allowed to go to college - then the college lifestyle will transform into one that is maximally supportive of the needs of young families raising little children. The culturally transformative power of this one reform cannot be overstated - we would literally not recognize America a few years into it - and it would be just one arrow in a large quiver of related policies. Satire would have to go well beyond that, maybe you have to clean latrines two hours a day or you don't get your oxygen ration. I probably wouldn't go that far.
Alternate outcome to college lifestyle changing: grandparents and hired caregivers start raising most of the new kids as their own kids go through school and the first years of work. I am not sure what the knock on dynamics there would be, other than increasing children born out of wedlock to respectable families, but I doubt it would be that everyone waits to go to college until after they get married and have kids. The college premium would increase quite a bit as supply of graduates dried up, and so getting in would be even more important and parents of young adults would respond. If they could afford to pay all the daycare themselves they would pressure their kids to have a baby quick and just pay to have it watched. If they can't afford daycare one of them will watch it themselves.
The die was cast the moment that it was decided that - rather than a matter of total indifference - it was self-evidently important for women to work outside the home in preference to working inside the home.
The people who hope to influence this in some way by fiddling with tax policy - are just fiddling.
I am a poor feminist but I don't care whether people have children or not. I mean, world population is such that at any given moment, most people would be off in estimating it by a billion. There is certainly grounds for being concerned about differential fertility among various groups - but that concern has two planks, one of which is Life Generally (in the Attenborough sense) in an atmosphere where the people who brought us the idea of conservation have all died off, and thus something the commenters here would not care about; and the other which, concerns quite real potential future suffering by people, but necessarily by the people who do have all the children, which - again - will not be the commenters on blogs - and while I'm sure there will be some genuine worry about that, the degree to which people care about a future that does not involve their own, if the idea of Life Generally does not move them, does not seem open-ended.
(Note this has nothing to do with "allowed" or "not allowed", not sure why people think women never in history "worked outside the home" and of course the involvement of women in farm work inarguably means they worked "outside" of the home more than they do now.)
As economists, how do we quantify the concept of sustainability? We don't seem to try at all.
Everything is markets and efficiency, and while we make grudging concessions to the need for things like food and national defense, we are so used to abundance that we don't spend much time investigating the security or sustainability of our production capacity.
Re: "In finance, the suppliers of funds earn a time premium and a risk premium. Insurance allowed for the separation of the two. A lender could now earn the time premium without bearing as much risk."
Incisive.
A hallmark of science: Intuitive once articulated, but hard to intuit in the first place.
“I don’t know what to make of that. It could be the fear that our economy’s current good performance is unsustainable, as I just discussed.“
This is probably an overstatement in my experience. I think it is just the structure and timing of most career advancement coupled with a cultural attitude around priorities of self-fulfillment and family formation.
If your child’s outcome (and importantly, which your own future status will br derivative of) is going to be determined—even in part—by the quality of the nurturing provided, then why would even a twenty-something who is motivated to have children, want to bring them into the world before they’re reasonably financially secure that they can provide them with a home, afford the daycare, save for the cost of private tuition, etc.?
Not even in the more successful professions do you feel like you’ve arrived at that point until well into your 30s.
Take a doctor or lawyer, which are probably in the extreme. After undergrad at 22, you have at least three more years as a lawyer and then another 10-12 as an associate before you are within hailing distance of making partner. All while working long hours and unable to be meaningfully present at home. Doctors don’t finish schooling until close to or after 30, along with long residency hours.
Actually, the essence of the late Soviet economy (the Brezhnev era) was that the state plays a big role. In other words, the economic system was one of the main reasons the average citizen looked around and said 'the whole system is fake and insane.' Very little in the way of private for-profit economic activity was legal, and although there was a large underground economy, you could go to prison if you were caught participating in it. To a significant extent, the cure involved some low-hanging fruit -- allow the former underground economy to operate out in the open, and stop putting people in prison for buying and selling for profit. The last time I was in Russia, I interviewed a factory manager who told me he had spent time in prison in the Soviet era for being a black marketeer. The solutions for what ails the current US political and economic system are not that obvious. In that sense, Andrews may be correct that the problems are more intractable.
"But my guess is that there are many more psychological factors involved, and the easiest thing to say to a pollster is that you are putting off having kids for financial reasons."
