Gray Stanley Becker Fertility

Gray Stanley Becker Fertility

Becker's next important foray into sociological country was to be a paper on the economics of fertility written for the National Bureau of Economic Research (1960b). Although political economy was once closely involved with demography (witness Malthus's famous essay), for much of this century the study of population was firmly in the hands of sociologists and un-theoretical number-crunchers. A few tentative attempts had been made to relate birth rates to economic variables, but Becker's paper went way beyond this. Here the decision to have children is firmly incorporated within the familiar framework of neoclassical economics. More particularly, Becker adopts the startling and controversial position that children are in important respects analogous to consumer durables such as automobiles, TV sets and dishwashers; thus the economic theory which has proved fruitful in relation to these commodities can be applied equally to human beings.

He argues that, at least under modern conditions, the raising of children involves a net cost to their parents. Yet people do continue to have children, despite the availability of effective contraception. Thus if people choose to have children it is because they obtain sufficient utility to compensate for the costs involved. These costs include such obvious things as food, clothing and schooling. Perhaps more importantly, however, they also include costs in terms of parental time, a scarce commodity which has alternative uses. Indeed, if one alternative is to use this time in the labour market, a value (its 'opportunity cost' in the jargon) can be put on it which will indicate that a very large proportion of the total costs of childrearing is accounted for by parental time.

The existence of these net costs indicates that children are some form of consumer good; their spread over time indicates we are dealing with a consumer durable. They therefore have to compete with other consumer durables for a limited share of the household budget: more children means less hi-fi equipment or a smaller car.

Once this rather bizarre comparison is admitted, it opens up the likelihood that decisions to have children will be affected by such variables as their 'price' (in terms of alternatives foregone) and the size of the household budget. As we have indicated, Becker accepts Friedman's view that the usefulness of a hypothesis depends on its ability to explain or predict. So how does Becker's approach fare in this respect?

Straightaway we are confronted with a problem. Broadly speaking, the demand for consumer durables tends to rise with income; on Becker's reasoning we might expect the demand for children to follow a similar pattern. Yet there is much evidence to suggest that family size declines with income. How does Becker handle this apparent refutation of his approach? Are babies inferior goods?!

One argument Becker offers in order to resolve this difficulty is interesting in the light of his later work. This is the argument that the cost of rearing children tends to rise with family income, largely as a result of the higher opportunity cost of parental time. At any particular moment better-off families tend to be better educated and thus to have greater earning power; over time, all earnings tend to rise as income rises. The argument can be il­lustrated diagrammatically. In Figure 1, an increase in income-illustrated by a parallel outward shift of the budget constraint -leads to increases in the 'consumption' of both competing consumer durables and babies, if the relative price of these commodities remains constant. At the point of tangency between a new (higher) indifference curve and the new budget constraint, more babies (B2) are chosen. If, however, the increased income results largely from higher wages paid to family members (a highly plausible assumption), this will raise the opportunity cost of time spent on rearing children, and thus increase their relative price. The budget constraint pivots, as in Figure 2, and the new preferred combination of babies and other consumer durables may involve a smaller desired family size.

It is ingenious, if not altogether convincing There is a suspicion that evidence Becker uses to support his arguments is highly selective, and moreover some of the generalisations he makes are amenable to alternative interpretations: for instance the observed inverse relation between education and family size could have nothing to do with the opportunity cost of parental time, but a lot to do with the different values and attitudes education might be expected to inculcate. However Becker's approach is more plausible in relation to short-term variations in fertility; economic factors seem far more significant here than ad hoc changes of tastes. In his approach empirical generalisations are linked to a broader theoretical framework; this is why, like it or not, it has stimulated so much further work in this field.