Putting a Price on Parenthood

I wonder whether we could afford it if we had to pay for it

I’ve been meaning for some time to write a post about the global fertility slump, and this piece by Charles Fain Lehman, which I found rather unconvincing, is the latest to provide me with a hook which I will finally grab.

By way of prologue, let me say that I’m not going to debate in this post whether the global fertility slump is a problem or not as such—that is to say, whether we have a strong communal interest in getting fertility up, or whether our fertility rate should be a matter of unconcern. (I’m not even going to get into who “our” refers to.) Rather, I’m just going to talk about why the slump is happening, and how it might be mitigated or reversed.

But first, why did I find that Lehman piece so unconvincing? Primarily for two reasons. First, it makes no attempt to do international or cross-cultural comparisons. second, it makes no attempt to distinguish cause from effect.

Lehman’s argument in a nutshell is that the Millennial generation is particularly anxious, commitment-phobic and risk-averse, and has therefore extended post-adolescence longer than previous generations, marrying later (if at all) and having fewer children (if any) at older ages. He describes the life strategy of Millennials as being structured around risk-aversion and delay of meaningful engagement with life, which in turn induces boredom, which in turn is treated with various kinds of distraction (social media, politics, fandom) and mood-altering strategies (marijuana, anti-depressants, therapy). America’s fertility slump, then, is due to a cultural failure that can be reversed through a cultural revival, a shift toward greater willingness to take risk, make commitments, and seek meaningful engagement with life.

I’ve engaged in analogous kinds of cultural arguments myself, so I’m in no position to throw stones. But any explanation for the dramatic decline in American fertility needs to reckon with the fact that fertility has declined globally, not just in North America but in South America, in Europe, in Asia, in the Middle East. 30 years ago, Iran’s total fertility rate was over 4.5; now it’s a bit over 2. Malaysia’s was 3.5; now it’s a bit under 2. Brazil’s was 2.7; now it’s 1.7. The fertility rates of Poland, Thailand and Chile are all below those of the United States, France and Sweden. There is surely still scope for both policy and cultural arguments, but the starting point for any discussion of fertility decline has to be that it is a global, cross-cultural phenomenon. The factors that correlate most-strongly with fertility decline are female literacy and urbanization. As a country urbanizes, and as it modernizes to the point where most women learn to read, fertility declines dramatically. As I’ve said before, if the alternatives to a low-fertility world are ISIS or the Khmer Rouge, I’m sticking with a low-fertility world.

If we limit ourselves just to developed countries, then, where female literacy is nearly universal and most people live in cities or their suburbs, the drivers of differences get murkier. Having robust social welfare policies that make it easier to start a family certainly seems to help, but not as decisively pro-natalists on the left would like to believe. Denmark’s total fertility rate, for example, is 1.7, the same as America’s. Religiosity within societies does seem to correlate with higher fertility, but it is very hard to separate selection effects from causality here, and in any event religiosity in America is in rapid decline. Policies that make housing artificially expensive are clearly negative, but again not as decisive as one might imagine; Japan has more housing-friendly policies than the U.K., for example, but a lower fertility rate. Much of Eastern Europe experienced a brutal fertility shock concomitantly with the shock of the end of Communist rule, which I suspect is due to the sudden rise in the cost of living combined with the economic opportunities attendant on reintegration with the West; the value of work went up at the same time that the cost of family-formation went up (which is what happened in China as well, a country where Communism never fell). It’s a complicated story all around.

In America, I think the notable drop in fertility over the past 15 years has been driven primarily by two factors.

First is the long shadow of the Great Recession, which significantly delayed a large number of Millennials from achieving economic independence. Though that cohort has since substantially caught up, and even surpassed previous generations, the need to catch up likely significantly shaped their timeline for family-formation, and with it their likely lifetime fertility. Inasmuch as anything Lehman observes about Millennials is true, then, I suspect he’s got cause and effect reversed.

