Two Surefire Solutions to Inequality

Here is a surefire solution to inequality–Increase fertility among the rich. If the rich had more children, capital would grow more slowly across the generations and perhaps not at all.  If r=4 and g=2 then capital doubles as a share of the economy in 35 years (using the rule of 70). That figure is actually too low as it assumes that the wealthy save all of their capital income but let’s stick with 35 years and call that a generation. Wealth per rich person, however, only doubles if every wealthy family has just 2 children. If every wealthy family has 4 children, wealth per person doesn’t increase and so inequality does not increase even when r>g. If the wealthy consume about 20% of their capital income (still a very high savings rate) and have just 3 children then again we have approximate balance and no increase in inequality over the generations. With a more reasonable figure on r-g or with more children, wealth per person actually declines.

Thus, Piketty’s “patrimonial capital” contains its own internal contradiction. The more patrimony the less capital.

ROMNEY-CARD-1So how can we increase fertility among the rich? Mormon fertility is higher than average so capital inequality could decline if more rich people will be or become Mormons. Had we elected a President Romney (5 children and some 22 grandchildren! Or is it 23? Romney has lost count), perhaps that would have encouraged greater fertility among the rich.

It’s an evolutionary puzzle why the rich don’t have more children as the costs to them are low and at very high levels of wealth there is no quantity-quality tradeoff. Perhaps this is a temporary response to the shock of birth control. If so, the effect of the shock is likely to fade over time as evolution works its logic.

In Selfish Reasons to Have More Kids Bryan Caplan notes that we overestimate the effect of parental investment on children and we underestimate the pleasures of grandchildren, in both cases choosing too few children. The rich should read Bryan’s book.

In these calculations I have assumed that primogeniture won’t make a comeback, that seems solid. Assortative mating, however, will slow wealth dispersion. I have also assumed that savings and fertility are independent which is unlikely to be the case. Becker and Barro (1988) suggest that more children will increase savings but less than proportionally so the logic continues to hold. Note also that this works both ways, wealthy people with fewer children will save less. Bill Gates has three children but has already given away a substantial fraction of his fortune and he has pledged to give away much more. Even parental altruism has its limits and Bill Gates has decided that on the margin he would rather give money to poor children in Africa than to his own children. Bill Gates’s shadow will not eat our future.

So what is the second surefire method to reduce capital inequality? Reduce fertility among the rich! If the rich as a class have fewer than 2 children then it follows inexorably that their time is numbered, albeit without first creating a small number of very rich people.

The logic of r-g turns out to be highly dependent on savings behavior, fertility decisions and the nature of altruistic bequests.

Comments

It’s an evolutionary puzzle why the rich don’t have more children as the costs to them are low

The rich have fewer children for the same reason that kids with video games in their rooms don't do homework.

Try disaggregating the "them" and see if the puzzle starts to resolve itself...

the costs would seem to be higher when you factor in all the expenses like elite schooling. unless you in the .01%, you will feel it

the rich know that once they die their money doesn't matter anyway. better to live for pleasure than procreation

Rather than start my own thread based on that quote, I'll just comment on yours.

Some (possible) reason the rich have fewer kids (off the top of my head):

1. Lots of pregnancies happen by accident. Impulse control is disproportionately prevalent among the rich, relative to the poor. Ergo the rich have fewer accidents.

2. In general, people are less willing to want kids outside of marriage or marriage-like committed relationships. Rich people delay marriage due to education and career. Ergo even if the rich have babies at the same rate once married, they have less fertile time after marriage, so end up with fewer babies.

3. Assortative mating. Rich men marry intelligent, career-driven women. Intelligent, career-driven women, on the aggregate, prefer smaller families or no children at all.

4. Rich people have less need to validate themselves through family. They've scripted a narrative in which their lives are meaningful due to their own cleverness, education, productivity, success, wealth, etc. So, less need for children.

As part of #4 as much as it confounds reductionists who want life to be simple, nothing in modern biology says that humans are automatons whose preferences are universally dictated by a simplistic reification of the selfish gene metaphor.

+1 for using the word "confound"

Another reason is that girls who intend to go to college or obtain further education do not have kids. So, if girls see a future, or have the means to obtain further education, there will be fewer kids.

Maybe the rich don't have as many kids because children suck. Doing blow on your yacht and partying all night is much more fun than taking an interest in little Johnny. C'mon people.

I've neither done blow on a yacht nor had kids, but I'm going to confidently assert that one is better than the other!

C'mon people is right...

When a 26 year-old says he'll never want kids or he'll live in the city forever ("This generation is different!") you should treat it exactly as you treat a 6-year old telling you girls have cooties and he'll never be friends with one. It's cute, silly, and has no bearing on that person's future desires. It shouldn't be taken seriously. They don't know their future self, so they assume it will be just like their present self, when it predictably won't be.

I'll willing to bet that I will continue to not want and not have children. Would you care to give odds?

As a function of your age? If you're in your 20s, male, you strongly feel you don't want kids ever, and you're straight?

