An Economic Analysis of Fertility - NBER

1 This PDF is a selection from an out-of-print volume from the National Bureauof Economic ResearchVolume Title: Demographic and Economic Change in Developed CountriesVolume Author/Editor: Universities-National BureauVolume Publisher: Columbia University PressVolume ISBN: 0-87014-302-6 Volume URL: Date: 1960 Chapter Title: An Economic Analysis of FertilityChapter Author: Gary S. BeckerChapter URL: pages in book: (p. 209 - 240)An Economic Analysis of S. BECKERCOLUMBIA UNIVERSITYANDNATIONAL BUREAU OF Economic RESEARCHTHE inability of demographers to predict western birth rates accuratelyin the postwar period has had a salutary influence on demographic re-search. Most predictions had been based either on simple extrapolationsof past trends or on extrapolations that adjusted for changes in the age-sex-marital composition of the population.

2 Socio- Economic considerationsare entirely absent from the former and are primitive and largely implicitin the long as even crude extrapolations continued to givefairly reliable predictions, as they did during the previous half century,there was little call for complicated analyses of the interrelation betweensocio- Economic variables and , the sharp decline inbirth rates during the thirties coupled with the sharp rise in rates duringthe postwar period swept away confidence in the view that future ratescould be predicted from a secularly declining function of could with some justification assume that Fertility was deter-mined primarily by two primitive variables, age at marriage and thefrequency of coition during marriage.

3 The development and spread ofknowledge about contraceptives during the last century greatly widenedthe scope of family size decision-making, and contemporary researchershave been forced to pay greater attention to decision-making than eitherMaithus or the forecasters have tried to place thesedecisions within a framework suggested by psychological theory; socio-logists have tried one suggested by sociological theory, but most personswould admit that neither framework has been particularly successful inorganizing the information on considerations encouraged me to analyze family size decisionswithin an Economic framework. The first is that Maithus' famous dis-cussion was built upon a strongly Economic framework; mine can beviewed as a generalization and development of his.

4 Second, although noNote:I am indebted to Richard A. Easterlin and Eugenia Scandrett for helpfulcomments, and to many others, especially Cornelius J. Dwyer, who commented on thedraft prepared for the OF POPULATION CHANGE single variable in the Indianapolis survey1 explained more than a smallfraction of the variation in Fertility , Economic variables did better thanothers. Section I develops this framework and sets out some of its II uses this framework to analyze the actual effects ofincome on Fertility . Section III speculates about some further implicationsof the discussion in I and The Economic FrameworkGENERAL CONSIDERATIONSIn societies lacking knowledge of contraception, control over the numberof births can be achieved either through abortion or abstinence, the lattertaking the form of delayed marriage and reduced frequency of coitionduring marriage.

5 Since each person maintains some control over thesevariables, there is room for decision-making even in such societies. Otherthings the same, couples desiring small families would marry later andhave more abortions than the average couple. Yet the room for decision-making would be uncomfortably small, given the taboos against abortion,the strong social forces determining the age of marriage, and the relativeinefficiency of reductions in the frequency of coition. Chance would bulklarge in determining the distribution of births among growth of knowledge about contraception has greatly widened thescope of decision-making, for it has separated the decision to controlbirths from the decision to engage in , such awidening of the scope of decision-making has increased the importanceof environmental factors, but which of the numerous environmentalfactors are most important?

6 To simplify the Analysis of this problem Iassume initIally that each family has perfect control over both the numberand spacing of its most parents, children are a source of psychic income or satis-faction, and, in the economist's terminology, children would be considereda consumption good. Children may sometimes provide money incomeand are then a production good as well. Moreover, neither the outlayson children nor the income yielded by them are fixed but vary in amountwith the child's age, making children a durable consumption and pro-duction good. It may seem strained, artificial, and perhaps even immoralto classify children with cars, houses, and machinery. This classificationdoes not imply, however, that the satisfactions or costs associated with'Socialand Psychological Factors Affecting Fertility , ed.

7 By P. K. Wheipton and C. , Milbank Memorial Fund, Vols. i2 Theeffect of chance will be fully discussed in a subsequent AXALYSIS OF PERchildren are morally the same as those associated with other satisfaction provided by housing, a "necessity," is often distinguishedfrom that provided by cars, a "luxury," yet both are treated as consumerdurables in demand from the kind of satisfactionprovided by children makes it possible to relate the "demand" for childrento a well-developed body of Economic theory. I will try to show that thetheory of the demand for consumer durables is a useful framework inanalyzing the demand for durables, children are assumed to provide "utility.

8 " Theutility from children is compared with that from other goods via a utilityfunction or a set ofcurves. The shape of the indifferencecurves is determined by the relative preference for children, or, in otherwords, by "tastes."These tastes may, in turn, be determined by afamily's religion, race, age, and the framework permits,although it does not predict, Fertility differences that are unrelated to" Economic " OF CHILDRENA family must determine not only how many children it has but alsothe amount spent on them whether it should provide separate bedrooms,send them to nursery school and private colleges, give them dance ormusic lessons, and so will call more expensive children "higherquality" children, just as Cadillacs are called higher quality cars thanChevrolets.

9 To avoid any misunderstanding, let me hasten to add that"higher quality" does not mean morally more is voluntarilyspent on one child than on another, it is because the parents obtainadditional utility from the additional expenditure and it is this additionalutility which we call higher "quality."INCOMEAn increase in income must increase the amount spent on the averagegood, but not necessarily that spent on each good. The major exceptionsare goods that are inferior members of a broader class, as a Chevrolet isconsidered an inferior car, margarine an inferior spread, and black breadan inferior bread. Since children do not appear to be inferior membersof any broader class, it is likely that a rise in long-run income wouldincrease the amount spent on is also suggested by another line of is known that Eka,where k1 is the fractLon of income spent on the ith commodity, andis the income211 ANALTSIS OF POPULATION CHANGEFor almost all other consumer durables, such as cars, houses, orrefrigerators, families purchase more units as well as better quality unitsat higher income levels, with the quantity income elasticity usually beingsmall compared to the quality expenditures on childrenresponded in a similar way.

10 Most of the increased expenditures on childrenwould consist of an increase in the quality of children. Economic theorydoes not guarantee that the quantity of children would increase at all,although a decrease in quantity would be an exception to the usual an increase in income should increase both the quantity and qualityof children, but the quantity elasticity should be small compared to thequality , on the other hand, concluded that an increase in incomewould lead to a relatively large increase in family argumenthas two major , an increase in income would cause adecline in child mortality, enabling more children to survive a decrease in births did not offset the decrease in child mortality.