The Payoff For Kids

Bryan Caplan recently praised Jonathan Last’s What To Expect When No One’s Expecting, as “the best-written, most engaging, and funniest book on the social cost of low birth rates and population decline.” But, in a follow-up post, Caplan takes issue with some of Last’s facts:

Contrary to popular opinion, children have never been a remunerative retirement plan. In pre-modern times, people rarely lived long enough to collect their “pension.” This has been verified by anthropologists and economic historians alike; see Ted Bergstrom’s excellent review in the JEL. Long before the birth of the welfare state, buying land and money-lending (and even hiding money under your mattress!) made far more financial sense than having kids.

Indeed, as I argue in Selfish Reasons to Have More Kids, kids are a better deal in modern societies than in traditional societies.  In purely financial terms, they’re still a money pit.  But at least nowadays you’ll probably live long enough to collect two or three decades of non-financial assistance and companionship.

Ruy Teixeira recently tackled Last’s prescriptions for how to increase America’s fertility rate:

He argues instead that we should make it easier for people to have all the children they want by reducing the costs of child-rearing. Fair enough. In this cost-cutting spirit, how about paid family and medical leave, flexible work schedules and, especially, affordable, quality child care? Expanding government programs to make college more affordable would also bring down the higher education costs of child-rearing and encourage parents to have as many children as they desire.

But these obvious proposals are rejected out of hand by Last. His solution is to exempt parents from part or all of their payroll taxes. (Have three kids and you pay nothing at all!) The resulting funding shortfall for Social Security and Medicare, not to mention inevitable political conflict arising from the creation of two classes of taxpayers, could kill off both programs pretty fast. But those possibilities do not seem to bother Last.

Last responds to Teixeira here.