20% chance of this persisting through age 45.

This solution only works in time scales longer than one generation. I think most people are concerned about inequality now and here, in their and possibly their children's lives. Not inequality between people living 100 years in the future. If I were to be cynical, I'd say that many people only oppose inequality because they feel that reducing it would make them better off at the expense of "the one percenters".

It's mostly mood affiliation, people should just roll up their sleeves and get jobs in private equity rather than whine about inequality all day.

Defrauding the <110 IQ folks with rigged products and depositing OPM into your own account for fun and profit is tough work. You'll see.

Not sure I like your framing but of course it's hardwork but that's exactly what the middle class wants to avoid these days.

please don't feed the trolls.

I can't imagine a million person march through Delhi protesting the 1% in the west getting sympathetic coverage.

If you make more than $68,000 a year, you are part of the 1 percent... Oh wait, when you say 1 percent, you mean to say you only care about inequality within the U.S. but not across the world. Got it. I didn't really care about those billions of other people either, which is why I HATE free trade. Those poor countries need to learn to lift themselves up by their bootstraps and stop stealing our middle class jobs.

http://www.leastof.org/results

+100000
The REAL solution to inequailty is open borders - let people move to where they can be most productive. Thank you for bringing this up the entire inequality "debate" is totally misfocused.

Well, thankfully I'm not in your global 1%.

Though with essentially universal health care, a legal six weeks vacation, and a legal framework that guarantees worker rights where I live, that probably puts me into the 1% in the U.S., regardless of income level.

Plus, I get to ride my motorcycle as fast as I want on the autobahn.

A correlation no doubt.

I'd call it causation.

I like living like my time is more important than money. Yes, very unAmerican - love it or leave it wasn't exactly a hard choice, when looked at through that frame.

And working at a university provided the time to travel - it was one of the last institutions in America (or at least the Commonwealth of Virgina) that had no difficulty handling an employee taking six weeks off after a couple of years of work (more like the Australian model than the German one, obviously).

Free time is called free for a reason.

Why limit the debate to the present? What income would it take to be in the 1% of humanity all time? People on welfare are probably in the 1% for all of humanity, ever.

We limit the debate to the present because there's no way to tax the present to redistribute to the past.

There is, however, a way to tax the future to redistribute to the present. It's called deficit financing. Most countries seem to do it.

-dk

Primogeniture. Let only the eldest son inherit, and r > g again. It has worked for royal families for millennia.

Another remedy for great fortunes is divorce. The founder of the company where I long worked was on his fourth wife. He was romantic and didn't believe in prenups. Another divorce would leave him 1/16th.

Even if wealthy couples don't want to bare children on their own they could help reduce WORLD inequality (ie more serious inequality) by adopting children in large numbers from poor countries.

Don't they have nannies to bare the children?

Of course, accidents do happen when you have a bit of fun with the help on the side - but you mussn't claim them as your own of course - one must keep certain things hush-hush to keep up appearances.

Baring children is illegal in many states. Bearing them is not.

From what I can tell from the papers, I think the rich bare their nannies.

Ha. After enjoying being taken seriously on most days, today must have been the day you woke up and thought, "Today...I'm going to do something different."

Tyler likes to write trolling posts to see if he can get over 100 replies. Usually when Alex writes something this stupid I call him the weak link on the blog and he promptly deletes my post.

Ooops - too close to home, it seems.

Or maybe the mistake was linking to personal information? - http://mason.gmu.edu/~atabarro/

After all, there is at least one other website with the same name (with a .com domain) of an author here that also earns quick removal.

Ha, this is great. Except, I don't believe Mormons' wealth is primarily diluted by having lots of kids. They simply give a lot of it away, to those in their community and far beyond. They essentially operate a private welfare system that works pretty well. It seems to create a highly successful (in all sorts of ways, not just financially) population.

http://www.philanthropyroundtable.org/topic/excellence_in_philanthropy/a_welfare_system_that_works

Does it create a highly successful population? Or does it create a highly successful cadre within the larger Mormon population?

Take, for example, the Mormon enclave of Colorado City, Arizona, where about 30 percent of the households live below the poverty line and every resident receives about $8 in social transfers for every $1 paid in taxes. Basically, there is an elite within the community that is very successful and can dominate local politics and the local church by a combination of carrots (government subsidies and transfers and private charity payments) and sticks (the threat of excommunication and banishment).

Granted, Colorado City is Fundamentalist Mormons and not LDS, but LDS seems to run according to similar, but much less severe, structure. The people who run LDS also dominate local politics and the local business community and they comprise a very visible and successful elite.

Yes, and there are a few pockets of Hasidim who are desperately poor and receive tons of public assistance.

I don't have data to back this up, but I would suspect that the situation you're citing is an extreme outlier.

A few pockets?? Are you talking about 90% of them?

It's probably not that much of an outlier among Fundamentalist Mormons and certainly not among Hasidim. Israel, for instance, has a very notable problem with a religious community that doesn't serve in the army and is heavily subsidized to essentially do nothing but study scripture.

