A propos recent discussions on the utility of existence, Robin Hanson has some ideas about how non-existent creatures could be forced to compensate for the costs of bringing them into existence. He suggests slavery, debt, owning stock in the creature, contracts, producing creatures that have gratitude towards creators, producing creatures with shared goals as creators, and if creators have a preference for reproduction, then producing creatures like themselves which can reproduce may be incentive enough.
Gary Becker and Kevin Murphy have an old paper called “The Family and the State” where they discuss, among other things, how children can compensate their parents, which provides another means to add to Robin’s list. Their idea is that if parents are altruistic and would leave bequests to their children, then they can in effect force children to compensate them by decreasing bequests. They argue that this means that families that leave bequests do have the pareto efficient number of children.
The argument goes like this: imagine if potential children could compensate their parents for having them. In this world the number of children would be pareto efficient, since any child not born must not be willing or able to compensate parents more than the cost of having them. But parents with non-zero bequests can in effect compensate themselves for having more children by consuming their wealth instead of bequeathing it. This means that even if potential children could compensate parents for having them, then parents with bequests would be made worse off by such compensation because they can already set their optimal level of compensation by reducing bequests. Thus those with bequests do not need compensation from the unborn to produce the optimal amount of children. All of this, of course, requires that parents know utility of existing versus non-existing, since that would clearly be a part of altruistic parents’ utility functions. As I’ve argued before, this is problematic.
The implication that Becker and Murphy draw from this is that parents who do not leave bequests have no mechanism to compensate themselves for having more children, and thus they are under-producing children. They therefore conclude that poor people have too few children, and rich people have just the right amount. Go ahead, read that last sentence again.
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Friday ~ September 3rd, 2010 at 9:51 am
Robin Hanson
What if parents choose their number of kids based on how the kid status will influence their own status? Having more poorer kids could reduce parent status. Would this analysis still predict rich people have all the kids who can pay for their existence?
Friday ~ September 3rd, 2010 at 4:44 pm
Adam Ozimek
Good question. My guess is you’d put kid’s impact on parents status as another cost/benefit of the kids existence to the parents, and it just goes into the parent’s utility function. This raises the costs of having more poorer kids, but on the margin the rest of the analysis should hold up the same, right?
Friday ~ September 3rd, 2010 at 7:03 pm
Rebecca Burlingame
There is a very basic problem with the whole idea of whether parents leave something of value to their kids. Where I grew up, most people in Texas assumed that capitalism would provide, for at the time (in the fifties) it was providing quite well. However in some of the more rural areas of the country, parents knew that capitalism was not to be depended upon (i.e. unemployment and only so many jobs in a small town) therefore they planned to leave property, assets, life insurance and other things to their children. Oddly enough, some of those prescient rural folk had the better survival strategy for the present times. What does any of this mean? If capitalism and family can’t always provide, looks like people have to be able to provide based on their own abilities, and better economic structures are needed to make that happen.