Unit 7: Family Law
In the first unit we said that laws typically arise for a reason, so our main task in this unit will be to describe the reasons for traditional legal structures that have arisen with respect to the family. In doing so, as a secondary theme, we will try to understand the huge shift in family arrangements that has taken place over the last few decades.
We will first cover marriage and divorce, and then go through a wide assortment of topics in family law – adultery, prostitution, polygamy, same-sex marriage, adoption, abortion, and others.
Marriage
What are some benefits of marriage?
Does marriage enhance welfare? Economists have traditionally pointed to a few efficiency benefits of getting married.
1. Economies of scale – Average living costs are lower when the household size is greater than one. For example, a married couple only needs one house instead of two.
2. Comparative advantage – Household members can specialize instead of all individuals having to do everything on their own: an arrangement that can create gains from trade. The traditional arrangement was that the woman “traded” her time in home production for the man’s time in the labor market.
3. Risk-sharing – Spouses can shield each other against adverse health and job shocks.
4. Children have traditionally been a marriage-specific commodity. We will talk about this point extensively later in the unit.
Marriage matching
Who marries whom? The marriage market features strong assortative matching – “high quality” husbands tend to pair up with “high-quality” wives. Research shows that anthropometric characteristics like BMI are the most important sorting characteristic for women and that human capital / income earning capability is the most important sorting characteristic for men.
or to pair up the smartest students with the best teachers. Similarly, empirical evidence suggests that assortative matching in marriage produces better children and eases marital friction. The reason in all cases seems to be that there are some increasing returns to scale from matching up high-quality partners.
Legal structure of marriage
Marriage is basically a contract, but is unlike a normal contract in two important ways.
• The terms are significantly restricted. While parties entering into private contracts in other settings have a lot of leeway in crafting contract terms, the marital contract has rigid standard-form terms. For example, marriages are required to be for life.
• Sanctions for breach of contract are very severe. The effect is that spouses are more likely to work out their own problems instead of dissolving the partnership. It might also make people more careful when they first get married, which translates to better marriages and better children who are more likely to be raised by parents who stay married.
A big question presents itself. Why is the arrangement what we think of as marriage? One can imagine many different family arrangements. We could think of sex being noncommittal and women taking care of children. We could think of men supporting children that they produce but not forming a household. Yet, nearly all societies have some kind of arrangement with a lifetime commitment (at least in principle) where the two partners share income, property and work. When a similar arrangement arises independently so many times, we are naturally inclined to ask why.
Here is an analogy. When I accepted a job offer at West Chester, I made investments that provide value for me specifically for a relationship with WCU. For example, I moved all my stuff, I learned about the policies, I bought a house, etc… All of these only provide value to me if I stay at WCU. At the same time, WCU made costly investments that depend specifically on their relationship with me. For example, they bought computer programs that I use and contributed to my pension. Again, these investments only provide value for my relationship with WCU. They are not transferrable. On both sides of the market, both I and WCU have undertaken extensive partnership-specific sunk costs. These investments only have value if my relationship with WCU continues.
This problem is what economists call bilateral monopoly. Both sides of the market were competitive when I first came to WCU – I had many job offers and they had many candidates to select from. But once I took the job, both of us started making investments that were only productive for our specific partnership, which opens the door for opportunistic breach. The legal solution to prevent opportunistic breach is a long-term contract that makes it costly for either party to terminate the relationship.
Marriage is similar. Husbands and wives make specific investments that produce value only for the current relationship. For example, they make emotional investments learning how to get along with each other, learn how to cook food that both like, etc… This problem is especially profound for women who stay at home. While male investments in labor market skills are transferrable outside of marriage or to another marriage, female investments in home production are difficult to transfer outside of the household. Although relationships start out in a competitive market, the two spouses are eventually locked into a bilateral monopoly with each other, each with high sunk costs invested in the relationship. Thus, marriage creates a potential for opportunistic breach on the part of both parties, just like my contract with WCU does.