Yes. But true or not many believe it. My 35 year old daughter is 5 months pregnant after 10 years of marriage saying she didn't want kids, at least not yet. Talking yesterday she noted her and her husbands salaries have more than doubled. And they already have more savings than most retirees. I suspect their improved financial situation played a big role in the change in priorities.
Re: "Can we really devote more than 20 percent of our economy to medical services?"
In a market economy, absent excessive regulation, the share of medical services in the economy would express trade-offs that people make between medical services and other goods. It is plausible that preferences in prosperous societies shift towards medical services. Twenty percent isn't necessarily too much, irrational, or wasteful.
It is hard to know the counterfactual: the share of medical services in a sound market economic in a prosperous society.
The economic issues in medical services are classic Kling pathologies: Restrictions on supply, subsidies for demand. Insulation of end-users from price signals. Disproportionate 3rd-party payment. Conflation of (catastrophic) insurance and manageable medical expenses. Conflation of risk-pooling and myopia.
Of course, I get it, that Arnold, wisely, is reminding us that the current heavily regulated/politicized system doesn't reckon squarely with opportunity costs and with honest public finance.
Would you stay married and have a 3rd child for a million bucks? I’m sure there is some amount of additional tax free money that would induce far more married couples to have more kids. Maybe only $40,000 would be enough—what we don’t know is what the minimum is to get the rate up to 2.1.
Nor is there any political cocensus on what govt handouts should be tried first. But more cash to married couples for more kids having married parents seems inevitable.
I am not sure, but I don't think many people bent on divorce are going to be swayed to have a third kid via a reasonable amount of money, even in the millions. Now, just having a third kid if you are reasonably happy in your marriage and already have two, that is probably a much cheaper thing to incentivize. People undergo very large costs to divorce, with good reason.
“Stay married” is actually an excellent social goal, and financial problems are one of the two top read for divorce, along with cheating. Some 15-18 years of $5000/month will certainly change a lot of folk’s minds about both having kids, and more kids, and staying together.
Economists are taught to look for the cheapest effective incentive, so trying to get those who are married with two, or even one kid to go up to three is the lower cost optimization problem.
My main point was to falsify the claim that Nobody Knows What To Do. Everybody knows what to do—more govt cash for more babies— but there’s not yet agreement on for who, or how much.
Of course Dems will say it’s racist because so few Blacks are married, but there’s actually more unmarried whites with kids (not %).
My more serious proposal is for:1) married, 2) with at least 2 bio-kids, 3) $1000/ month on the birth of the third, or additional, child. 4) Every year the House reviews the US fertility rate, and can increase the amount by 100/month if the rate is less than 2.1.
3b) for 18 years, or as long as there is a child under 18.
Everybody who has ideas on adjusting these parameters has ideas on how to fix the problem, but not agreement on a policy.
I think you are misunderstanding the reason people divorce for financial issues. It isn't because they are super happy and just don't have enough money to stay married; staying married is cheaper than divorce. Rather it is because A: they don't like each other much and money is the proximate thing to fight over, or B: one of them is a spend thrift and blows through cash faster than the family can handle. Case A might be helped by more money, but chances are it isn't the actual root of their problem, and so they will either continue to fight over money or find another issue. Case B is not helped by more money at all; just as lottery winners often are right back to being as poor as they were before winning, if people can't handle X dollars a month in income they can't magically handle X+1000 dollars a month.
On the economics front, you need to consider cheapest effective incentive WHILE ensuring the cost does not exceed the benefits. $5000 dollars a month is more than the median yearly income (or was before inflation went nuts). That is going to have some huge and negative knock on costs due to incentives to have kids and not work while lying about being married. $1000 a month might be more reasonable, but 12-24K per year per family with 3-4 kids might get really expensive, really quickly. Along with the costs of administering the program (Who is checking up that those people are acting like married people and not just married on paper? Are the kids taken care of?) one had better be sure the birth rate actually increases and the benefits of that increase exceed the costs.
‘He that hath wife and children hath given hostages to fortune; for thay are impediments to great enterprises, either of virtue or mischief.’ Francis Bacon, Of Marriage and Single Life.
Money is defiantly a driver behind not wanting to have kids.
1) Ever since mortgage rates went up housing is flat out unaffordable. Please go and run the numbers on this, it's stark.
2) If your disgusted with public schooling after 2020, your expense to raise a child just went up by hundreds of thousands of dollars each if you want to go private.