LDS Mormons appear to do much better, but their success is also a function of a system of fairly strict social control, that is, those who don't want to play by the rules are either excommunicated or self-select out of the community.

@Cliff and j r
What I am getting at is that there are subsets of any group that defy trends for the umbrella population.

But you're defining the trend according to the group's ability to weed out those who don't accord to the trend, so your categories are tautological. Yes, successful Mormons are successful. That doesn't mean that their methods are scalable to larger populations or replicable in different groups.

Never said their methods were scalable or that they weed out small groups of outliers. I am opposed to the idea religion is needed to do good things.

What you're asserting is that Mormon success is limited to a small cadre. I'm saying that success is the norm, median, whatever, for this group and that there are reasons for it.

What if the correct formula is that fewer children mean richer parents. Women in particular have much higher earnings if they delay children and concentrate on careers. Women with fewer children often throw more effort into education and or advancement.

It may be harder for males with high earning potential to find a female mate who does not prefer her career advancement over more children. Athletes may be an exception.

The super rich can endow each of their children with significant benefits. Don't underestimate the power of parental networks, the value of such connections may be the greatest endowment.

TC's comment is supported by an anecdotal story of a 1%-er who had several hundred million and five sons or so, and wanted his richness and name to "live forever", but after hiring an expert, the expert concluded that it was almost impossible that his wealth would be around forever, though his DNA had a good chance.

BTW I once wrote a program that, using Monte Carlo stats and Francis Galton statistics (see more here: http://en.wikipedia.org/wiki/Galton%E2%80%93Watson_process) estimated the chances of your DNA surviving. Much to my surprise, even having 10 kids does not give 99% survival (it's closer to 90% as I recall). Hence even having ten kids means once out of ten times your DNA will not survive forever, much less your wealth.

@ myself. Of course the most successful breeder in history was Genghis Khan, who probably had a 99.9% survival rate for his DNA given how many kids he had. Is it a coincidence that the Mongolians, in IQ by country, have "Singapore" style IQ's (105, see the Economist article from a few years ago, search 'IQ by country'), whereas other countries with similar impoverished economies have much lower IQs? (IQ varies by environment, the poorer the country the lower the IQ, pace Mongolia)? Maybe not, if Mr. Khan was a high IQ fellow?

His name was Temujin and IQ varies a lot between countries of the same level of wealth.

I've read some newer studies that suggest fairly close clustering of nations by IQ and Income levels. Not sure where you get your information.

In IQ and the Wealth of Nations the correlation of national IQ and GDP was estimated at 0.62

There's no evidence Mongolians have an IQ that high.

However even Americans with only upper middle class wealth could vastly increase the chance of their DNA surviving if they moved to a low income country like Thailand or the Philliphines and had lots of children there. Cost per child drops dramatically in US terms.

And did he mention he has a girlfriend less than half his age?

I think they term they prefer is "lady boys."

Inappropriate.

Dennis Rodman's father Philander Rodman Jr. lives in the Philippines, where he manages his ObamaBurger bar and has 26 children.

We know, SSSS, we know, you've told us this several times.

R u sayin' Mr. Rodman Jr. is a "Philander"? What's in a name, "S.S." --> Steve Sailer? Coincidence?

Definition of philander (vi)
have casual affairs with women: to flirt with and have casual sexual affairs with many women, especially when married to another woman

Forever? I think you may want to look into adding exogenous factors to your model -- like say the heat death of the universe.

God calls it a sunk cost.

"It’s an evolutionary puzzle why the rich don’t have more children as the costs to them are low and at very high levels of wealth there is no quantity-quality tradeoff." No, it's not a puzzle at all. Humans appear to have lived in pretty Malthusian conditions up until the industrial revolution at which point a change in the environment resulted in humans gradually reducing the number of children they have. It's pretty straight forward - no industrial revolution, no demographic transition. And I'll mention that the environment change stemming from the industrial revolution hasn't stopped yet. Roboprostitutes and artificial wombs await us.

Instead of forcing the rich to have more children, let's just setup abortion mills in the ghettos and begin sterilizing the unfit. That way, the relative number of poor and unfit children will decline!

No, but at least keep abortion legal for some part of a pregnancy. I also support Medicaid and health insurance paying for contraceptives.

The vast majority of the so-called Middle class should also stop breeding. We can't just blame the poorest for our problems.

I know this is sarcasm but in essence they already have. The entire West and much of the rising East has sub replacement fertility. Even the Catholic areas of Latin and South America are joining in. For example Brazil is on par with the West at 1.7 and Mexico is at or near replacement.

Of course all the pro-natal agit-prop of late is a product of this. Its hard to have a growth based economy with a shrinking population of affluent consumers.

Of course the solution, reversing 3rd world immigration into more affluent areas controlling trade and reversing wage arbitrage is so opposite the economic liberalism zeitgeist as to be unthinkable,

Has that worked for Japan?