What are some solutions to this problem of potential opportunistic breach? One traditional answer is to establish very rigid gender roles – once a marriage is created, both parties behave a certain way because of social custom and pressures. But that’s inefficient because the traditional arrangements might not be optimal for every couple.
The other obvious solution answers the question we initially posed. By requiring that marriage be a long-term contract, we can take away the threat of opportunistic breach. But, as often happens in economics, in solving one problem we create a new one. If we make it impossible or very costly for people to get divorced, then couples might get stuck in a bad relationship – even one that would be efficient to dissolve.
That’s quite a dilemma – How can we enjoy the benefits that permanent partnerships create (more investments in the relationship because there is no potential for opportunistic breach), but without the law leaving people stuck permanently in bad relationships? Here are a few suggestions.
• Allow divorce, but only for cause. One partner has to demonstrate that the other partner is doing something wrong in order to qualify for a divorce.
• Allow divorce, but at a very high cost.
Recent changes to marriage
The institution of marriage is eroding rapidly in Western countries. Fewer people are getting married, and those who do are waiting longer to do it. More than half of all marriages end in divorce. Premarital sex is almost universal, with at least 97% of people entering into marriages having had sex before marriage, and many children are born outside of marriage.
A primary driver of falling investments in marriage is that the sunk costs of being in a marriage are significantly lower, especially for women. Because of lower infant mortality rates and better medical care, women don’t need to spend a lot of time in childbearing in order to have 2 or 3 healthy children. More importantly, what used to be female-specific investment in the household has largely become a part-time job rather than a full-time job. Easy availability of appliances (e.g. washing machines) and cheap services (e.g. take-out food) have substantially reduced the need for investments in in-home production.
Because women do not need to specialize as much in household production, they do not sink as many unrecoverable investments into their marriages as they used to. Thus, the costs of breaking up a marriage are lower than what they used to be. Economists always look for fundamentals that underlie social change, and technological progress that has made household work easier is almost certainly associated with the decline of the commitment aspect of marriage.
Another element underlying the declining value of marriage is a near-universal reduction in demand for children. The value of children has declined – child labor is abolished, fewer people need their children to do household work, and most Americans don’t rely on their children for old-age support. At the same time, the cost of raising a child has risen significantly, especially the opportunity cost of the mother’s time.
Generally, where do babies come from? Economists have traditionally pointed to four sources of demand for children.
1. Accidental byproduct of sex 2. Income-producing asset 3. Social expectations
4. Happiness / noneconomic benefits
The first three are disappearing rapidly: (1) as a result of birth control, (2) is basically a nonissue in Western countries and (3) is falling rapidly. Thus, really, the only reason to have children anymore is if the parents get some enjoyment from having them.
Divorce
Economic model
Let’s begin with another analogy. Firm A spends 10 years designing a product and then turns the design over to Firm B, which markets and sells the product. This arrangement creates a huge opportunity for breach by Firm B. Firm A made all its investments up front. Firm B would love to enjoy the benefits of those investments while not providing a decent return to Firm A.
The analogy is strikingly relevant to marriage. Women (in the traditional household) perform most of their parts of the arrangement early on – bearing and raising children and being a good sex partner. The main male contribution (again in the traditional household) is income, which is higher later in life. Furthermore, women “depreciate” faster than men do – Statistically, the ability of a woman to find a partner at age 40 instead of age 25 falls much more rapidly than a man’s ability to find a partner falls. All of this creates a colossal opportunity for opportunistic breach by men. They can extract high female investment early on in the marriage without delivering on their part later on, leaving the women high and dry.
A logical response by women is to adjust the timing of their performance and not to make so many unrecoverable investments early on. Facing a risk of divorce, women might think about later childbearing and about making investments in their careers rather than specializing in household production – daycare and take-out food rather than staying at home and cooking. Note that this can lead to inefficient outcomes. Even if more investment in the household is efficient, women might be reluctant to do so because of the chance that the marriage could dissolve.