Saying people used to be poorer doesn't matter because they used to have kids when they had sex and they didn't have social security if they didn't have kids. It's a new world.
I think the problem will solve itself if we normalize the incomes of the child bearing and childless, but that would be a massive redistribution.
I have a theory the gender pay gap is narrowing due to extension of benefits to men. We have had several men take paternity leave. FMLA also allows men to take leave of absence. Including family planning in all health insurance spreads the cost to men.
"And at least faking those things is deeply tied to your admission to those schools and to your social life and experience in class and administrative rules set once you arrive."
So selective schools are at least in part selecting for people who excel at faking certain emotions and lying about their beliefs, or at least can tolerate doing so. I'm sure that has no negative implications for the future.
Moreover, the Admissions process invites -- indeed requires -- applicants to sing their own praises. On the one hand, teen applicants are expected to have been "agents of change." On the other hand, they are promised "a transformative experience."
The psychology of the process is unhealthy.
It would be refreshing to receive an application statement that says something like: "Please see my transcript for my academic record. I don't pretend to be special. I'm grateful to family, teachers, neighbors, and friends who helped and encouraged me. If you give me a chance, I promise to work hard, behave responsibly, help others, and do my level best to repay your confidence."
I'd hire that applicant, unless they accidentally applied to my company instead of to a university... that would be a bad sign.
Moses had a truly outstanding post on the effects of healthcare inflation on employment. Linked below.
I will add something to this analysis. When I look at fertility rates they are replacement at the bottom and replacement at the elite level. They fall as income rises until you reach "fuck you money".
My own view is that not just healthcare but everything is designed to ring as much value as possible out of middle class people who have enough to be worth stealing from but not enough to make the system work for them. So they all get two jobs and try to buy the right real estate and keep their heads above water and its so exhausting that they have fewer children to try and get an edge over on the other people doing the same.
In general we need to:
1) Stop exploiting this group so much (to rich for poor people welfare, to poor for rich people welfare).
2) Normalize the after tax income of the child bearing and childless within this group so that the decision to have children is based on wanting/not wanting children rather then a backdoor way have higher take home income.
I don't have an easy solution though because its just really easy to exploit middle class families, they are too busy to do politics all day.
https://substack.com/home/post/p-146052503
"Employers do, in fact, see those rising insurance premiums because they have to pay those premiums as part of employer-insurance plans. But since employers can’t exactly force people to “consume less healthcare” (or be better, smarter or more discerning about the healthcare they consume), what can they do to push back on rising prices?
Employers can fire people, when premiums get too high, that’s what they can do."
"Researchers claim that a 1% increase in local hospital prices lead to ~40 lost jobs, $5M in reduced wages, and ~$1M in reduced tax revenue:
Higher coverage costs had a far greater impact on middle income workers than anyone else (so says the research).
The reason is pretty straightforward: from the employers perspective, the cost per employee is the same, so insurance premiums reflect a far larger tax on lower income workers, as a percentage of salary. If premiums are ~10K/employee, than that is a 20% tax on a $50K worker, while only a 10% tax on a $100K worker, so naturally the middle income worker gets the ax.
Why not the lowest income workers? Well, they’re covered by Medicaid, so the taxpayer handles those.
So, to summarize, as a result of higher healthcare costs—which are rising because more and more people consume a relatively dwindling healthcare supply without any idea of how much it costs—people simply get fired, for no other reason than their share of the cross-subsidy was too high.
Yup, that’s going to solve the problem, for sure."
As someone in his mid-twenties who wants to wait to have kids, along with most people I know at my age and education level, I can say confidently that it has little to do with money alone. The financial aspect of not wanting children at this age is just an extension of a general unwillingness among Millennials and Zoomers to fully embrace the responsibilities of adulthood that involve doing things that are not solely beneficial to themselves. I have noticed this, particularly among people my age who are very conscientious. The primary concern for intelligent and ambitious men and women in my generation is securing comfort and stability in life through a career, good health, and a home. Having children early is generally seen as disruptive to these goals.
To be fair, it is disruptive to these goals.
It definitely can be. A major difference between every generation before the Boomers and every generation after them has been the willingness to put up with that disruption. It was much easier when it was standard to have a homemaker in every nuclear family. With two working parents, it requires a significant sacrifice from both.
It was also much less disruptive when parents weren't expected to constantly supervise their children, or drive them around to be supervised by others.
