A few weeks ago, I found myself in a discussion with a friend and colleague of mine regarding birth control. This discussion began as one about anti-poverty policy alternatives. My colleague suggested an inverse child tax credit, but before we knew it, we were discussing birth control or whether or not it should be subsidized by the government (As a point of reference, this blog entry will not be discussing the infamous Obamacare birth control mandate because mandates and subsidies are conceptually two separate policies). For as long as I can remember, my attitude towards subsidies has been "I've never met a subsidy that I actually liked." Look at unemployment benefits, food stamps, or student loans. These examples of subsidies are all failures that have done nothing to solve the problem, and in certain cases, even have exacerbated the problem. Throughout all my academic studies and research, I have never come across a subsidy that actually works, perhaps until now. What is it about a birth control subsidy that would cause such a reassessment?
Raising a child costs a considerable amount of money. Not to be too tautological, but poor people aren't exactly rolling in the dough. Childcare puts economic strain on poor people due to lack of resources. This is particularly true for those who have unplanned pregnancies. The Census published a report last year showing the connection between out-of-wedlock births and poverty. A Pew Research report (2010) on motherhood demographics shows that nearly half of mothers have a high school degree or less educational attainment, which is disproportionately high when considering educational attainment in this country. Even more recently, a study from Harvard University showed that the single largest factor of economic immobility is single-parent households. Childrearing can be financially strenuous enough for a two-parent household, which makes it a fortiori difficult both for single-parent households, particularly if those mothers have unplanned pregnancies or give birth out of wedlock.
For some, it might be peculiar to think of children as a negative externality, or at the very least, wanting to put a limit on the number of children that are propagated. After all, children are supposed to be a human capital investment in our future. That sounds like a positive externality to me. However, there can be too much of a good thing, and considering the resources that childrearing consumes, children are not an exception to the rule. Even when looking at the economic theory behind positive externalities, it's not as if any positive externality has infinite value. If they did, that would certainly make for some messed up policies! The socially desirable output [of children] has a quantifiable limit, and a lot of that has to do with the fact that we have scarce and limited resources. Women from disadvantaged backgrounds have great difficulty adequately managing their fertility (Salas, 2013), and when that is combined with how we should approach and prioritize positive externalities, that brings the debate on birth control into a different light.
Economic mismanagement notwithstanding, there is a societal aspect to this discussion. In spite of the fact that "sex is everywhere on television," abortion is legal, and pornography is considered free speech by the Supreme Court, a sizable amount of Americans are still puritanical when it comes to sex, whether it comes in the form of condemning prostitution, teenagers having sex, or sex education that isn't abstinence-only. There is a societal stigma against birth control (Sauer et al, 2013), particularly in more religious communities, that causes a decrease in the demand of birth control, as does a lack of sex education. There is also the issue of the high costs of contraception. Whatever is causing the low demand, this a textbook case in which current demand is lower than the marginal social benefit.
Birth control comes with its advantages. According to the Contraceptive Choice Project, an extensive study performed by the Washington University School of Medicine, contraception leads to a drop both in unwanted pregnancies and abortions. There are also the health benefits of birth control beyond pregnancy prevention. In a longer-term sense, there is increased educational attainment, increased family savings, and stronger national economies. It's nice to list the cost and benefits, but it's even nicer to have a cost-benefit analysis, which the Brookings Institution recently performed. If the government were to enact a $235M program through Medicaid, it would produce a benefit-cost ratio of 5.6 (Thomas, 2012, p. 6), which is high rate of return for any government program.
Even if the benefits greatly exceed the costs, that does not seem like a prima facie libertarian justification to allow for this subsidy. It would be nice is there were not a stigma towards contraceptives, but it exists. For anarcho-capitalists, it would be great to live in a world without government intervention, but that pipe dream is strictly reserved for economic textbooks. Rather than have an all-or-nothing approach, we should ask ourselves which scenario would translate into less overall government.
The Brookings Institution report brought up a good point, which Thomas explained while outlining what he couldn't measure in his study: "The prevention of unintended pregnancy would probably also reduce government expenditures on the criminal justice system, on means-tested benefits for older children and adults, and on a a range of other spending programs not incorporated into this analysis. Had sufficient data been available to allow for a more complete accounting of the taxpayer savings that would be generated bt these policies, my estimates of the monetized benefits of these policies would be even larger (ibid)." Considering the cost of public schooling, Thomas should have also added government expenditures on public education into his list. Even so, let me put his thoughts into simpler terms: when looking at the grand scheme of things, a birth control subsidy would mean smaller government, which means that doing nothing would paradoxically mean more Big Government.
There are the issues of whether a birth control subsidy would further moral hazard (e.g., if contraception leads to higher incidence rates of sexual activity, which leads to more STDs) or if it would adversely contribute to fertility being below the replacement rate, although the latter does not seem to be a contributing factor to Europe's declining fertility rate. We should still continue the discussion of how to decrease poverty, address societal stigmas towards sex and birth control, as well as encourage individuals who want to have children to get married before giving birth because these are related policy issues that, if mitigated, would diminish the need for a birth control subsidy.
In summation, even if it means a slight, relatively non-intrusive form of government intervention, I would rather take that over a sizable increase of government spending any day of the week.
Here's to a future where government does little things to prevent needing to do big things.
ReplyDeleteI'd hope that the contraception would not reduce overall births, but instead allow for better timing. That would retain many of the benefits, such as allowing parents to plan and attain educational and career goals. However, this would mean that the savings on public education would be minimal, since despite greater ability to afford private education, we cannot assume that the parents would avoid public schools.
I'm not much worried about the fertility rate falling below replacement. We've been below it for a while*. I'd much rather we continue our habit of relying on immigration, since so far it has worked extremely well and seems to be a net positive, giving us cheap labor and reducing worldwide poverty (remittances make charities look stingy).
*http://data.worldbank.org/indicator/SP.DYN.TFRT.IN