In addition to adjustments that women can make on their own, the obvious legal solution to this potential opportunistic breach is to impose large damage payments on men who seek divorces. One problem this creates is that men who want a divorce might mistreat their wives in order to make the wife file for the divorce. Another issue is that damage payments that are too large conversely create a potential for opportunistic breach by wives, who now know they can act like lousy partners because it’s too costly for their husbands to request divorces.
Legal structure
Alimony
Men are generally required to pay some money to women (in the traditional arrangement) upon divorce. How should it be calculated?
Figuring out the wife’s “share” of household assets is difficult. A woman might have stayed at home to take care of household responsibilities, enabling the husband to earn money. Maybe we could think about reliance damages – what the wife would have earned if she had not been married. Common Law courts usually avoid the whole problem by just assigning each spouse 50% of assets that were accumulated during marriage.
Under some circumstances, men are also required to pay a share of their future incomes to support divorced wives, which is called alimony. Why do we have alimony?
• Damages for breach of contract – Alimony is never awarded if the wife is at fault for the divorce.
• Repaying the wife for investments in her husband’s future earning capacity, like taking care of children while he was studying or getting job experience.
• Providing the wife with severance pay – By being married, the wife invested in relationship capital and reduced her earnings capacity outside of marriage. This is basically the same reason that employers provide severance pay.
Why do we need alimony? Why not simply compensate the wife during marriage for these opportunity costs? The problem is that most men don’t have a lot of liquid assets early on. Alimony provides a way to guarantee damage collection against future income.
Also, why not contract before marriage instead of arguing about how to compute damages afterwards? Well, the date of a divorce and the wife’s severance costs are obviously unknown when spouses enter into a marriage, so the damage costs are unclear beforehand.
Out-of-Wedlock Births
The percentage of children born to unwed mothers has increased tremendously over the last 50 years. In fact, the majority of births in Scandinavian countries are to mothers who are not married. Paradoxically (or maybe not), this shift occurred concurrently with increasing access to birth control and abortion. Economists have offered a few potential explanations for the proliferation of births out of wedlock.
benefits of having a child may not be sufficient to justify childbearing if the parent has to cover all of the costs, but it may be worth it if the state will subsidize some of the costs. However, out-of-wedlock births have been rising in all economic groups, not just in low-income groups who collect welfare. Thus, the welfare state is not a convincing explanation for the proliferation of births out of marriage.
• Job opportunities for women – Some women might just prefer to raise children alone, and with better opportunities in the labor market and higher income they can afford to do so.
• Reduced mortality in childbirth – When childbearing was dangerous, women were in a good position to demand marriage in exchange for having sex since it was risky to get pregnant. Now that it’s not so risky, the bargaining power of women to demand marriage in exchange for sex has deteriorated.
• Gender ratio changes – Wars that kill men and fewer deaths from childbirth tilt the gender ratio in favor of women and reduce their bargaining power. For a contemporary example, there is evidence that a larger number of incarcerated men in a particular community is associated with increasing prevalence of out-of-wedlock births. The interpretation is that the high number of women relative to men reduces their bargaining power because men are on the “short side” of the market.
Access to birth control
To address the initial paradox head-on, could increasing access to birth control actually cause an
increase in births out of wedlock? It’s an incentive-based argument that only an economist could love, but logically the answer is yes.
Without birth control, babies and sex are joint products – each act of sex produces some chance that a baby will result. But traditionally women have had a higher demand for the child piece and men have had a higher demand for the sex piece.
