Economic Return of Children

When I first introduce economics to my students, I talk about using economic thinking to examine “non-economic” problems, frequently using some of the work of Gary Becker as an example.

Likewise, when we discuss economic development, a frequent observation is that richer countries tend toward lower birthrates. The hypothesis sometimes put forth is that as parents become less dependent on children for support in old age, the incentive to have more children falls.

But Brian Caplan at EconLog draws our attention to an old article originally published in the Journal of Economic Literature by Ted Bergstrom (link appears to be to a more recent version).

While the paper is long and contains some math that probably can't be used in your classroom, Caplan does highlight two interesting points. The economic (read financial) benefit of having children is minimal and may even be negative in some cases. So, if the hypothesis is true, why do we see people choosing to have children? Apparently there is still a benefit that accrues to the parent, a value received. Maybe it’s more than financial?

It’s just something interesting to think about. I'd welcome your insights.