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Hub Dialogue: Lyman Stone on why people are having fewer kids than they want

Podcast & Video

In this Hub Dialogue, The Hub’s editor-at-large Sean Speer speaks to demographic scholar Lyman Stone about fertility rates around the world.

This conversation has been revised and edited for length and clarity.

Sean Speer

We are honoured to be joined for a new Hub Dialogue by Lyman Stone, an adjunct fellow at the American Enterprise Institute, research fellow at the Institute for Family Studies, and a newly-appointed senior fellow at Cardus.

Stone, who has recently moved to Canada to study as a PhD student at McGill University, is a leading expert on migration, population dynamics, and regional economics.

I’m thrilled to be able to speak to him about fertility rates around the world, why they matter, and what public policy can do to help families achieve their idealized family sizes.

Thank you for joining me, Lyman.

Lyman Stone

Thanks for having me.

Sean Speer

One of your major areas of study is the difference between idealized family sizes and actual family sizes in countries around the world. What does it mean for there to be a gap between idealized versus actual family sizes, and why is that gap something that policymakers and the broader society ought to be concerned with?

Lyman Stone

That’s a great question. I think the idea of an ideal fertility is kind of weird to a lot of people. They often say, “Well, it’s not my ideal. What makes you think that you know the ideal fertility rate?”

It’s important that we clarify then what we mean by ideal fertility rate, or what I often call, desired fertility rate. It’s based on social surveys of various kinds in which we asked thousands of people, “How many kids do you want to have? Or how many kids do you think would be ideal for you to have?” Then they tell us a number.

Occasionally, respondents may give an answer that isn’t a number, which could range from “there’s no true ideal number,” or “as many as God wants me to have,” or “I’m not going to tell you.” But most people will just say a number, and then we’re able to build average sizes from there.

When I say we talk about ideal fertility, therefore, we’re not talking about something prescriptive, philosophical or abstract. We’re basically talking about something approximating a democratic average like if we were to hold a vote on how many kids that families would ideally like to have.

What we see is that in most societies, this ranges from two to four; there are a few countries where it’s about four and there are a few countries where it’s below two. But overwhelmingly, throughout the vast majority of human populations — even populations that are very poor, traditional, or religious — the ideal fertility rate usually ranges from two to four.

You do see lower idealized rates in richer countries, more secular countries, and more gender egalitarian countries, but they’re not usually far below the norm. Even in these countries, the ideal fertility rate that people have tends to still be two or three kids. It’s a pretty strong social norm that persists across a wide range of variables

This is important because, when you have a society like Canada or the United States where right now the current birth rates are usually around 1.5 to 1.7 children per mother, on average, it tells us is that, on average, people are having fewer kids than they want.

Now that average is dicey because it doesn’t capture outliers. Some people are still having more children than they want due to unintended childbearing: they may want to stop at two kids but have a contraceptive failure (or some other explanation) and end up with a third. But it indicates that, in overall terms, there’s a baby shortfall relative to what people say they want.

One way to think of it is that in societies like Canada or the U.S. we find that, on average, there are more women having fewer kids than they want than there are women having more kids than they want, which means there’s a lot of pent-up demand for kids.

The question, of course, then, is why do these people not have these kids if they want them? It’s not like it’s that hard. The 90 to 98 per cent of people who are biologically fertile should be able to have more kids if they want them. Why aren’t they?

You get a lot of answers to this but I broadly categorize them in two areas. The first is alternative preferences. This refers to instances when somebody says, ” I want two kids, but I want to go on nice vacations even more.” What they’re essentially saying is “all things being equal, I’d like to have two kids” but all things aren’t equal and they ultimately value other things more.

To the extent that these alternative preferences are the explanation for lower fertility rates it isn’t really a big concern. If that what’s driving fertility below what women say they want, that’s not a big problem because it’s not that they really don’t want to have more kids, but rather that they kind of want to but they really, really want the vacation, a new iPhone or this other thing. So, if that’s what’s going on, that’s maybe not a huge social problem.