Now, women are less promiscuous than men overall, presumably because their limited reproductive capacity makes it more important for women to screen sexual partners carefully. And most women were traditionally unwilling to have sex without some guarantee of support because of the fear that they could be left with a baby and without support means. In some societies this means no sex outside of marriage, and in some societies it means that men who impregnate women are socially obligated to marry them.1
1 Despite longing for the moral good-old-days, premarital sex has been common in the West for centuries. Researchers
Easy access to abortion and birth control have changed this entire landscape by breaking the link between sex and childbearing. Birth control is especially important because it’s cheap and involves very little risk. Now, a woman who wants to have sex can do so even without a guarantee of support from her partners because the risk of getting pregnant is largely out of the equation.
What are the broader implications? Women who want to have children are worse off because they have fewer men from which to select; they are competing against women who do not want children and are willing to have sex without a commitment. Men are better off, even married ones. The availability of women willing to have sex without a commitment tilts bargaining power in favor of men because it makes it easier for them to get sex outside of marriage.
Engagements
Many men prefer to marry virgins and are reluctant to support other men’s children, so single mothers have historically faced a lot of problems finding husbands. As a result, even in societies that tolerated premarital sex, a woman would only have sex outside of marriage under the implicit promise that the man agrees to marry her if she gets pregnant.2
Of course, the obvious risk is opportunistic breach by men. The solution is a performance bond – the man should make a financial investment that he loses if he does not follow through on his marriage promise. Ever wonder where the tradition of giving expensive engagement rings came from? That’s it. It was a performance bond, and traditionally the woman got to keep the ring if the man broke off the engagement.
The practice of giving rings, and the value of engagement rings, have both been declining over the last few decades. Can we think of any reasons?
• Premarital sex is near-universal and increasingly socially acceptable. Women in Western countries aren’t expected to be virgins when they get married, so a failed sexual relationship doesn’t doom their future prospects of finding a husband.
• Better birth control has reduced the risk of the single-motherhood scenario, so there is less need for a performance bond in exchange for sex.
• Some Common Law jurisdictions require rings to be returned to the party who purchased them if the engagement is dissolved, which obviates the performance bond aspect of the rings.
Prostitution
Economists have an inclination to be skeptical about prohibiting mutually agreeable exchanges. If a man and a woman agree on a price for a sexual encounter, and both enter into the agreement voluntarily, then almost by definition prohibiting the exchange is inefficient.
Of course, the answer is not quite this simple if externalities are involved. One argument for outlawing prostitution is commodification – Sanctioning an institution with sex offered in exchange for payment fundamentally changes the way society thinks about sex, which harms society at large. How might a supporter of legalized prostitution respond to this argument?
• The market exists already.
• Most people don’t view the government as their source of moral authority.
• Just because prostitution is legal does not mean that people will view it as a legitimate way to obtain sex. Gambling is legal, but many people still consider gambling to be immoral.
People also seem to have a weird problem with money exchanges in general. There’s no other logical way to explain the practice of giving gift cards when cash gifts would reduce transactions costs and would be easier for everyone. And friends might “owe each other” favors or something, but you would never think about repaying a friend for dinner at his house.
A better argument against prostitution is the way in which it can affect family relationships. The main issue is that sex outside of marriage can compete with marriage. Laws against prostitution benefit women as a whole; they make it difficult for men to obtain sex outside of marriage, and so enhance the bargaining position of women. Furthermore, since children of married couples tend to do better than children born outside of marriage, society as a whole may have an interest in stabilizing marriage by eliminating prostitution.3
Adultery
Why is there so much cheating within marriage? We can think of a few things that have changed in recent years.
• The risk of extra-marital sex has fallen a lot with easy access to birth control.
• Surveillance of wives by husbands is more difficult since many women work outside of the house.
• Search costs for partners are lower since men and women increasingly co-mingle in public and at work.
3 To provide balance, I must mention here that some researchers have suggested that prostitution could be
• More women stay unmarried, so the pool of potential partners is larger.
• The value of virginity is falling, which was traditionally viewed as a signal of fidelity within marriage.