"How long can the government keep exponentially increasing its debt?"
How has it continued this long? Would anyone 20+ years ago have believed we could reach this point without catastrophe or at least a weak economy?
How much further can price/earnings ratios rise in the stock market?
PEs don't look particularly high, especially if one only looks back to early 90s.
https://www.macrotrends.net/2577/sp-500-pe-ratio-price-to-earnings-chart
Can we really devote more than 20 percent of our economy to medical services?
Yes. And as per capita GDP grows, the percent can go up.
"The fertility decline is a much bigger problem. It can be seen everywhere liberalism touches."
Why is this a mystery? If young couples truly believe the progressive narrative, people - especially white people - are a cancer on the planet. Worse, there's an even chance that a couple could produce a male offspring who, after all, would not only be toxic but also responsible for slavery, women's oppression, climate change, colonization, worker exploitation, and transphobia.
Fertility is declining pretty much everywhere above the bottom fifth, in plenty of places that are neither white nor woke. When something is happening in most places it is due to causes that are also affecting most places, like new technologies or global trends in work, education, law, and shared perceptions about which people are high status and what they are doing.
The answer to the mystery is simply that having kids early has an enormous opportunity cost, especially for women, especially those who are smart and potentially high-earning. People without kids have -tremendous- advantages in the labor market in all kinds of ways, which is why practically all the elite females where I work have zero kids before 35 and some have one afterwards.
It is socially undesirable to forthrightly admit this is the reason - it's considered odd if a women doesn't want kids and so only normal for her not to have them if she is compelled by circumstances - so people give (and even believe) false but socially acceptable excuses as cover stories. There is nothing to be done except to reduce the opportunity cost by reducing opportunities for the childless. "No kids, no college," is one of my proposals. Most governments won't realize this, and most of those that do won't have the balls to do anything about it. My money is on China to get it, and to get it done, and if I'm right and the AIs don't get us all first, then they win the future.
I wonder if I can get Mike Judge or Judd Apatow interested in my 'Govt says "Have Two Kids By 30 To Discharge Your Student Debt"; Hilarity Ensues' movie script.
You are thinking too small. Satire should go far past what is actually necessary, but student loan stuff is far too short of the mark. To fix fertility, childlessness will need make one a second class citizen ineligible to attain privately or publicly any of the signals, credentials, rank, income, or benefits of having high social status. For those who aren't going to be in the running for high status anyway, the opportunity cost of having kids will remain high. For those with a shot at high status, they will do whatever the system asks them to do and start popping out kids after graduating high school. When everyone going to college is married with kids - because those are the only people allowed to go to college - then the college lifestyle will transform into one that is maximally supportive of the needs of young families raising little children. The culturally transformative power of this one reform cannot be overstated - we would literally not recognize America a few years into it - and it would be just one arrow in a large quiver of related policies. Satire would have to go well beyond that, maybe you have to clean latrines two hours a day or you don't get your oxygen ration. I probably wouldn't go that far.
Alternate outcome to college lifestyle changing: grandparents and hired caregivers start raising most of the new kids as their own kids go through school and the first years of work. I am not sure what the knock on dynamics there would be, other than increasing children born out of wedlock to respectable families, but I doubt it would be that everyone waits to go to college until after they get married and have kids. The college premium would increase quite a bit as supply of graduates dried up, and so getting in would be even more important and parents of young adults would respond. If they could afford to pay all the daycare themselves they would pressure their kids to have a baby quick and just pay to have it watched. If they can't afford daycare one of them will watch it themselves.
I take your point. Judge rather than Apatow territory, then.
The die was cast the moment that it was decided that - rather than a matter of total indifference - it was self-evidently important for women to work outside the home in preference to working inside the home.
The people who hope to influence this in some way by fiddling with tax policy - are just fiddling.
I am a poor feminist but I don't care whether people have children or not. I mean, world population is such that at any given moment, most people would be off in estimating it by a billion. There is certainly grounds for being concerned about differential fertility among various groups - but that concern has two planks, one of which is Life Generally (in the Attenborough sense) in an atmosphere where the people who brought us the idea of conservation have all died off, and thus something the commenters here would not care about; and the other which, concerns quite real potential future suffering by people, but necessarily by the people who do have all the children, which - again - will not be the commenters on blogs - and while I'm sure there will be some genuine worry about that, the degree to which people care about a future that does not involve their own, if the idea of Life Generally does not move them, does not seem open-ended.
