It's unclear to me that "plain old growth" is going to get people into a higher-fertility lifestyle bucket unless and until it's accompanied by progress in addressing the Baumol cost disease for childcare. Right now, very high income people can afford a great deal of help raising their kids, freeing them up to still do all the other things they want to do with their lives in parallel. At the tippy-top, this includes the "farm them out to live-in nannies/governesses" strategy that used to be the normal way for rich people to handle childcare.
But that strategy is so labor intensive that it's logistically impossible for a majority of the population to adopt it. If I were a pro-natalist venture capitalist, I would try and fund companies working on robot diaper changers and the like; that's the only really long-term-sustainable way I can see to make the great mass of people substantively rich enough that they feel like having kids is relatively cheap and easy.
Another intuitively pro-natal progress direction, ISTM, is healthspan and fertility-span extension. Part of the opportunity cost of kids is that you only get one life, and one youth, and having kids means navigating a quite narrow fertility-vs-career timing tradeoff and spending a large chunk of your most energetic and enjoyable years burdened by raising young children. If people could confidently expect 100 years of healthy, outgoing life, and women could reliably and healthily have kids up to age 50, that would make it a lot easier to "have our cake and eat it too". And since some lucky people *do* already get that much life and fertility, it's at least in principle possible for many more people to do so.
Good analysis, Max. Incidentally, my last two posts have been about family-unfriendly land use policies that reduce the availability of housing and childcares. The intent was to explain why young families or those who want to have families flee to the suburbs, but your analysis supports how a dearth of housing and childcare would also reduce fertility for those at the bottom of the U-curve, where they have enough money to live nice childless lives but not enough to support families.
This is a cool analysis but I think things might change for the younger generation (where we see an unprecedented increase of childless women at age 30)
Wonderful piece Maxwell explaining how economic growth *check notes* may paradoxically lead to high fertility rates in the future. If you are correct, the dire consequences that I have written about may not play out….
I will certainly update my future write up on demographics with some of these insights for Risk & Progress.
Speaking also from personal experience, I share the suspicion that affluent households may be more willing to have kids not because they are in the downward sloping part of the labour supply curve but because they can afford to buy childcare services, especially to deal the less rewarding aspects of childcare (while maintaining those aspects that are more complementary to leisure, eg travelling the world with the children). This would be consistent with the fact that working hours have not declined - actually the opposite - for highly paid professionals in spite of economic growth. When reading Keynes’ prophecy about the economic possibilities of future generations I wondered whether he applied the same logic to his own ‘work’’ and that of his peers. Any reader familiar with his writings would also know that he took for granted that he and his peers would always have servants at their disposal (even if did not have children).
There are several issues here, internal and external.
1. People with high incomes (over 200k USD/year) are different from ordinary people. They are older and more male, more intelligent, and they have higher ability to defer gratification, and they are far less likely to be single parents. Old males with high incomes and other social prestige are able to choose mates who are willing to bear more children, so maybe there is a male preference for higher fertility. Maybe.
2. The U shape suggests that children are a lower priority than other goods. They are acquired only after other desires have been met, or if those other desires can not be met. As some of these other desires are for positional, zero sum goods, like choice of neighbourhood or access to the best schools or holiday destinations, it is not possible to generalise from high status families to the population at large.
3. Parents in high-income households can afford help with childcare and household management, reducing opportunity costs for them as much as they desire. If all incomes rise, including those of home help, then modal households will still face high opportunity costs.
4. Desire for children is culturally determined. (Those with low impulse control get them by accident, of course.) Economic tools are not sufficient for diagnosing the situation because they take desires as fixed and exogenous. To increase fertility, make child-raising a high prestige activity.
First, I would like to see confidence intervals on the chart titled Total Fertility Rate by Income Group. Second, I wanted to bring up a point I have been considering associated with population decline. I wonder if an increase in the "productivity," of the portion of the population that is now not productive could more than offset a decrease in the population. I use the word "productive," for lack of a better term. I'm referring to people who for whatever reason have lives that could be more satisfying, like people living on the streets or working in jobs that do not use their full potential. If these people could somehow become more "productive," and I also certainly also mean happier and "self actualized," then couldn't the economy continue to grow, and couldn't more innovations be conceived and actualized? In other words, if a society somehow helps the disadvantaged and underemployed, could this be a supplement or even an alternative to pro-natal policies? I hope my point comes across despite the clumsy language.
The elephant in the room and the uncomfortable question...