I think we already do that. Planned Parenthood just hasn't been as effective as its founders had hoped.

If the rich having more children reduces inequality, so does the poor having fewer children. People may not voice the first idea because it brings to mind the second. Of course, Steve Sailer has, in a 2014 essay "How to raise equality and quality"

"So, here's a suggestion for a national movement to fight inequality effectively: We must try to raise awareness of the idea that it is the moral duty of affluent and well-educated Americans to have more children, which would decrease the amount of resources of money and time these parents can devote to each child. Conversely, we must raise awareness of the need for the poor and the poorly educated to devote more of their limited resources to each child by having fewer children.

Assuming that Nurture 100% controls outcomes, this will lead to less inequality. Or, if you insist upon assuming that Nurture and Nature both influence outcomes, this would lead to somewhat more equality and quality of Americans. All else being equal, future generations would be smarter, harder-working, and less unequal."

Solution one would be great and at the same time provide incentives to reduce breeding among the poor. Less poor, less poor? Whether you think the root cause of their resource problem is largely environmental or largely genetic, you can agree that it would just be better for the poor and their children if they had less children overall.

Of course the type of person who thinks inequality is a problem is not interested in such pragmatic solutions. This doesn't give them more money, err, equality today.

I do enjoy the writings of Julian Simon, but was Malthus clueless? If the fertility rate is high enough, at what point do we have no more standing room? I would be careful about recommending more kids.

It occurs to me that you overlap with Clark's Farewell to Alms. Clark argued that England was in a Malthusian pressure cooker, and that those who were more thrifty and hard working had more children who survived compared to others. Those traits spread through the population; there was only so much room at the top. That triggered the industrial revolution. If the rich have more offspring compared to the lower classes, and if the rich are still more thrifty and hard working, the traits should spread.

Finally, academics have a different view of patrimonial capital than I have. If the plutocrats give their money to the endowments of Ivy League colleges, for example, or to big museums in New York City, have we really reduced inequality? Or have we just created a new type of dynasty. Why do we complain about inequality of personal wealth but not of institutional wealth?

Suppose first that fertility among rich and poor is equal. In that case basically any growth model will tell you that r increases in the fertility rate since an increase in the labor force increases the value of capital. Hence, the solution fails. Second, consider optimal fertility rates for those that own capital. They will likely be lower than that of the general populace (as historically they have ALWAYS been), for the reason that it often proves very difficult to divide capital between many heirs. Hence, unless you take the unrealistic assumption that you can somehow increase the fertility of the rich above that of the fertility of the poor, against their own interest your model fails.

Nice job, Alex, putting this Pikkety fad in perspective. Sorry the commenters aren't getting it.

The commenters are getting it perfectly well.

I'm pretty sure this isn't a joke, Pikkety has said the same exact thing (that rich people should have more kids to reduce inequality) himself.

Being rich is a solution to next generation poverty. Wow. How insightful.

'no increase in inequality over the generations'

So, the rich stay rich, the poor stay poor, and stasis represents a lack of inequality?

Really, the best satire site on the web.

'It’s an evolutionary puzzle why the rich don’t have more children as the costs to them are low and at very high levels of wealth there is no quantity-quality tradeoff.'

Obviously, Prof. Tabarrok, being an economist, is unfamiliar with Brook's Law, relevant in this case because of the quip - '"Nine women can't make a baby in one month."' http://en.wikipedia.org/wiki/Brooks's_law Rich women don't have babies any faster than poor ones - and effective contraception that a woman can use without fear of retribution is basically a generation old at this point, regardless of whether the woman is rich or poor.

Though rich men in many cultures in history have instead followed the idea of having a legal wife's children recognized as legal, while ignoring children from other women as irrelevant. Doesn't seem to have made a difference in inequality. Or apparently, in remembering just how often unacknowledged descendants were left in the wake of wealth.

This is a serious point, and important. It actually doesn't matter so much what the birth rate of the poor is, since they have essentially no wealth to bequeath and can't go negative. If rich people reproduce at more than replacement value, and they bequeath at least 50% of their wealth to their non-oldest children in aggregate, then bequests will dilute their wealth. Actually, it's looser than that, since even if they bequeath 100% to the oldest son, if that son marries a woman who has inherited nothing, the end result is zero change in concentration of wealth.

If I recall rightly, for most of history rich people reproduced faster than poor people, which is just what one would expect--- poor people, in fact, would have net negative reproductive success in a Malthusian world.

This is part of a general problem with Piketty's book: it is labor income that drives much (most?) inequality, and a rich father's biggest bequest to his children is his high IQ and work ethic, which aren't diluted by having more heirs.

The birth rate of the poor does matter for poverty in general. If they stop having children, they have more money for themselves immediately, secondly their children do not inherit their low IQ and poor work ethic because they have no children. This would benefit society as a whole but whiners will say it's eugenics and that's the most evil thing in the world because Hitler. We'd probably be much better off with a lower amount of higher able people then what we're getting now. It seems that the less able are out breeding the able and this is the true cause of inequality.