Spoiler, that’s not what’s going on. We actually have surveys of this too, where we asked people to rank things like the importance of family, leisure time, work, or all these different things. It turns out that, while there are competing preferences that do matter, those competing preferences usually result in lower-stated preferences in the first place. Women who say, “One of the most important things in my life is taking care of animals,” tend to have fewer children. But they also tend to desire fewer children. It’s not that the desire to take care of animals competes with the desire to have children.

It turns out that the competing preferences are actually a pretty bad statistical explanation. For women who have ideal rate of two, 2.5, or three kids, but they’re only having one or two kids, competing preferences don’t explain that gap very well.

Which brings me to the second set of explanations for the idealized versus actual gap. The main things that explain that gap is broadly defined as unpartnered status. Women who want to get married but are not; women who say that their partner is unsupportive or is not going to help raise a child; or women who say that they met their partner too late in life. That’s the number one reason.

Another big reason is stage of life issues. Women who say, “I want three kids, but I’m still in school,” or “I want three kids, but I live too far from my family, and I want to live closer so that they can enjoy this stage of life with me.”

Another big one is cost issues. Women who say, “I want two or three kids but housing is too expensive.” Those answers in particular tend to be more common among poor women. Richer women are, of course, much less likely to cite financial costs. The final thing is, of course, biological infertility. That is a reason that people don’t have kids.

But the point is, these are all problems. Nobody looks at this combination of high housing costs, excessive educational costs, and people being single longer than they want to be, and says, “that’s good.” Nobody looks at a job requiring two extra degrees and says, “this is a great thing.” Nobody looks at how long it takes for young adults to get a stable job and says, “this is the ideal society that we want to live.” Policymakers should care about this gap, because it overwhelmingly comes from bad things happening in our economy and society.

Sean Speer

I’ve heard you say before that this gap between idealized and actual fertility rates isn’t present in all of the countries you study. In other words, there are some places for which these different sources of the problem aren’t actually creating a gap in terms of fertility rates.

But there are other countries like Canada and the U.S., where there indeed seems to be a persistent gap between idealized and actual fertility rates, and as such there’s an entry point for public policy to try to address those issues that are conducive to policy solutions.

Can you to talk a bit about this idea that there are some jurisdictions where you don’t see a gap in idealized and actual fertility rates, and others, including in North America, where you do, and the role for public policy in these latter jurisdictions to address the root of these problems?

Lyman Stone

There are countries where women have more kids than they want to have. Those tend to be pretty poor countries, where maybe women don’t have access to contraception. There are women from rich countries where they have fewer kids than they want to have; that’s actually the case for pretty much all developed countries or industrialized countries. And then there are countries where women have about the number of kids they want to have, and those countries tend to be ones that are transitioning between underdeveloped to developed.

There are not a lot of industrialized countries happily churning along at the desired family size. However, the size of the gap does vary. In the first decade of this century, the gap in the U.S. was small, and it has since grown dramatically over the last 10 to 15 years. In Canada, fertility has been pretty low for quite a long time, so the gap has been pretty large for quite a long time. Then you get other countries like France, where the gap is a little bit smaller, and Italy, where the gap is much bigger.

One of the problems in studying this is that we don’t have a good comprehensive public database of fertility preferences that covers lots of countries. I’m in the process of building one, but it is laborious. Tracking this can be challenging because the data came from surveys, and not every survey asked the same question to the same sample population.

But in general, it does appear that when countries provide more explicit financial support for childbearing and for child rearing—with child allowances, baby bonuses, maternity leave, and childcare, fertility tends to rise, and desired fertility does not rise as much. Sometimes desired fertility might rise in response to a policy change, sometimes it might fall. On average, it does not rise as much, which means policies that support family formation begin to reduce the gap between desired and actual fertility rates.

Sean Speer

Given that you aren’t just a demographer, but you’re also a family policy scholar, you are uniquely positioned to make judgments about which sets of policies seemed to have the most bang for the buck in terms of closing the gap between desired and actual fertility.

You mentioned various family-oriented benefits in your last response, but in your first answer, you talked about a wider set of issues, including housing affordability, student debt, and other factors which may push back family formation and, in turn, increase the gap between desired and actual family size.