How many of those high income households have asymmetrical income earning by the spouses, where one brings home the majority of the bacon, allowing the other to be a full time child rearer?
And also if the incomes are asymmetrical, then how many of unions were done not for economic necessity (ie we need to partner up to afford rent, mortgages, together, and thus need two incomes) but partners chosen for having children in mind?
Wealthy people have more kids as they can afford more help and space. Simple. I don't think it follows that societies as a whole can afford more help and space as they become wealthier as those are distributional issues. There isn't an endless supply of nannies or 5 bedroom appartments to go after.
AI progress has been so rapid that I don't think it's unreasonable to assume AI will be able to at least alleviate this problem, if not solve it completely. I think this is true even if one is relatively conservative about future AI capabilities.
In addition to AI, other solutions will also likely be technological. Some of them coming in the not too distant future are artificial wombs, household robots capable of doing domestic tasks, and embryo selection/genetic editing, which will allow for continued innovation and growth, even with fewer people, because these technologies will dramatically increase the human capital of the population.
Regarding the cultural aspect of fertility, I think the way that culture will become more pro-natalist is through these technologies. Now, if one were to think of a way to transform culture without these technologies, I would say the best bet would be for the government to offer a huge amount of money to parents to have children. Basically, if having children was a short-term and long-term net positive financial decision for the middle class and upper class, then this could end up turning the culture in a pro-natalist direction.
The middle class gets the most screwed by our system of governance.
Too "rich" to get the assistance that poor people get.
Too poor to bid up scarce resources versus families that have fewer children (they can outbid you on a house, outbid you for childcare, outbid for XYZ).
Basically we need to redirect resources from the childless to those with children. Make the child tax breaks big enough that families can outbid for housing and more labor moves away from the leisure sector to the childcare sector. Or more simply, make it so a lot of families can "afford" to have one parent at home when you have small children.
It's unclear to me that "plain old growth" is going to get people into a higher-fertility lifestyle bucket unless and until it's accompanied by progress in addressing the Baumol cost disease for childcare. Right now, very high income people can afford a great deal of help raising their kids, freeing them up to still do all the other things they want to do with their lives in parallel. At the tippy-top, this includes the "farm them out to live-in nannies/governesses" strategy that used to be the normal way for rich people to handle childcare.
But that strategy is so labor intensive that it's logistically impossible for a majority of the population to adopt it. If I were a pro-natalist venture capitalist, I would try and fund companies working on robot diaper changers and the like; that's the only really long-term-sustainable way I can see to make the great mass of people substantively rich enough that they feel like having kids is relatively cheap and easy.
Another intuitively pro-natal progress direction, ISTM, is healthspan and fertility-span extension. Part of the opportunity cost of kids is that you only get one life, and one youth, and having kids means navigating a quite narrow fertility-vs-career timing tradeoff and spending a large chunk of your most energetic and enjoyable years burdened by raising young children. If people could confidently expect 100 years of healthy, outgoing life, and women could reliably and healthily have kids up to age 50, that would make it a lot easier to "have our cake and eat it too". And since some lucky people *do* already get that much life and fertility, it's at least in principle possible for many more people to do so.
Good analysis, Max. Incidentally, my last two posts have been about family-unfriendly land use policies that reduce the availability of housing and childcares. The intent was to explain why young families or those who want to have families flee to the suburbs, but your analysis supports how a dearth of housing and childcare would also reduce fertility for those at the bottom of the U-curve, where they have enough money to live nice childless lives but not enough to support families.
Housing: https://www.ryanpuzycki.com/p/cities-arent-for-families
Childcare: https://www.ryanpuzycki.com/p/who-cares-about-childcare
This is a cool analysis but I think things might change for the younger generation (where we see an unprecedented increase of childless women at age 30)
Wonderful piece Maxwell explaining how economic growth *check notes* may paradoxically lead to high fertility rates in the future. If you are correct, the dire consequences that I have written about may not play out….
I will certainly update my future write up on demographics with some of these insights for Risk & Progress.
Speaking also from personal experience, I share the suspicion that affluent households may be more willing to have kids not because they are in the downward sloping part of the labour supply curve but because they can afford to buy childcare services, especially to deal the less rewarding aspects of childcare (while maintaining those aspects that are more complementary to leisure, eg travelling the world with the children). This would be consistent with the fact that working hours have not declined - actually the opposite - for highly paid professionals in spite of economic growth. When reading Keynes’ prophecy about the economic possibilities of future generations I wondered whether he applied the same logic to his own ‘work’’ and that of his peers. Any reader familiar with his writings would also know that he took for granted that he and his peers would always have servants at their disposal (even if did not have children).