So, I take it, you're in favor of making birth control pills available under Obamacare?

Not leftist enough. Make them mandatory.

Sounds like many here would indeed advocate mandatory birth control for the poor

hmm @Bill and @TMC

I'd advocate not paying them money to have children they can't afford.

xvo, You could still be better off if you assume that people will always want to form families. How might you be better off: make sure people have educational or other opportunities that increase future productivity that are independent of initial wealth conditions. You and they will be both better off.

You'll still wind up paying to raise their kids unless you're willing to see them literally starve. Free birth control is a great idea.

Doing it through Obamacare is stupid.

So I guess XVO prefers ideological purity over practicality?

I like Bill so much more now that I have prior_approval and JAMRC to compare him to.

@Bill see reply below
@Careless, @mavery

It would never gain any traction but birth control or sterilization as a requirement for welfare would be a good idea.

Eric, I think you missed the premise.

How about a math lesson.

Tell me the answer to this question. Assume that the 1% has a population growth rate of simply replacement. Then double that (i.e., increase the birth rate, ignoring that the woman now may not be able to work). Start with population of 1% and raise that to the power of 1.85, and then compare the population one period later where the 1 percent raised its growth rate to 3.7.

How many generations will it take to for the inheritable 1% to be 5% of the population assuming that other parts of the population grow at their traditional rates.

This post illustrates how ideology overcomes common sense, and even basic mathematics.

Less than three generations?

A little more. Now, what do you think a generation is.

Hint: From Ancestry . com:
"In general we think of a generation being about 25 years - from the birth of a parent to the birth of a child. We also generally accept that the length of a generation in earlier periods of history was closer to 20 years when humans mated younger and life expectancies were shorter.

However, generation lengths are not certain and keep evolving. We are now already starting to consider that a generation could be longer than the accepted 25 years. Men could be at least a third longer, so 35-year generations with women one-sixth longer, 30-year generations."

So, the solution is 75 to 100 years.

If at all, if they go out and double their fertility.

A better solution is to reduce fertility among the poor to cut entitlement spending

Or, increase the productivity of the poor by increasing their educational spending.

Answer this question: Is a poor person more or less likely to have poor or good educational resources available to their children. Is a rich person more or less likely to have poor or good educational resources available to their children.

If that worked they'd all be engineers by now. Get your head out of the sand. It's an illusion, a dream, a lie, you can't make all of the people lawyers and doctors and entrepreneurs through education. This type of ignorance can only come from spending no real time with the poor. They are not as smart as you, they may have mental problems that push them towards unsociable behavior, they don't have the same drive to work. They don't think the same way about the world as you and may not be capable of it.

Let me guess, never worked a minimum wage job? Never had to manage an assembly line, a retail store or a restaurant?

I've done all of them. Ever worked your way through school. I've spent time with the poor, including some relatives who are poor.

Why are they poor, Bill?

People are poor for many reasons. One of them is their parents who were not educated, who do not understand the value of education, and who fear that their kid will demand money from them to go to college.

How would you like to be a parent who told their kid that they cannot afford college or further education. Better to tell them that they can be happy flipping hamburgers at McDonalds, like themselves.

I'm not saying education is the answer either. Poor kids associate with other poor kids and are influenced by their peers.

@Bill

Yes I have.

I saw it more as many were uneducatable, they just didn't have the raw capacity to compete even if they were educated. Especially the way the world is going where intelligence is becoming more and more important. It's not enough to learn one skill, you have to be able to constantly adapt. I also saw the other main plight of the poor which was what I would consider extreme dysfunction, family turmoil, inability to prioritize, difficulty controlling impulse, difficulty understanding consequences medium and long term.

There is nothing wrong flipping burgers to work your way to something better, apparently that's what you and I did. There are many opportunities to take advantage of if you have the drive to do it. The government pays for school or gives low cost loans, you don't need a four year degree depending on the profession you choose. One of the biggest problems in our society today is the education system, the public and higher education system. A bachelors degree has become a title of nobility which gets you preferred in hiring in any job whether it relates to what you learned in school or not. Education is not all it's cracked up to be, it's mainly a social signal that says, I can keep myself together long enough, and am intelligent enough, to get a bachelors degree. Which is a huge accomplishment on it's own and would be great if it didn't take 4 years and $100k of which could be actually productive time and be used to make money instead of blow it. There very surely is a better more efficient way to prove what a bachelors degree proves.

True, the rub is that really only the poor are having children. The singular exception is a few religious groups, not all of them financially successful as noted before. More Middle Class Mormons are a good thing, more poor FLDS not so much.

Also if my local area is a viable broader example, it only helps to a small degree, I know quite a few young Mormons and because the economy is so stale around here, none of them have the resources to start families, none are married and they are in their mid 20's well into the standard marriage age in that community. It may not stick.

