The third child

My wife, currently taking classes at a London college, was dismissed from class last week. Her offence was bringing our three-year-old into the lecture room. I suspect many will sympathize with the college’s stance. Children disrupt; they run around, giggle loudly, and turn every tool on earth into a toy. That is, if they do not demand food, request help with personal hygiene, or a human embrace to sleep. As such, other students’ learning experience is diminished due to our son’s presence. I am an economist. I understand negative externalities—however slight. My professional Pavlovian instinct should be to propose a Coasean solution to internalize the externality: my wife could have paid the other ten participants to compensate for the distraction caused by my son’s presence. It’s a silly proposal of course, as Coase himself had recognized. We cannot operate in a world in which every norm is subject to negotiation; the transaction costs would be prohibitive.

Last week’s episode was emblematic of a larger societal issue, however: the almost perfect separation of the generations. Ask yourself: when was the last time you had an in-depth conversation with someone thirty years younger or older? As a parent, this reality is painful on two fronts. First, parents often cannot bring their children to the most ordinary places, like classrooms, concert halls, or the gym. Second, the grandparents who might have once stepped in to help, are more likely to live far away—or are still working themselves. Both of these factors contribute to excluding young parents from adult life.

If the separation of generations were merely a question of who can provide care, other than grandparents, economists could suggest a straightforward solution: the market. In Brazil, supervised play areas within shopping malls are commonplace, whereas in Britain, Baumol’s cost disease, childcare staff ratios, and higher income taxes mean such spaces are lacking. Additionally, the government does not trust eight-year-olds to stay home alone. Parents of young Kevin would almost certainly have come into conflict with the law. If I had a magic wand, I would promote the “IKEA-fication” of all adult institutions, similar to how the Swedish furniture store offers free childcare to its customers. Universities would provide playgroups so that parenting students can attend lectures. Workplaces would provide on-site and flexible childcare, and swimming pools and museums would incorporate supervised play areas that give parents time for self-care and intellectual pursuits. Clearly, re-integrating children into adult spaces is only affordable if the government relaxes childcare regulations first. The cost of not doing so is significant. I share Jonathan Haidt’s assessment that the lack of spaces where children can play with one another has contributed to the rise in screen time among the younger generation—with known consequences for mental health.

You could argue that my vision of “IKEA-fication” relies heavily on other people’s time and resources. True. Note however, that society also imposes significant demands on parents’ time. Consider the following data: according to American time-use surveys, parenting in the 21st century has become twice as time-intensive as it was in the 20th century. And then and now, mothers shouldered the lion’s share. In 1975, the average college-educated American parent (of all ages) dedicated 6.4 hours per week to parenting; by 2003, that number had risen to 12.8 hours—16 hours for mothers. (I’ll gladly share more recent data once I can afford a research assistant. This information comes from the American Time Use Survey as reported by Aguiar and Hurst.) In many contexts, society now demands these time contributions from parents—mothers, to be brutally honest—where it once did not. Children can no longer walk to school, sport clubs or music lessons unattended, nor can they spend time on the playground alone. In that these time demands limit parents’ choices, they are not exactly enticing them to grow their families.

No society can afford to alienate its mothers if it wants a future. And I do not say this as a moral argument. It is a mere description of the essential role mothers have played throughout history. An honest appraisal of time-use data says no less. If one day women were to decide that motherhood was a trap, society would end. The same cannot be said about men. This makes the question of mothers’ happiness a societal imperative. To address this issue, we must identify both the obstacles to motherhood and the and the factors influencing mothers’ contributions to parenting. The great economist Simone de Beauvoir offered insight: “the child brings joy only to the woman who is capable of disinterestedly desiring the happiness of another.” I believe that this capacity for disinterestedly desiring another’s happiness hinges on philosophical, spiritual, and economic preconditions. As an economist, my focus is on the economic factors, which concern me.

