Children: Good investment, or ultimate consumer good?

Source Flickr Author tarotastic

WASHINGTON, June 9, 2014 — CDN columnist Richard Cotto reported today a surprising London School of Economics study that shows that smarter women want fewer children.

The most surprising thing about the study is that chief researcher Satoshi Kanazawa found the results surprising. Economists — of which the LSE has an indecent number — have been arguing that for years.

Perhaps not quite in those terms. The economic argument isn’t that smart women want fewer children, but that better educated women with better jobs want fewer children. That argument makes perfectly good sense, and the reason is opportunity cost.

You may have noticed that wealthy lawyers have relatively few close friends. That isn’t for the reasons you might suppose (no lawyer jokes here, but you can imagine them all you like), but rather for the same reason that career-driven people in all sorts of fields have relatively few close friends: Friends are time-consuming. They expect you to remember their birthdays, to help them shop for swimsuits, to be interested in their summer vacation.

When you’re billing clients $600/hour, who has time for friends?

Children are much more demanding than friends, and unlike friends, they live inside you for nine months. A high-income man with a stay-at-home wife might not be bothered by pregnancy, and he doesn’t have to stay home and be bothered by his progeny, but a woman can’t (with a few exceptions) foist off her pregnancy on someone else.

A successful female attorney, physician, or entrepreneur has to give up a great deal of productive time to have children – valuable time. Her children are much more expensive than her secretary’s children, or than the children of your cashier at the local SuperMart. The time the cashier takes off for her children is only worth $7.50 an hour.

You may be pounding your head in disgust at this point, wondering that anyone could look at the joys of pregnancy and child-rearing so coldly, but please, don’t judge women too harshly. The decision is more nuanced, not simply a matter of cold, hard cost. We do, after all, take delight in our children.

But now the question is, what kind of children are we delighting in? Will they care for us in our old age, massaging lotion into our scaly feet and trimming our thick and malformed toe nails? Will they change our diapers and provide us with the nicest silk curtains to chew on? In other words, are they a good investment?

Or are they ornaments to show our friends, little people we can trot out at parties to play the piano, recite Greek lyric poetry, future graduates whose degrees from Harvard we’ll hang in the living room to fill the hearts of our dearest friends with despair over their kids who flunked out of beauty school? In other words, are they a high-end, durable consumer good?

We want our children to love us, make us proud, take care of us in our old age, to help work the farm, and even to carry on the family name and grant us a measure of immortality as they pass on our genes. The reasons for having children or not having children are complex, not just a matter of cost, but cost is relevant, especially depending on what we want back from them.

For the poor, children can be an investment. They can be little workers or a substitute for a 401(k), as well as something to love. For the rich, children are more of a consumer good, more likely to take on the role of a luxury car than a retirement fund. Your friends’ children might be Mercedes, so you start yours on French lessons at birth and algebra at three in the hopes that you’ll have a Lamborghini.

The more money you make, the more expensive the kids, but also the greater the likelihood that you’ll pour money into the kids you do have to make sure yours are the envy of all your friends.

This, anyway, is what economic theory predicts. As women are better educated and make more money, as their financial contribution to the household becomes more important, the opportunity cost of children will rise and women will have fewer children. And that does seem to be the case.

The LSE study looked at intelligence, not education and jobs specifically, but there is a strong correlation there. Controlling for those factors, it would warm the hearts of traditional economists (if any of us had one, except for the heart each of us keeps in a jar in our desk) to think that smarter women, acting as more rational Homo economicus than their less clever sisters, would hit on the right answer of calculating the costs of children, not just leaving the decision to messy, hormone-driven feelings.

And so we see the power and grandeur of economic reasoning applied to real people, doing real-people sorts of things like reproducing. Remember that next time you mock IMF head Christine Lagarde (a lawyer, but with a heart just like an economist’s, in a drawer in her desk) or Fed Chair Janet Yellen for suggesting less fiscal austerity in England or looser money in America. Economists have ways of seeing things that you don’t, and you should trust us.

Next time: Why Bill Gates should get to buy your kidney.

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