What Libertarians fail to get is that all citizens are not equal and worse in a society with leftism, urbanization and feminisms population decline is inevitable especially among the more productive. Avery strong economy can balance this a bit but without that the educated class will forgo child bearing rather than live on less each year. If a having child means beans and rice instead of steak once a month than that child will not be born. The exception there being the extremely religious but society run by them will be reading The Bible or Koran not engineering texts and again even that may not help if you look at Iran which has Europe level fertility.

In truth we have flattened inequality largely by making everyone poorer. That effect is strong enough that even the highly natal types are having smaller families. And yes you could try and bring in yet more immigrants, it won't help since they won't be able to replace the people 1 for 1. The people that keep us rich are highly skilled and have a specialized set of work ways. The new people have yet to assimilate to many of these and may never.

Sio as Aaron Cleary might say, enjoy the decline.

"In truth we have flattened inequality largely by making everyone poorer"

Wut?

This is really well said.

I actually read an interesting study that ascribed much of the increase in inequality to the professional class marrying each other rather than Rosie the Riveter (my father was a Ph.D., who married a Boeing quality control inspector with a high school diploma as an example). Thus, you would get a real bang for the buck by increasing fertility among the rich and requiring them to marry people in the bottom 20%. That seems a small price to pay for a tidy trust fund.

I have to question the assumption that if a wealthy couple has many children and bequeaths the wealth equally among the children, then that generation's wealth aggregated will be equal to the wealth of the parents, and thus diluted. Wealthy couples with many children clearly value the quantity and are more likely to invest additional resources of time and labor as well as capital into their upbringing.

If wealthy George Romney has four children and teaches them what he knows about generating wealth, one or more of those children (say, Mitt) might apply those principles in his career and generate enough wealth, in the aggregate, to prevent George's wealth from dissipating in the next generation.

One new nine+ figure fortune per generation forever would be an incredible and unprecedented feat. Not going to happen.

Okay, now we have the complete answer:

1. Sterilizing rich people prevents inequality
2. Sterilizing poor people prevents poverty

That leaves everyone in the "middle class", right?

Better yet, sterilize everyone, then we don't really need to worry about anyone for very long! We dramatically cut greenhouse gas emissions as a bonus!!

Why not phrase it the other way: 'the poor should have fewer children?' After all, inequality negatively affects them most, so they are best motivated to solve the problem.

'‘the poor should have fewer children?’'

Well, in all fairness, it wasn't Prof. Tabarrok that suggested the Nazis were merely a 'bump' along the road to using eugenics effectively.

Who was it?

Prof. Cowen, obviously - aren't you one of his loyal readers?

'Eugenics was a very popular idea with Progressives earlier in the twentieth century, and also with economists (in particular, pdf), and ultimately the Nazi connection will be seen as a bump in the road.'

http://marginalrevolution.com/marginalrevolution/2013/10/further-small-steps-toward-designer-babies.html

Some people (especially those in 'mongrel' nations like the U.S. or those in the country that committed such horrific crimes) consider what the Nazis did to be a fulfillment of what eugenics means in practice, and not a 'bump.' Clearly, they are the sort of people who hold a points of view contrary to Prof. Cowen's own - not that they are worth linking to, of course.

Some people think the Sun revolves around the Earth.

So to you, smart people having more children is equivalent to murdering millions of Jews?

'So to you, smart people having more children is equivalent to murdering millions of Jews?'

Nope. The comment was regarding the original remark - 'the poor should have fewer children.' Which is a basic eugenics idea, one that was implemented in different ways, in different societies - http://en.wikipedia.org/wiki/Compulsory_sterilization

In Germany during that period which represents a bump in eugenics acceptance, sterilization was also used, until replaced by more direct measures, eventually involving several hundred thousand deaths. - http://en.wikipedia.org/wiki/Action_T4

The remark was not about genocide, it was about eugenics, something that Prof. Taqbarrok has not remarked on, to my knowledge (being merely a disloyal reader). Prof. Cowen apparently favors eugenics, though one can assume that his opinion on genocide is probably thoroughly politically correct.

Why don't the rich have more children? I would suspect the marginal rate of substitution of child bearing/rearing time for other time (work, leisure, sleep). If capital is not a constraint then we could assume less time is required for work. However, if capital is not a constraint then there is more potential for leisure or recreation. Even if outside help such as nannies are used, each additional child requires some additional amount of parental time even if it is just supervising more nannies. The utility functions of the average wealthy person must be optimized at around 2 children.

This has been answered already:
http://marginalrevolution.com/marginalrevolution/2008/08/why-the-falling.html

Mr. Falkenstein! Please restart your blog!

Thanks! But I should report that time off the grid allows one to develop new ideas without prematurely fitting them into to an existing narrative, which is the impulse when you are writing a lot. I feel I've grown more this year than in long time.

I didn't see anyone supply this data, and it seems critical for this discussion:

What are the reproduction rates across income bands?

Historically, it depends. Before hand washing became common among doctors involved in child birth in places like Austria, the rate was higher among upper class women that could afford a hospital birth.