Second, as I’ve written before, the relatively higher fertility of the 2000s may have been an immigration-driven illusion, with recent immigrants from Mexico having children soon after arriving, making it seem as if their lifetime fertility would be higher than it actually will be. It’s notable in that regard that total fertility rates for Hispanic Americans have dropped faster and farther than for Black, White or Asian Americans. If this is right, then our TFR was never as high as it looked when we were “beating” Europe, and also hasn’t fallen as far as it seems since then. We might have been more “normal” all along.

My general assumption, then, based on my read of the global evidence is that the norm for a modern, developed society is modestly below-replacement fertility. If it goes much lower—or if it stays much higher, as, for example, Israel’s has—there’s probably something going on beyond the demographic transition. But that’s the normal baseline from which I think we should compare.

But why should that be the normal baseline? I suspect the answer might be almost the exact opposite of what Lehman suggests—and the reason I say that has to do with evidence from the pandemic.

The pandemic created an interesting natural experiment in what drives fertility because unlike a recession, which reduces but doesn’t eliminate economic activity, it suddenly shut down big chunks of modern life. Work changed radically for many people, and leisure changed even more radically. In the United States, the pandemic and associated economic insecurity caused an immediate drop in fertility that has been offset by a dramatic rebound, which looks like what you’d expect if the main driver of fertility was economic. There’s another a group of countries, though, that experienced a notable and surprising fertility boost during the pandemic: the Nordics.

Unlike most countries—not only the United States but also China, France and many others—Denmark, Finland, Iceland, Norway and Sweden all experienced increases in births during the pandemic. Some Nordic countries experienced fertility surges during prior times of economic uncertainty such as after the financial crisis, and the reason appears to be that generous child benefits and parental leave policies substantially cushion the cost of having children when job loss causes earned income to decline. But there’s something on the other side of the ledger as well: a drop in opportunity cost. A recession, by reducing opportunities for earned income, also reduces the opportunity costs of having children—delay to career, less ability to travel and otherwise indulge in adult pleasures. On a relative basis, childbearing and childrearing look less expensive—and, unsurprisingly, as a result you get more children. The pandemic put this effect on steroids, because those adult pleasures were simply vaporized. There just wasn’t much else to do—and the state was offering financial support. A lot of people figured they might as well have kids.

The fact that the Nordics generally still have sub-replacement fertility, though, suggests that even their very generous welfare states don’t adequately compensate for the cost—and the opportunity cost—of having kids. And this shouldn’t be surprising. Just carrying a child to term is an extremely demanding, even dangerous task. Then, once a child is born, the effect on one’s life is transformative. Even if you don’t indulge in America’s recent penchant for helicopter parenting, kids take an awful lot of your time and energy, and even free childcare (or a generous child allowance to pay for either childcare or to make up for lost income associated with staying home) doesn't cover the cost. Moreover, the opportunity cost rises with socioeconomic status; people who can potentially have careers have more to lose than people who just have jobs.

You can say all day long that having and raising children is a far more meaningful than nearly all jobs or leisure activities—and frankly, I’ll agree with you. But it is also largely uncompensated—and neither work nor leisure are meaningless. And plenty of people find the day-to-day of raising children quite boring. There’s a whole literature on the subject dating from mid-century. The problem, in other words, may not be that modern people are too bored, but that they aren’t nearly bored enough. And the problem may not be as simple as saying that raising children has gotten too expensive; the problem may be that not raising children has gotten ever-more remunerative.

If that’s correct, it has some pretty big-picture implications. Specifically, if we don’t want to settle for a sub-replacement fertility norm (and, again, I’m not arguing that question here; I’ll leave that for another time) that we might need to think about compensating parenthood—motherhood especially—at something like a market-clearing price. Such a price would have to reflect not only the cost but the opportunity cost, which will vary regressively, being higher for people of high socioeconomic status.

I suspect that price will turn out to be very high—much higher than we will be willing to pay. Which would be unsurprising. People rarely do like paying the full cost of a service they’ve taken for granted that they can get for free.