What are the costs of adultery to society? Both partners in a marriage benefit from sexual exclusivity. Exclusive marriages are typically more stable, leading to more emotional commitment and more resources being used within the household rather than outside. This promotes better childrearing, and so again society has an interest in marital stability.
But here’s a curious puzzle. Why is female adultery almost universally considered to be more serious than male adultery, both socially and legally? Traditionally, men had to be serial adulterers to provide grounds for divorce, but for a woman one incident was enough. Biology might provide a simple answer. Both partners want to make sure they are raising their own kids. But, of course, it’s only men who have any uncertainty. Women know pretty well which kids are theirs! A second issue is that women have limited childbearing capacity, so a wife’s adultery could diminish her ability to bear children from her husband, but this is not much of an issue for men.
Restriction of Private Sexual Activity
An oft-heard mantra is that the government should stay out of people’s bedrooms. Does it make any sense for the government to restrict private sexual activity? Actually, it can, and we go back to our favorite problem of spillovers.
Restricting private sexual activity, in principle, can be socially efficient if the activity imposes significant costs on outside parties. As we have already argued, prostitution and adultery impose costs on spouses, on children, and probably on society as a whole because they leave children without parents living together. Another big externality is that any non-monogamous sexual intercourse increases the spread of sexually transmitted diseases. This is most profoundly not
merely a private issue restricted to people who choose to have extramarital sex – the spread of infections imposes costs on future marital partners and on children.4
Of course, there are risks associated with criminalizing private sexual activity as well. People might be less likely to undergo medical tests if the results can be reported to authorities. People are also less likely to cooperate in medical research and, crucially, are less likely to seek information about prevention if they think that their sexual behavior can land them in jail.
4 You might read More Sex is Safer Sex by Steven Landsburg for an alternative perspective. He argues that, for a
Polygamy
Your immediate thought is probably that polygamy is good for men and bad for women. Economics would actually suggest the opposite. Polygamy simply presents women with more options and forces men to compete more vigorously for wives. One way of expressing this in economic terms is that polygamy increases the demand for wives, which increases their price. In this context, we interpret “price” as the terms that women can extract in marriage. Even within a monogamous marriage, the existence of outside options can increase a woman’s bargaining power. Note that the option value itself can enhance women’s bargaining power even when the option is exercised only infrequently in practice.5
If we look at it this way, monogamy is actually a collusive arrangement among men not to compete too much. To make an analogy, imagine in a car auction in which each bidder agreed to only bid on one car. We would immediately see this as a conspiracy to limit competition and keep car prices low. But marriage is not much different – agreeing that each man can pursue only one wife basically benefits men by giving women fewer outside options.6 Polygamy hurts men, especially younger and poorer men, by increasing competition for the pool of available wives.
The problem that many have observed with this argument is that women may not actually realize the gains that theory would suggest. First, in a society where dowries are customary, the additional value may end up going to the woman’s family, rather than to the woman herself, in the form of a higher dowry. Second, if contract terms can’t be enforced, then it’s not clear that the promised benefits will actually materialize – men might opportunistically breach. Finally, the question of overall social efficiency does not have a simple answer. Different husbands have a different value to different wives, and so optimizing the rules to reach an efficient solution to this sorting / matching question is complicated.
Same-sex Marriage
To evaluate the efficiency consequences of allowing same-sex marriage, we of course have to weigh the costs and the benefits. Let’s take each piece in turn.
First, same-sex marriage confers private benefits to couples who take advantage of it. Some of these benefits are efficiency-enhancing, like hospital visits and the ability to bequeath property upon death, because they create benefits with no offsetting costs. Some of the benefits are transfers. Extending marriage-specific tax and social security benefits do not create a net increase in wealth for society; they’re just redistributive.
5 Polygamy is very, very rare even in Muslim-majority countries where it is legal. It doesn’t take a genius with numbers
to figure out that, in a society with about half men and half women, every man cannot have many wives.
