Monday, August 19, 2013

Seeing what you know is true

Brad DeLong had an interesting take on technological change, productivity, growth, and Malthusian dynamics. As is often the case at Brad's place, the comments provide a significant portion of the value added. Occasionally, of course, it's value subtracted, as with the case with this comment.

The commentor is objecting to the idea that greater wealth will lead to lower fertility. Part of his concern is that the automatic fertility reduction from increased wealth won't be nearly enough to prevent problems, a concern I agree with:
Even the (few) countries in the world with falling populations have those falling SLOWLY. We're already using up all our seed corn.
Everyone saying there isn't a problem never gives the numbers. They tell us that in some tiny number of countries the population growth rate has gone (very slightly) negative and this is supposed to, what, I don't know, be proof that the rest of the world is going to go negative voluntarily , and soon enough for it to matter?
 But in between those two excerpts, he goes off the rails:
Third the people who spout this line never discuss the actual MECHANISM by which it will work --- and we all know that the sign of a flawed economic argument, no matter how great it might seem, is the lack of an actual mechanism for the effect. In particular, the idea is that people will have fewer kids because having more kids entails hardship and reduced opportunities. For that to work, there actually have to BE hardship and reduced opportunities. In the developed world, for better or worse, we are doing everything we can to sever this link. We (society, not the parents) provide food, medicine, clothing if necessary for the kids, then education. Even among the middle class, the insistence is that society should be providing parental leave, and then childcare, precisely so that the kids aren't a burden. All this provides just one more reduction of the signal that would be telling people to stop having kids.
So of course there should be some sort of link between the level of comfort a given society's safety net provides for families and that society's fertility, right? Right? Countries with "softer" nets should have higher fertility, and as countries' nets get "softer" over time, their fertility rate should rise, right? Or a "harder" net should lead to a lower fertility rate, right?

Except that's not it at all.

The EU has much softer nets than the U.S., yet their fertility rate is 1.57 compared to our rate of 1.89. (All the data discussed here are from the World Bank, here.)

Looking at the U.S., our rate fell really fast during the 1960s, before and during the implementation of LBJ's "Great Society" programs.

After 1976, it crept up, most noticeably during the later 1980s, by which time Reagan's restrictions on welfare programs had had time to be felt.

Clinton's welfare overhaul in 1996 had basically zero effect, though if there was an effect, it was positive (i.e., harder safety net, higher fertility). The recession of 2001 seems to have brought the rate down, with the disaster of 2008 having an even bigger effect.

We shouldn't expect any unicausal explanation to suffice in an issue like this. In the U.S. case, increased access to birth control and women's increased options are pretty obvious candidates for why the rate fell so strongly in the '60's.

Globally, poverty and high fertility seem to have an incredibly strong link. Beyond about $30,000, everyone is hardly above a fertility level of 2.0, but are mostly below (with the exception of Qatar way out on the right). Almost all the countries with fertility above 3.0 have incomes below $8,000.
Combining with the U.S. data, there's a suggestion that being poor over a long time relates to higher fertility, while lower income due to business cycles causes lower fertility.

This is all nothing but eyeball econometrics, but it's enough to suggest that the DeLong commentor's contention about social safety nets and fertility is bollocks. If a factor actually affects fertility, it should be visible somewhere.

But it has to be true. Economists know that people respond to incentives. If you make it less burdensome to have kids, people will have more of them. Trust me.

File this under, "Someone somewhere on the intertoobz said something wrong."

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