(Note this has nothing to do with "allowed" or "not allowed", not sure why people think women never in history "worked outside the home" and of course the involvement of women in farm work inarguably means they worked "outside" of the home more than they do now.)
As economists, how do we quantify the concept of sustainability? We don't seem to try at all.
Everything is markets and efficiency, and while we make grudging concessions to the need for things like food and national defense, we are so used to abundance that we don't spend much time investigating the security or sustainability of our production capacity.
Re: "In finance, the suppliers of funds earn a time premium and a risk premium. Insurance allowed for the separation of the two. A lender could now earn the time premium without bearing as much risk."
Incisive.
A hallmark of science: Intuitive once articulated, but hard to intuit in the first place.
“I don’t know what to make of that. It could be the fear that our economy’s current good performance is unsustainable, as I just discussed.“
This is probably an overstatement in my experience. I think it is just the structure and timing of most career advancement coupled with a cultural attitude around priorities of self-fulfillment and family formation.
If your child’s outcome (and importantly, which your own future status will br derivative of) is going to be determined—even in part—by the quality of the nurturing provided, then why would even a twenty-something who is motivated to have children, want to bring them into the world before they’re reasonably financially secure that they can provide them with a home, afford the daycare, save for the cost of private tuition, etc.?
Not even in the more successful professions do you feel like you’ve arrived at that point until well into your 30s.
Take a doctor or lawyer, which are probably in the extreme. After undergrad at 22, you have at least three more years as a lawyer and then another 10-12 as an associate before you are within hailing distance of making partner. All while working long hours and unable to be meaningfully present at home. Doctors don’t finish schooling until close to or after 30, along with long residency hours.
Actually, the essence of the late Soviet economy (the Brezhnev era) was that the state plays a big role. In other words, the economic system was one of the main reasons the average citizen looked around and said 'the whole system is fake and insane.' Very little in the way of private for-profit economic activity was legal, and although there was a large underground economy, you could go to prison if you were caught participating in it. To a significant extent, the cure involved some low-hanging fruit -- allow the former underground economy to operate out in the open, and stop putting people in prison for buying and selling for profit. The last time I was in Russia, I interviewed a factory manager who told me he had spent time in prison in the Soviet era for being a black marketeer. The solutions for what ails the current US political and economic system are not that obvious. In that sense, Andrews may be correct that the problems are more intractable.
"But my guess is that there are many more psychological factors involved, and the easiest thing to say to a pollster is that you are putting off having kids for financial reasons."
Yes. But true or not many believe it. My 35 year old daughter is 5 months pregnant after 10 years of marriage saying she didn't want kids, at least not yet. Talking yesterday she noted her and her husbands salaries have more than doubled. And they already have more savings than most retirees. I suspect their improved financial situation played a big role in the change in priorities.
Re: "Can we really devote more than 20 percent of our economy to medical services?"
In a market economy, absent excessive regulation, the share of medical services in the economy would express trade-offs that people make between medical services and other goods. It is plausible that preferences in prosperous societies shift towards medical services. Twenty percent isn't necessarily too much, irrational, or wasteful.
It is hard to know the counterfactual: the share of medical services in a sound market economic in a prosperous society.
The economic issues in medical services are classic Kling pathologies: Restrictions on supply, subsidies for demand. Insulation of end-users from price signals. Disproportionate 3rd-party payment. Conflation of (catastrophic) insurance and manageable medical expenses. Conflation of risk-pooling and myopia.
Of course, I get it, that Arnold, wisely, is reminding us that the current heavily regulated/politicized system doesn't reckon squarely with opportunity costs and with honest public finance.
Would you stay married and have a 3rd child for a million bucks? I’m sure there is some amount of additional tax free money that would induce far more married couples to have more kids. Maybe only $40,000 would be enough—what we don’t know is what the minimum is to get the rate up to 2.1.
Nor is there any political cocensus on what govt handouts should be tried first. But more cash to married couples for more kids having married parents seems inevitable.
I am not sure, but I don't think many people bent on divorce are going to be swayed to have a third kid via a reasonable amount of money, even in the millions. Now, just having a third kid if you are reasonably happy in your marriage and already have two, that is probably a much cheaper thing to incentivize. People undergo very large costs to divorce, with good reason.
