16. Children as Financial Instruments?

Having more children can be viewed as an act of worthwhile gamble for many. With many children, at least a couple would turn out fine and take care of their parents. However, the increase in the number of children also undoubtedly increases the risk that some of them would go wrong.

The main appeal of children is that they will take care of parents in old age and provide financial help.

Families also consider the gender composition of their children—-preferably, they would like more sons because once married, their husbands have more economic control over the daughters. They can also decide their children’s gender directly through sex-selective abortions, where they could choose whether they would rather abort a female fetus. Even if parents don’t take this approach, many would have as many children until they have the number of boys they want, causing girls to grow up in larger families.

One fact states that the world has many fewer girls—Amartya Sen calculated that there were over 100 million “missing women” in the world in the 1980s, and that was even when sex-selective abortion wasn’t available yet.

A family is one “unit,” but decision-making within a family is far more complex than an individual. Family decision making is the result of a bargaining process among family members, coming up with a solution that serves both interests. This is referred to as the “efficient household” model—since family members are tied together for the long term, it is possible to negotiate over decisions to find the best resolution for the family as a whole.

What makes the family special is not entirely that its members can negotiate with each other—it’s how they can operate by observing simple rules that safeguard their basic interests, without having to negotiate.

“The family is bound together then, not in perfect harmony or by the ability to always divide up resources and responsibilities efficiently, but by a very incomplete, very coarse, and often very loose “contract” that defines the responsibilities of each member toward the other members.”

Returning to the question of whether the poor really want such large families, sometimes they don’t really “want” so many children, but rather need that many because there is no other way for them to ensure that at least one child would support them later in life.

However, many elderly people have the option of surviving on their own instead of spending more time with their children. The most effective population policy, as the book suggests, might be to make it unnecessary to have so many children.

We will move on to the second part of the book next time and talk about institutions!