The Economic Boost of Childbearing

• Post by: Bryce J. Christensen
• June 12, 2011

When American parents take on the burden of bearing and rearing a child, they deliver a huge dividend to society. So concludes a team of economists from Berkeley and Syracuse universities intent on assessing “the net fiscal externality to being a parent.” Through careful economic accounting, the researchers assess, on the one hand, the costs a couple incurs as a consequence of becoming parents and the costs society at large incurs through their parenthood and, on the other hand, the economic benefits realized by the couple and by society because of their parenthood. These complex calculations yield the researchers’ “central finding”—namely, that each child parents raise constitutes a net benefit to society amounting to $217,000 in 2009 dollars. In the rather opaque language of economics, “the net fiscal externality of becoming a parent is [thus] positive and substantial.” Elaborating on this finding, in the same almost impenetrable jargon, the researchers assert: “Becoming a parent is tantamount to providing society with a non-depreciating capital asset that generates an annual flow of revenues, in perpetuity, such that the present value of the asset (at an interest rate of 3 percent) is $217,000.” Clearly, there are “substantial public benefits to childbearing.” The Berkeley and Syracuse scholars recognize that analysis “could contribute to policy debates.” In particular, they note that their analysis may compel rethinking of how “public-sector transfer programs” can so divert the financial benefits of having children from parents themselves to society at large that it “distorts the incentives guiding individual fertility choices, perhaps leading to a suboptimal level of childbearing.” Clarifying what they mean by “suboptimal” childbearing, the researchers note, “Although overall fertility has remained fairly constant in the U.S. since the early 1980s, the prevalence of biological childlessness among women who have re