Acton Institute Powerblog

The surprising, economic reason 157,000 British children were never born

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Students of the free market say that economics is merely human action. Economists also understand that policies have unintended consequences – such as reducing the number of children born in a nation. The Adam Smith Institute, based in London, has released a new report describing one such consequence due, in part, to central planning and overregulation.

The British housing crisis has inadvertently discouraged women from having 157,000 children, its report finds. Young couples in the UK increasingly struggle to afford a home of their own. The average price of a home in London has increased from £55,000 in 1986 to £492,000 today (approximately $71,800 to $642,250 U.S.). While that is due in part to urbanization, the ASI notes that some government policies artificially reduce the supply even as demand rises.

The new ASI study found that rising housing prices increased fertility for homeowners but decreased birthrates among those who rent. While the former is more confident in its economic future, the latter is struggling to save up for a home. Higher prices require higher deposits. In the meantime, the housing that couples can afford may not be large enough to accommodate all the children they wish to have.

ASI’s analysis found that “a 10% rise in house prices resulted in 4.9% decrease in births amongst renters and a 2.8% increase in births amongst home owners over the whole 18-year time period [1996 to 2014]. The net effect is a 1.3% decrease in births over the entire period, equating to approximately 157,000 missing children.”

Unfortunately, “in the ten years between 2004 and 2014 homeownership fell from 60% to 35% among 25-34 year olds – the key childbearing demographic,” the report, written by Andrew Sabisky, notes.

While careful to stipulate that child-bearing decisions are not exclusively, or even primarily, economic, they state that family size is driven in part by financial considerations. “When weighing the decision as to whether or not to have another [child], parents who simply cannot afford to do so will often not, no matter how much they might want another baby for other reasons.”

As newborns become more scarce, the average age creeps upward, and the number of Brits aged 85 and older will more than double in the next 18 years.

While a highly regulated-and-subsidized housing market discourages some Brits from having children, that population drop will further undermine the British economy. Any decrease in population levels exerts significant economic pressures on a nation with an old-age pension system like the UK (or the U.S.):

Lower mortality and fertility rates imply a rise in the dependency ratio (the ratio of non-workers to workers). The consequences for public finances are obvious. 55% of welfare spending currently goes to pensioners (as of 2014/15). In an ageing population this number is likely to rise even further. As of 2014 there were 3.2 working-age people for every pensioner; by 2037 this number is projected to fall to 2.7 (House of Commons Library, 2015). The rise in the numbers of very old people – as discussed above – presents an additional burden. The average 85 year old is estimated to cost the NHS three times as much as the average 65-74 year old (House of Commons Library, 2015).

The housing trend illustrated by ASI exacerbates an already contracting population. The UK’s total fertility rate (TFR) has not met the replacement level since 1972. Sadly, as ASI notes, “by European standards, the UK’s TFR (1.82) is quite impressive.” The British birthrate exceeds that of Germany (1.5), Italy (1.35), or Spain (1.33). Slightly more fertile European nations still fall short of replacement levels; the closest is France at 1.96. These rates track rather closely with the Heritage Foundation’s Index of Economic Freedom and the Fraser Institute’s Economic Freedom map.

This is a salient fact: Market economies produce enough goods for young people who are so inclined to support more children. The world is incalculably richer for their fecundity. “Every human creature who is born on earth is the ‘sign’ par excellence of the Creator and Father who is in Heaven,” said Pope Benedict XVI in 2010.

Those economies that reject the market have the opposite effect. After Bolivarian populist socialism plunged Venezuela into the depths of recession, many of the nation’s women had themselves voluntarily sterilized. Similarly, a 2014 Princeton study found that 426,850 Americans will never be born because women chose not to have children after experiencing the Great Recession and the statist policies that slowed the recovery. Finally, according to the Guttmacher Institute, nearly three-quarters of women who seek an abortion say they “can’t afford a baby right now.” Economic opportunity has profound human consequences.

“Our governments must learn to construct policies that do not accidentally have the side effect of making it harder to have children,” ASI states. Government limits on the design and height of housing complexes have capped the number of apartments available. Allowing development on 3.7 percent of London’s Green Belt would create a million new homes, ASI estimated in a previous study. Loosening other regulatory restrictions and reducing or abolishing taxes would also bring down housing costs. You can read ASI’s new report here. A previous summary of ASI’s housing policy proposals may be found here.

Any parent can attest that no amount of economic security will make someone feel adequately prepared to care for a child. And one ought not view human beings as economic goods; human dignity is incomparably higher than private budgetary issues.

However, history and human nature make clear to us that economic concerns will intrude upon even the most intimate questions of life and death. Therefore, those who affirm the intrinsic value of human life should be concerned to promote a market environment that provides hope, growth, and opportunity for all its citizens – and their posterity.

(Photo credit: Keith Williamson. This photo has been cropped. CC BY 2.0.)

Rev. Ben Johnson Rev. Ben Johnson is Senior Editor at the Acton Institute.

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