I fear we are creating a hold-up for would-be mothers. Hold-up occurs when a profitable investment fails to materialize because the beneficiary cannot commit to not exploiting the investor after the investment is made. In this context, the profitable investment—measured in sheer joy and, as an economist, I must add, future productive inputs—is children. The beneficiary of productive inputs is society. Exploitation manifests in the mother’s exclusion from adult life and the significant challenges mothers face in the labour market. Despite these challenges, children continue to be born, however  in far smaller numbers than they once were.

The witnessed decline in the fertility rate in most countries can be attributed to two margins: the extensive margin (the share of mothers among all women) and the intensive margin (the number of children per mother). My sense is that the intensive margin matters more. Just consider that totalitarian-socialist East Germany under Soviet rule had a greater share of mothers than liberal West Germany. In 1992, only eight percent of East German women born in between 1952-1957 were childless. That number was 25 percent in West Germany and has since risen to one third of the population. As to fertility rates, those were almost identical in both states. I would go even further than that. Without government intervention, it is not surprising that a third of a generation remains childless: first, it takes two to form a match, and worryingly so within a short biological time window; second, having children is expensive; and third, not every couple has the physical or mental health to conceive. From a long-run perspective, it is also desirable: In that parents’ socioeconomic status (and parenting hours which rise in socioeconomic status) predicts children attainment in life, the next generation of doctors, engineers and scientists will be much better prepared for adult life if today’s doctors, engineers, and scientists are also parents and assume an active role in their children’s lives. The key factor for generational turnover is whether existing families decide to have more children. My wife’s recent experience illustrates what’s lacking: However wonderful it is to be a parent of young children, the incessant time demands, exclusion from adult life, and foregone earnings often transform it into an experience that most young parents wish to escape after one or two children, rather than prolong with a third child.

The American time-use surveys from 1975 and 2003, which provide detailed accounts of time use among representative subsets of the US population, show that this trend is indeed occurring. Consider the distribution of the number of children among college-educated women during both survey waves (depicted above): the share of childless women increased by only 4.1 percentage points. More significantly, the average number of children per mother dropped by 0.44—almost half a child. Why is this a problem? This trend poses a long-term problem because the two-child family norm is not sustainable. If only two-thirds of women in each generation have children, then each mother would need to have three children on average to maintain the population. This is not a small difference, as illustrated by the calculation (2/3)^2 = 4/9. If the average is two, society more than halves every two generations.

Many will likely agree with the diagnosis: we need bigger families! In 2016, the OECD analysed survey data on intended and realised family size, concluding that “in all countries the number of children women intend to have is far above the actual number they already have, which points to barriers in family formation across the OECD.” Gallup polls in the US add to those insights by considering the number of children that Americans find ideal in other American families: 2.7—closer to three than two. The fact is, families on average do not attain their ideal family size. This suggests that the solution lies not in changing preferences but in creating societal institutions that support family aspirations. I have many proposals that I can share: income tax breaks for mothers (but not fathers) re-entering the labour market to close the 10 ppt employment gap between mothers and childless women; lower marginal tax rates for child workers to incentivise missing labour supply; greatly enhanced post-natal care in hospitals, multi-generational housing, and indeed the “IKEA-fication” of all adult institutions. But that is for the future. The more pressing issue is cultural. Many think that amidst cultural change any policy response is futile. So let me end this discussion as it began: with an anecdote.

Five years ago, a mother brought her ten-year-old son to my wife’s college, leaving him waiting on a sofa in the lobby while she attended class. Security personnel approached the boy, disrupting classes as they searched for his mother. This caused significant disturbance and ultimately led to a ban on non-students from the premises. What if, instead, the security personnel had simply kept a watchful eye on the boy while allowing him to stay? There was and still is plenty of space in the lobby for a dedicated play area. Security personnel could have invited him to join them while doing their rounds or brought him to the office of an available staff member. There are many simple solutions to the problem of a waiting child that would have seemed perfectly reasonable in the past. However, to implement these, we first need to change our societal norms and invite the children back in.