So, in a world of scarce resources, if you had a government or a set of policymakers focused on narrowing the gap between desired and actual, where would you encourage them to prioritize resources?

Lyman Stone

Your questions is what can do to raise fertility and to some extent, the answer is anything. Because everything touches on fertility. In general, anything you do that ease household budgets on a fixed-time budget—that is, you’re not changing or creating new time demands for them, then it’s probably going to be good. If you explicitly subsidize fertility, that’s probably even better.

However, as you point out, there are budgetary constraints. You can’t have the world’s most generous childcare program, paid leave, child allowance, and housing initiatives. You do have to make choices including within the arena of classical family policy, particularly in a society like Canada or the U.S., where we have a great amount of diversity of family norms and life values. We have a lot of diversity, and we’re pluralist societies that are quite committed to letting people make their own way.

In a diverse, pluralist society, giving people cash is best. You’re giving them the choice; the government is not making a choice for them. The research says this is probably slightly more effective in boosting births.

So, within the realm of classical family policy, my preference is child allowances and bonuses. I think they make more sense. They respect freedom of choice and they’re the least likely to be distortionary of what people’s natural choices and preferences are.

You can’t buy your way to desire; it just costs too much. The empirical data estimates that based on the current effectiveness of these policies, it would take countries like Canada or the U.S. about a third of the entire government budget to be spent on top of current spending to buy their way to desired fertility. That’s not happening. What else can you do? That’s where you look into other ideas.

Now, one of the biggest issues is tied to stage of life. It takes a long time to reach adulthood now, because jobs require so much education, and that education takes a certain amount of time.

You have to ask, do certain jobs really require that much education? Could we try to do decertify jobs that 10 or 20 years ago didn’t require a degree and now they do, even though the job itself didn’t change? Occupational licensure is a big issue here; occupations where you’re basically going to learn this through an apprenticeship one way or another, but we create licensures instead of just letting people work. The length of education is one challenge.

Another factor is that people work longer into retirement; they don’t retire as early, which reduces the rate of job turnover, which means it’s harder for young people to get a shot. Raising the retirement age may have merit for fiscal reasons but it is not a solution to the demographic problem here. It’s a solution on one side of the demographic equation, but it makes things worse for the other side.

Another area is marriage: why is marriage so postponed? Well, there’s a million reasons including cultural and economic. But sometimes, it’s economic. Take marriage penalties for instance. Once you’re in a household where both people’s incomes are counted, sometimes you’re losing benefits. We penalize marriage in many countries, particularly for working class and lower-income people.

A big issue in Canada in particular, is housing. It’s expensive, and it’s not getting cheaper. There was a great study out of the UK during the global financial crisis that found that when the central bank arbitrarily slashed mortgage payments for a semi-random group of households, those families suddenly had a bunch of babies. Why? Because housing costs are the number one cost of having another person.

Then there is a series of issues that one might describe as “family friendly” or “family unfriendly.” There was a study in the U.S. looking at car seat regulations, for instance, that found that stricter regulations at the state level led to fewer babies. I live in Québec, and I love how many parks there are everywhere; practically every street has a park on it. I don’t know if that’s true everywhere in Canada, but it’s not true everywhere in the U.S.

Thinking about what actually makes a society family-friendly could be a useful means of helping to create the conditions for higher fertility. We put a parking spot for disabled people but not for pregnant people. The line at the women’s bathroom is longer even if you’re pregnant. Now, some of these conditions are not going to be fixed with policy. But thinking about these things, and thinking across our whole society, there’s a lot of little things we do that just add up to a lot of work.

We just create societies that make parenting way too hard and that don’t recognize parenting as socially valuable labour. They don’t compensate it as such. When you have a society that requires every single person to carry their own weight, what you’re saying is you’re a society that doesn’t want any children. You’ve got to have some kind of burden-sharing, because otherwise people who have children are on the short end of the stick.