General Agreement
Here is my view:
https://thomaslhutcheson.substack.com/p/population-fear-of-falling
I'd like to push back against the idea that rising pc income reduces pc growth. Why should it?
I very much hope it's true that we can grow our way to higher fertility, but I fear higher density/YIMBY may be bad for fertility, as Sam and Lyman have noted https://reasonalone.substack.com/p/yimby-is-probably-bad-for-fertility https://x.com/lymanstoneky/status/1775154652452999259?s=20
There are several issues here, internal and external.
1. People with high incomes (over 200k USD/year) are different from ordinary people. They are older and more male, more intelligent, and they have higher ability to defer gratification, and they are far less likely to be single parents. Old males with high incomes and other social prestige are able to choose mates who are willing to bear more children, so maybe there is a male preference for higher fertility. Maybe.
2. The U shape suggests that children are a lower priority than other goods. They are acquired only after other desires have been met, or if those other desires can not be met. As some of these other desires are for positional, zero sum goods, like choice of neighbourhood or access to the best schools or holiday destinations, it is not possible to generalise from high status families to the population at large.
3. Parents in high-income households can afford help with childcare and household management, reducing opportunity costs for them as much as they desire. If all incomes rise, including those of home help, then modal households will still face high opportunity costs.
4. Desire for children is culturally determined. (Those with low impulse control get them by accident, of course.) Economic tools are not sufficient for diagnosing the situation because they take desires as fixed and exogenous. To increase fertility, make child-raising a high prestige activity.
First, I would like to see confidence intervals on the chart titled Total Fertility Rate by Income Group. Second, I wanted to bring up a point I have been considering associated with population decline. I wonder if an increase in the "productivity," of the portion of the population that is now not productive could more than offset a decrease in the population. I use the word "productive," for lack of a better term. I'm referring to people who for whatever reason have lives that could be more satisfying, like people living on the streets or working in jobs that do not use their full potential. If these people could somehow become more "productive," and I also certainly also mean happier and "self actualized," then couldn't the economy continue to grow, and couldn't more innovations be conceived and actualized? In other words, if a society somehow helps the disadvantaged and underemployed, could this be a supplement or even an alternative to pro-natal policies? I hope my point comes across despite the clumsy language.
The elephant in the room and the uncomfortable question...
How many of those high income households have asymmetrical income earning by the spouses, where one brings home the majority of the bacon, allowing the other to be a full time child rearer?
And also if the incomes are asymmetrical, then how many of unions were done not for economic necessity (ie we need to partner up to afford rent, mortgages, together, and thus need two incomes) but partners chosen for having children in mind?
Wealthy people have more kids as they can afford more help and space. Simple. I don't think it follows that societies as a whole can afford more help and space as they become wealthier as those are distributional issues. There isn't an endless supply of nannies or 5 bedroom appartments to go after.
Great piece! But will rising incomes push fertility rates above replacement level? Most rich couples might opt for only one or at most two children.
AI progress has been so rapid that I don't think it's unreasonable to assume AI will be able to at least alleviate this problem, if not solve it completely. I think this is true even if one is relatively conservative about future AI capabilities.
In addition to AI, other solutions will also likely be technological. Some of them coming in the not too distant future are artificial wombs, household robots capable of doing domestic tasks, and embryo selection/genetic editing, which will allow for continued innovation and growth, even with fewer people, because these technologies will dramatically increase the human capital of the population.
Regarding the cultural aspect of fertility, I think the way that culture will become more pro-natalist is through these technologies. Now, if one were to think of a way to transform culture without these technologies, I would say the best bet would be for the government to offer a huge amount of money to parents to have children. Basically, if having children was a short-term and long-term net positive financial decision for the middle class and upper class, then this could end up turning the culture in a pro-natalist direction.
The middle class gets the most screwed by our system of governance.
Too "rich" to get the assistance that poor people get.
Too poor to bid up scarce resources versus families that have fewer children (they can outbid you on a house, outbid you for childcare, outbid for XYZ).
Basically we need to redirect resources from the childless to those with children. Make the child tax breaks big enough that families can outbid for housing and more labor moves away from the leisure sector to the childcare sector. Or more simply, make it so a lot of families can "afford" to have one parent at home when you have small children.