'Ignaz Philipp Semmelweis[Note 1] (July 1, 1818 – August 13, 1865) (born Ignác Fülöp Semmelweis) was a Hungarian physician of German extraction[1][2] now known as an early pioneer of antiseptic procedures. Described as the "savior of mothers", Semmelweis discovered that the incidence of puerperal fever could be drastically cut by the use of hand disinfection in obstetrical clinics. Puerperal fever was common in mid-19th-century hospitals and often fatal, with mortality at 10%–35%. Semmelweis proposed the practice of washing with chlorinated lime solutions in 1847 while working in Vienna General Hospital's First Obstetrical Clinic, where doctors' wards had three times the mortality of midwives' wards.[3] He published a book of his findings in Etiology, Concept and Prophylaxis of Childbed Fever.

Despite various publications of results where hand-washing reduced mortality to below 1%, Semmelweis's observations conflicted with the established scientific and medical opinions of the time and his ideas were rejected by the medical community. Some doctors were offended at the suggestion that they should wash their hands and Semmelweis could offer no acceptable scientific explanation for his findings. Semmelweis's practice earned widespread acceptance only years after his death, when Louis Pasteur confirmed the germ theory and Joseph Lister, acting on the French microbiologist's research, practiced and operated, using hygienic methods, with great success.' http://en.wikipedia.org/wiki/Ignaz_Semmelweis

This is one of the worst posts I've ever read on this site.

FYI: Rich people DO have more children, double the number of children as poor families. The average wealthy family has 4 kids -but it's trending higher since having more than 4 kids is very much a status symbol these days. Whether one is Mormon or not. Poorer families have 1.8-1.9 kids.

Seriously, think about it. Fertility is a measure of health. Wealthy people are healthier than poorer ones.

Like I said, dumb post.

source?

The Koch family, the Walton family, the Romney family....

I guess tyler is asking why not have a brood of kids like 50 or more

but more kids would probably result in the wealth being diluted faster. So there is an optimal number of kids to preserve wealth but no dilute it too much

With monogamy it may be impossible to squeeze out 50 kids.

I'm going to handwave a lot and say that once you are spending more than about $5 million per kid, you start leveling off seriously in attempts to improve the kid's lifetime earnings. At that point you have bought the most exclusive schools and friends so they can network with only other rich people, and given them a nice amount of capital to experiment with some high-expected-value-but-low-probability-of-success ventures.

The fecundity of human females is 42.

anonymous, I agree. This is one of the dumbest posts I have read on this site, although there are many you can compare it to.

As it happens, today I am reading for pleasure Donnella Meadows book, Thinking in Systems. Its a great book which makes you sensitive to looking at things as systems and not individual isolates, such as fertility classes for the uberwealthy.

If you do not like the actual solution of the problem, or if your barely acknowledge the existence of the problem itself, the best you can do is to provide a Procrustean solution.

I'm old enough to remember when getting married and starting a family was the only way for poor people to escape poverty.

The worst problems of the poor can't be fixed by economic distribution, just work, faith, and family! https://twitter.com/TPCarney/status/462319798219984896

You'd have to be a couple of hundred years old

The existence/magnitude of the income inequality crisis is positively correlated to the need of collectivist/statist politicians to make "hay" with it.

Since June 2009 (end of recession) mainstream American families' real dispoosable income has increased 4.2%, while Wall Street's has soared 108.2%.

Solution to so-called income inequality: incentivize people to get/stay married and raise their children and vote Republican.

Did Alex ever hear of a Gini coefficient as a measure of inequality????

Ask yourself this question: What is the effect on the Gini coefficient if the wealthy DECREASE their fertility rate.

Correct answer gets to go home early.

Stop subsidizing r-selection. And stop putting the American working class in competition with the global poor for wages.

Reading from all the reviews of Capital it seems every one agrees that r > g for the past 300 years except during the Wars and Depression period. Setting aside whether one agrees on the future policy front.

The assuming the statement "The logic of r-g turns out to be highly dependent on savings behavior, fertility decisions and the nature of altruistic bequests" to be true.

Can we infer that if the "savings behavior, fertility decision and nature of altruistic bequests " remain same into future then we will have r > g into the future too..

Also are there any studies that have looked into current 1% behavior in savings, fertility and altruism ??

The rich don't have a ton of kids for the same reason that most people with access to contraception and abortion don't have tons of kids: very low infant and early childhood mortality rates. Once those started dropping heavily and women gained access to stuff designed to let them have greater control over their own bodies, the incentives for having a ton of kids dropped down to where most people have between 1-3 kids.

Perhaps their more-numerous offspring would just become part of a larger and even more dominant group which was just as exclusive as before, with a somewhat expanded super-elite.

I don't see how this would do anything to bridge gaps between the rich and the poor, although if things went as they would in the simple case then you would expect formal measures of inequality to be lower.

A lot of the time, children of rich kids get ahead, not because of the money, but because of the connections they have by belonging to more affluent circles. I don't think the "inheritance" effect is as relevant as perhaps it used to be.

