Saturday, March 13, 2010

The Economics of Babies

I could be at work right now. I could be partaking in sweet, sweet overtime.

I am not.

Instead, I am typing with one hand while rocking a sweet, sweet baby girl with the other.

And that's what led me to today's post.

There are economies of scale with babies. The first baby, who is now nearly two and half, was extremely costly. Most of the cost, however, is opportunity cost. He's costing easily $30,000 a year in forgone wages, and only a few thousand in actual, out-of-pocket expenses.

The second baby, however, is far, far cheaper. The out-of-pocket expenses currently make up the lion's share of her economic impact. I'll be facing an opportunity cost for the next few weeks in that I'll be unable to work overtime, but that's nothing compared to the costs of losing a full time job.

I suppose the state of my finances is irrelevant to just about everyone, but it suggests that China's one-child policy (or for that matter, the unofficial one-child policy in Italy), is the worst economic situation. The total economic costs would be far reduced if one couple could have two children, and the next couple could have none. Fewer people would buy into that than the one-child policy, even though it would most likely reduce the gender imbalance.

Which reminds me, here's some counter-intuitive math for you. In a hypothetical country, you cease reproducing if you have a boy. So if the boy is first, you have one child. If the boy is second, you have two, and so on. If you keep having girls, you can have as many children as you want, but as soon as you have a boy, you have to stop.

So, what will the gender balance look like? Will this country be overwhelmed with girls? Even if one mom has eight girls and another has only one boy? Nope. It's because the genders are roughly balanced at birth. The first birth leaves you with a 50/50 balanced. Only the ones who have girls go on, but the second birth is once again 50/50. A smaller group continues for the third time, and it's 50/50 again. Even though it is seemingly biased in favor of girls, it produces nothing of the sort.


Anonymous Anonymous said...

Men stick around if a woman has sons, but divorce more readily if there's only a daughter(s). The effect is only 5% in the US, but greater outside of the US:

Overall the ratio is about 50/50, but some couples produce more girls and some more boys. To be frank about it, the uglier a couple is, the more boys they'll have. Ironically, this might explain why couples don't divorce if they have boys, because it's the good lookers that cheat/divorce more:

So my prediction is you'll have a ton of girls because all the couples that tend to have boys will cease reproducing per the law after having their first kid, while the couples that tend to have girls will have many of them.

11:24 PM  
Blogger Octavo Dia said...

This comment made me laugh.

On the other hand, though, successful people tend towards boys, so it may all average out, particularly if the successful boys are not wholly monogamous.

9:34 PM  

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