“Stay married” is actually an excellent social goal, and financial problems are one of the two top read for divorce, along with cheating. Some 15-18 years of $5000/month will certainly change a lot of folk’s minds about both having kids, and more kids, and staying together.
Economists are taught to look for the cheapest effective incentive, so trying to get those who are married with two, or even one kid to go up to three is the lower cost optimization problem.
My main point was to falsify the claim that Nobody Knows What To Do. Everybody knows what to do—more govt cash for more babies— but there’s not yet agreement on for who, or how much.
Of course Dems will say it’s racist because so few Blacks are married, but there’s actually more unmarried whites with kids (not %).
My more serious proposal is for:1) married, 2) with at least 2 bio-kids, 3) $1000/ month on the birth of the third, or additional, child. 4) Every year the House reviews the US fertility rate, and can increase the amount by 100/month if the rate is less than 2.1.
3b) for 18 years, or as long as there is a child under 18.
Everybody who has ideas on adjusting these parameters has ideas on how to fix the problem, but not agreement on a policy.
I think you are misunderstanding the reason people divorce for financial issues. It isn't because they are super happy and just don't have enough money to stay married; staying married is cheaper than divorce. Rather it is because A: they don't like each other much and money is the proximate thing to fight over, or B: one of them is a spend thrift and blows through cash faster than the family can handle. Case A might be helped by more money, but chances are it isn't the actual root of their problem, and so they will either continue to fight over money or find another issue. Case B is not helped by more money at all; just as lottery winners often are right back to being as poor as they were before winning, if people can't handle X dollars a month in income they can't magically handle X+1000 dollars a month.
On the economics front, you need to consider cheapest effective incentive WHILE ensuring the cost does not exceed the benefits. $5000 dollars a month is more than the median yearly income (or was before inflation went nuts). That is going to have some huge and negative knock on costs due to incentives to have kids and not work while lying about being married. $1000 a month might be more reasonable, but 12-24K per year per family with 3-4 kids might get really expensive, really quickly. Along with the costs of administering the program (Who is checking up that those people are acting like married people and not just married on paper? Are the kids taken care of?) one had better be sure the birth rate actually increases and the benefits of that increase exceed the costs.
Arnold
Always enjoy your work.
Andrews comment ‘no one knows how fix fertility decline’ isn’t accurate.
Religious communities - Jewish, Mennonite, evangelical, even catholic and Islam - known for high fertility rates.
Note the ancient description of family life.
Psalm 127 . . .
“Unless Jehovah builds the house,
It is in vain that its builders work hard on it.
Unless Jehovah guards the city,
It is in vain that the guard stays awake.
It is in vain that you rise up early,
That you stay up late,
That you toil for your food,
Since he provides for his loved ones while giving them sleep.
Look! Sons are an inheritance from Jehovah;
The fruit of the womb is a reward.
Like arrows in the hand of a mighty man,
So are the sons of one’s youth.
Happy is the man who fills his quiver with them.
They will not be put to shame,
For they will speak with enemies in the city gate.’’
This encouragement for family happiness is based on premise humans are ‘children of God.’
Belief we are just ‘smarter animals’ or only ‘interesting chemicals’ is . . . not . . . equal idea.
Look at impact.
The idea that ‘no fix exists’, this assumption, this rejection of religious culture , especially judeo/ Christian traditions, is a decision.
The solution is obvious, clear, and historical.
The complete deep rooted rejection of religion is destructive.
Modernity may not endure.
Thanks
Clay
‘He that hath wife and children hath given hostages to fortune; for thay are impediments to great enterprises, either of virtue or mischief.’ Francis Bacon, Of Marriage and Single Life.
Money is defiantly a driver behind not wanting to have kids.
1) Ever since mortgage rates went up housing is flat out unaffordable. Please go and run the numbers on this, it's stark.
2) If your disgusted with public schooling after 2020, your expense to raise a child just went up by hundreds of thousands of dollars each if you want to go private.
Saying people used to be poorer doesn't matter because they used to have kids when they had sex and they didn't have social security if they didn't have kids. It's a new world.
I think the problem will solve itself if we normalize the incomes of the child bearing and childless, but that would be a massive redistribution.
I have a theory the gender pay gap is narrowing due to extension of benefits to men. We have had several men take paternity leave. FMLA also allows men to take leave of absence. Including family planning in all health insurance spreads the cost to men.