You're being too conservative, Alex.

If a rich man marries a non-rich woman, and has two children, then wealth will fall by half in a generation. Wealth is only maintained if a wealthy man marries a wealthy woman, and they have only two children, and those children only marry rich spouses, and so on.

This sounds like 18th century England, my Lord, where we divide the landed estates rather than maintain primogenitor. And, what do we do with the poor ladies, who have no inheritance. Have them read Jane Austin novels on the veranda.

Nay, nay, my lord, you miss the point. Wealth is not just inherited...it is spent by parents on children, giving them a good education and educational opportunities, or locating them in a good school district, that play out later.

Ask yourself this question: who is more likely to have a better grade school: a wealthy kid or a poor kid.

Ask yourself this: What makes a better school?

A better school is a better mix and one with equal resources, controlled for need, with other schools.

I want to respond to this, but the stupidity of it is overwhelming. I'll try anyway:

"a better mix"
- The quality of an education given by schools is somehow rested on the "mix" of the school? As in, a which doesn't reflect the proportions of ethnicities in the general population performs worse than a class that does? Despite that this is absurd on it's face, consider a necessary problem: What must the minimum class size be to provide for accurate demographics to 1% for each ethnicity? We'll need at least a couple hundred kids to insure representation of the Asian Hispanics, Non-Hispanic American Indian, and Native Hawaiians among others. I'm sure you'll counter that I am being too particular or something, and really your point was just some feel-goodery nonsense?

"one with equal resources, controlled for need, with other schools"
-Again, absurd on it's face. Someone should let Harvard know that they aren't achieving what they could. If they give away enough money to reach the median endowment they will surely improve. We could take that money and give it to Phoenix Online. They will ramp up their associate of photography technology program and will soon be producing the world's finest associates.

Thomas, let me give you an example of a "better mix". I grew up in a community with two high schools. As luck would have it, the wealthy lived on the east side, poorer residents lived from middle to west side. The high schools were aligned North and South, meaning the east side kids split and went to either the Northside school or the south side high school.

There was a very wide range of economic mix in the high schools. This mix assured that the community did not favor one school over the other, because the east side kids were in both.

That aint so today. Suburban schools are very homogenous with income background where I live, and spend more per student, controlling for deficiencies, special needs, etc, than city schools.

Thomas, if someone disagrees with you, you don't call them stupid.

I learned that in school, but apparently you did not.

So are we speaking top 10%, top 5%, or top 1%, or top 0.1%?

A top 10% income is about $150,000 per HH; 30 m households

A top 5% income is around $200,000; 15 million households

A top 1% income is around $350,000; 3 million households

A top 0.1% income is about $1,700,000: 300,000 households

If you're in the top 10%, there's a pretty good chance your spouse will also be in the top 10%, I think. But if you're in the top 0.1%, this becomes more problematic. You'd need to be very focused to find a partner in the same income category. I would think at least 70% of 0.1%-ers marry into a lower income category, but typically within the top 15% or so in terms of income.

Further, of the people I see in the top 0.1%, only a small portion have real inherited wealth, and the wives rarely work. It is true, however, that well-educated men often have well-educated wives and their children are also well-educated. But that won't get you into the top 0.1% by itself. It will, however, provide a pretty good shot at getting into the top 5%, certainly the top 10%.


Bryan Caplan notes that we overestimate the effect of parental investment on children and we underestimate the pleasures of grandchildren, in both cases choosing too few children. The rich should read Bryan’s book

What Caplan does is assert that we overestimate the importance of parental investment. However, I don't think his claim has anywhere near the level of evidentiary support that he seems to think it does. What we know is that SES is largely heritable, but genetically? No. That hasn't been demonstrated.

The central thesis of Caplan's book is that people have too few children because, as an economist would say, the costs of having kids are frontloaded, while the benefits are not. Or, as an human being would say, no one wants to think about dealing with another kid while they have a 4 month old weeping in arms while the 3 year old is throwing a temper tantrum in the next room - even though those stages are short lived. It's a very clever idea, and I think it's even right, but I think Caplan erred in trying to stretch it into a book.

I don't know what SES means.

I would think the offspring of wealthy people would increase their capital as they have the education, seed capital, etc. to each save much more than they earn. The Koch brothers are far wealthier than their father who was quite successful, I'm looking forward to the next generation expanding the business.

I love this post! I like the first idea the best: raise fertility of the responsible and productive rich!

This was a point that biologist and statistician Ronald Fisher made: given equal starting points and equal opportunities, wealth will accumulate in families that have few children.

Quote from Wikipedia:

Using the census data of 1911 for Britain, he showed that there was an inverse relationship between fertility and social class. This was partly due, he believed, to the rise in social status of families who were not capable of producing many children but who rose because of the financial advantage of having a small number of children. Therefore he proposed the abolition of the economic advantage of small families by instituting subsidies (he called them allowances) to families with larger numbers of children, with the allowances proportional to the earnings of the father.

Wouldn't having no children generally have the same effect?

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