Second, same-sex marriage creates some public benefits. The institution of marriage promotes stable relationships and reduces promiscuity, which reduces the spread of sexually transmitted diseases. This is a public benefit that helps everyone. Furthermore, many same-sex couples adopt children, and the stability of being raised by married parents enhances these children’s welfare and is good for society later on. Laws also have a “teaching effect” of increasing tolerance and respect.
Are there any social costs associated with same-sex marriage that might offset these benefits? Much of the objection boils down to a distaste for homosexual relationships. Is this a valid social cost? That’s actually a complex question with deep roots in Western philosophy. Mill, and others, have argued that people have no legitimate interest in the activities of other people simply on the basis of dislike. Thus, Mill would say that this is not a valid cost to weigh against the benefit. Unless a person can document some kind of tangible harm from same-sex marriage, the fact that he doesn’t like it or finds it immoral is not a valid social cost and therefore has no relevance for public policy. Other philosophers disagree, and say that esoteric, psychological utility is every bit as important as monetary considerations, and should be included in social welfare calculations. Again, this is a long-standing philosophical question that economists wrestle with.
A second question is whether allowing same-sex marriage encourages homosexuality. The evidence that sexual orientation is innate or set very early in life is quite compelling. Nevertheless, it may be true that social acceptance of homosexuality influences intensity of sexual activity, even if orientation is innate. Whether this creates any valid costs is a normative question.
Children
Externalities and welfare consequences
Public policy in the US is a confusing mix. On one hand, society subsidizes childbearing a lot. We provide a tax write-off for children, provide universal, free public education and levy no taxes on household production. On the other hand, the evolution in the legal structure around marriage and divorce, especially easy access to divorce, reduces incentives for household investments like children.
What should public policy towards childbearing be? Should we tax it, subsidize it, or do nothing and let the free market decide? Ultimately, an economist would say that the answer to this question boils down to externalities. If children create public benefits above and beyond the benefit to their parents, then subsidies can enhance efficiency. If children create public costs above and beyond costs to their parents, then taxes are in order. Which side is more compelling?
chance that your children will become criminals. Investing in your children also increases the chance that your child will grow up to be productive and invent something, and of course we all benefit from these improvements in innovation. Furthermore, your productive and high-earning children are going to pay taxes to support everyone else’s retirement. Raising healthy and productive children creates benefits for the rest of us in society, and we don’t repay parents directly for any of those benefits.
On the other side, most of the costs associated with raising children are private. Parents pay for diapers, daycare, books, etc… And the resources that a child consumes are not really an externality since they are paid for privately. Too much population growth might make the world overcrowded, but overcrowding is still basically voluntary. You can live in Alaska if you think New York City is too crowded. Legitimate negative externalities include things like pollution, crimes that your children might commit, crying on airplanes, etc…
Overall, most economists are persuaded more by the positive side than by the negative side. That is, investing in raising healthy children creates large public benefits, but most of the costs are borne privately by parents. This is the signature of an activity that society should subsidize. Most economists support subsidies for childbearing.7
Legal protection
Children require considerable financial and time investments by parents, though the optimal level varies from child to child. Unless they are altruistic, parents might not invest up to optimal levels because a lot of the benefits created by these investments are external to the parent – they benefit the child and society at large without any direct compensation back to the parents. Even parents who are altruistic might underinvest if they are poor or credit-constrained.
Maltreatment of children is almost universally viewed as a public, social problem, rather than a private problem. Parents are required by law to provide education, food, a non-abusive home, and other things. The socialization of child welfare (versus other private household issues) makes good economic sense because there are big public benefits from healthy children who grow up in a stable home. Abused children are less productive, more likely to commit crimes and have a host of other problems into adulthood that create large social costs. This kind of reasoning rationalizes subsidies for education and for prohibiting child labor – parents might not make good decisions, weighing only the private costs and benefits, but it is in the best interest of society to protect the child.
