2003 August 19 Tuesday
The Growing Economic Disincentives For Having Large Families

James Surowiecki has a very interesting article in The New Yorker about a forthcoming book entitled The Two-Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke that argues it is becoming more expensive for couples to raise children.

You might, then, expect American families to be luxuriating in good fortune. But, compared with people who don’t have children, people who do are in worse economic shape than they’ve ever been in. The Harvard law professor Elizabeth Warren and her daughter Amelia Warren Tyagi demonstrate, in their forthcoming book “The Two-Income Trap,” that having a child is now the best indicator of whether someone will end up in “financial collapse.” Married couples with children are twice as likely as childless couples to file for bankruptcy. They’re seventy-five per cent more likely to be late paying their bills. And they’re also far more likely to face foreclosure on their homes. Most of these people are not, by the usual standards, poor. They’re middle-class couples who are in deep financial trouble in large part because they have kids.

Warren and Tyagi argue for a public school voucher system to help deal with this problem. But housing prices are one reason why much of the middle class is opposed to school vouchers. People who paid high housing prices to buy a house in a neighborhood with an excellent school do not want to see vouchers used to bring in students from other areas who will compete with their kids for slots in the highly rated school that is near their house. As the need for more education has increased the competition for ensuring quality education for offspring has intensified. Therefore worries about the ability to send potential offspring to quality schools become an additional disincentive for having children.

One perverse consequence of these disincentives is that they are felt less strongly by those who are less educated and less bright themselves. Those who are not well educated tend, on average, to not be as bright as those who are well educated. So one effect of these disincentives is to select against intelligent offspring. Note if you click thru on that link and follow thru to the original articles on the Australian Twins Registry study that there are two separate selective effects measured: years of education (which is a decent rough proxy for intelligence - not that the researchers will say that) and types of religious belief - with Catholics standing out as having measurably different reproductive rates than other Australians. The religious influence should not be too surprising. What people believe affects what they do.

The writers also point out that the gradual growth of the expectation in the post-World War II era that all middle class kids should go to college has effectively become an additional disincentive for having more children. Each child a middle class couple gives birth to translates into an even larger expense per year when the kid goes off to college. As college tuition has risen more rapidly than overall inflation this disincentive has continued to grow.

The need for two incomes has an interesting consequence that I rarely see mentioned: if one member of the couple becomes unemployed and can not find a job locally then the couple have a reason to move to another part of the country. But then both have to find a new job at a new location. When only the husband worked the decisions about when to move and where to work were much easier to make. Ups and downs in particular industries were easier to adjust for. Having two members of a household working becomes an incentive to move to near a major metropolitan area to increase the odds that both members of a married couple will be able to find work in their area of expertise.

Share |      By Randall Parker at 2003 August 19 01:28 PM  Civilizations Decay

A Berman said at August 19, 2003 2:23 PM:

As marriage and child-rearing continuously lose their 'place of honor' in our society, you get less marriage and you get less child-rearing. And you get more and more changes in laws and economics in favor of this or that group, which indirectly disfavors married, child-rearing couples.

One example: Socially, it's ok to not be married now. And it's illegal to hire someone on the basis of their marital status. That means, all else being equal, unmarried people with more free time have an advantage in the job market over married people.

Patrick said at August 20, 2003 4:47 PM:

As it costs more and more to buy a house in the right area so as to send children to a good public school, eventually it will be cheaper to buy a house in a cheaper area, and send them to a private school.

Here is Australia this largely happens already. In my state (New South Wales) 50% of children attend Private schools, despite the free public schools on offer. Of course most of these are the Catholic schools, which at something like $2000/year are almost free, compared to the cost of moving to a more expensive neighbourhood.

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