Thursday, June 4, 2015

Virtual Kids are Better

A recent article from the Pew Research Center, based on data from a 2013 Gallup poll, discussed how half of Americans still say that two children is the ideal number for a family, a percentage that has held fairly steady over the last 40 years. What seemed particularly surprising, however, is the low percentage of Americans that view one or no children as the ideal (3% and 2%, respectively). Given the apparent prevalence of one- and no-child families, it would appear that Americans' actual fertility varies substantially from their stated preferences.

In fact, this is true and not at all unique to the United States. According to this MarketWatch article about the same data, European women average 0.4 fewer children than their ideal (1.9 versus 2.3), similar to the American shortfall of 0.3 children per woman (2.1 versus 2.4). But why the gap between desired and actual fertility? Is this an issue of infertility, where many women who want children can't have them, or are people choosing not to pursue their stated ideal?

This question can be answered by digging deeper into the data and comparing the ideal and actual percentages of women for each total number of children.

The ideal number data comes from the 2013 Gallup poll and the actual number data comes from the June 2012 Current Population Survey of the U.S. Census Bureau. For actual fertility the data for the 45 - 50 year age cohort is used to estimate completed fertility, though the percentages are almost identical for the 35 - 39 year and 40 - 44 year cohorts. It's worth noting that the one- and no-children percentages are almost identical and well above the stated ideal. If the gap between preferred and actual fertility were due to infertility problems, the data might be expected to favor none over one relative to the ideal, but this is not observed. Instead, the gap between actual and ideal is the same for one and none, suggesting that choice, not infertility, is the major driver.

So why are American women choosing to have fewer children than their ideal preference? Gallup reports that 2/3 of Americans attribute the gap to the cost of raising children. Modest support for this explanation, aside from public opinion, is seen in the variation of the ideal with age.

Younger Americans, who have yet to grapple with the challenge of raising children, are more likely to favor 3 or 4 children as the ideal compared with older Americans, whose fertility is completed. Whether the reason is financial or something else, in matters of fertility, older does indeed seem to be wiser. This would seem to imply that fertility patterns are impacted by external incentives, particularly financial ones. It is worth noting, however, that even older Americans hold as an ideal a level of fertility well above what Americans actually do. Consequently, a rational response to incentives is unlikely to explain all of the gap between actual and ideal fertility. For reasons that are still not clear, Americans like the idea of children more than they like their reality.