Sean Speer

Reihan Salam from the Manhattan Institute wrote an essay several years ago which made the slightly facetious argument that childless people ought to pay higher tax rates. I think what you’re saying is that at minimum we ought to do the opposite: we should be recognizing the positive externalities of children through financial benefits and some of these broader policy actions.

Lyman Stone

Frankly, punitive taxation might be more efficient. However, I think it’s a political nightmare. Also, I don’t like to bully people into having kids. I don’t think that’s reasonable or ethical, and it’s probably not good for those kids either. But positively rewarding a set of behaviours is good.

The other thing I’ve suggested is that number one contribution you make to public pension programs is not your income, but rather it’s how many children you have. And yet in most countries, the more income you earn, the better public pension you get. What we should do is we should instead calculate public pensions based on some base rate, and it should be much lower than the current rate, and then the remainder of it should be calculated based on the number of your descendants.

Sean Speer

Let me just ask you one final question. You’ve made an argument about demography and climate change elsewhere that may be somewhat counterintuitive for our readers. In particular, you’ve argued that if we want to solve climate change, we should want more people, not less.

Can you please explain your thinking behind that claim? And why ultimately you think more people rather than fewer people is the best means of combating climate change?

Lyman Stone

Yes, one of the worst countries in the world in terms of climate change according to their emissions intensity in recent years, and their adoption of worse forms of energy is Japan. Because when they turned off all their nuclear power plants after the Fukushima meltdown, they started importing a ton of coal.

So, when they turn off nuclear power plants, why didn’t they just build a ton of green energy sources? Well, simple: there’s no economic growth to pay for. If you make that investment, it’s not really going to pay off in a great way, because this isn’t a growing society. Same thing in West Virginia. The state is not growing, so you’re not going to replace that coal plant. You’re going to extend its lifespan for 10 more years. The outcome is that slow or declining populations are a bad foundation for capital investments in emissions-reducing technologies.

You can think about this in a setting like Tanzania: a low income, high fertility country. What happens if you encourage a family a couple to not have a child? What happens? Are there fewer carbon emissions now? No, because emissions are closely linked to income levels and in Tanzania, when a couple has a child, the mother probably stops working. If they don’t have a child, she probably continues working, which means they have more income. What do they do with that income? They spend it on stuff that emit carbon emissions. So, in the short run, reducing fertility can actually increase emissions if people substitute away from low intensity emissions activities, like hiring a nanny, or buying diapers. Avoiding childbirth is likely to lead to more consumption right now.

Then how do we think about greener technology in the future? How do we make sure that future technologies are as green as possible?

Well, faster market growth increases the pace of technology change, because it makes it easier to amortize the cost of new investment. Faster growing economies have faster energy turnover, they’re more likely to leapfrog intermediate energy sources. The other thing is you have to ask, do we have all of the technologies right now that we’re ever going to want? And the answer is no, we don’t. If we all adopted the most carbon deficient technologies right now, we would almost be efficient enough to prevent climate change; almost, not quite. Which means we actually have to invent new stuff. Who’s going to do that? People.

Now you might think we invent the most things when we invest the most per capita in education. False, we don’t. In fact, technological progress is closely related to market growth and market size based on demand. And that, of course, gets back to population. To a first approximation, countries that have more people do more innovation; planets that have more people do more innovation. When we have more people, we are more likely to have Einsteins. And it only takes one Einstein to make a huge difference to the entire world. You want to roll that dice as many times as possible, particularly in countries where you do have enough resources to educate those kids, like rich countries. Now, in rich countries, you do have higher carbon emissions, so that is a problem. But in rich countries, you can also solve that by better technological substitution. In poor countries, you have higher fertility, but you also have lower carbon emissions per person, and I don’t think it’s ethical to try and restrain the economic growth of very poor countries because that’s just saying, “you got rich late, you have to stay poor.” I’m not really okay with that.

Sean Speer

Thank you so much for your insights about fertility rates, and the various ways in which public policy interacts with fertility including, but not limited to, family benefits, housing, work, education, and, as we’ve just discussed, climate change. We’re thrilled to have had the chance to discuss these issues in today’s Hub Dialogue.

Lyman Stone

Thank you so much. My pleasure to talk to you.