What should we do with children who, despite legal protections, are abused by their parents? Temporary homes have proven to be very problematic because foster parents have no incentive, other than altruism, for long-term investments in foster children. In the next section, we turn to permanent adoption.
Adoption
The institution of adoption is not working well. We have great difficult matching adoptive parents with children, and the process is so expensive and time-consuming for parents who do want to adopt children that many give up.
The problem is that there really is no market in a normal sense since the price of adoptions is fixed by law at zero. Adoptive parents are not allowed to pay birth mothers for adoptions. Basic microeconomics tells us exactly what the consequences of this price ceiling are – long waits, rationing,8 and black markets.9
Why don’t we allow adoptive parents and birth parents to arrange a mutually satisfactory price? Here are some of the standard arguments, along with the way in which an economist might respond.
• We shouldn’t sell human beings – But adoption isn’t buying a person per se. It’s just a transfer of parental rights, which are “owned” by the birth mother anyway. In other words, we are not making a commodity out of something that doesn’t already exist.
• Adoption-for-payment ignores the welfare of the child – But the adoptive parents willing to pay the most for children are probably the ones who want children the most and are most likely to take the best care of them.
• Adoption-for-payment commodifies children – But most people do not view adoption as the ideal way of obtaining children, whether money changes hands or not.
• The richest people would end up with the best babies – Not necessarily. Rich people also have high opportunity costs associated with their time.
• Adoption-for-payment would make it impossible for non-rich, but good parents to adopt babies – This problem is probably worse under the current system. Adoption is already very expensive, and economic criteria are used to screen parents.
Reproductive Technology
In-vitro fertilization is now common and accepted practice. Human cloning is not used yet, but is almost certainly technologically feasible. We can expect the usual arguments against the proliferation of these technologies – people are being taken advantage of, parents will be less
8 Not many firms are licensed to arrange adoptions, and there are very strict requirements for adoptive parents.
9 These black market payments often take the form of hidden payments made to birth mothers in the form of agency
committed to their kids, it’s contrary to the natural order, more unfair benefits for the rich, new things are scary, and on and on. But history has taught us without exception that the law cannot hold back technological progress. It may delay progress and irritate people for awhile, but the law has always eventually adapted to new technology, not vice versa.
A more controversial issue today is surrogate motherhood. While simple and legal, courts do not enforce surrogate motherhood contracts. In other words, if a birth mother decides not to give up her baby, the court will not order her to do so no matter what the contract says. Should we allow the formation of enforceable surrogate motherhood contracts? It would go a long way towards alleviating some of the excess demand for adopted children, and ultimately legalizing it would bring the price down, making this alternative more accessible to middle-income potential parents. Ultimately, it’s pretty ironclad that the market will supply anything that’s demanded. We have our heads in the sand if we don’t design laws with this reality in mind.
Abortion
Prohibiting abortion would probably encourage people to have less sex and would encourage more intensive use of contraception. Generally, legal abortion may have actually made the birthrate rise. While the fraction of unwanted births is lower, the total number of births may be higher since abortion reduces the cost of having unprotected sex.10
Many Western countries prohibit late-term abortions but provide easy access to abortion earlier in pregnancy. Fetuses in a late stage of pregnancy are thought to have more human rights. In any case, late-term abortions are costly and dangerous, so it would probably happen only in serious cases. The net effect of these laws may actually be to raise the total number of abortions since mothers who are uncertain about carrying their pregnancy to term might be more get an abortion early on if they know that the procedure is unavailable later in pregnancy.
There is an interesting argument about the relationship between abortion and AIDS. Condoms are effective at preventing STD’s but are less effective at preventing pregnancy. Birth control is effective at preventing pregnancy but does nothing about STD’s. As a result, the AIDS epidemic spurred many people to switch to condoms instead of birth control. This substitution definitely reduced the spread of AIDS, but it would not have been possible without legal abortion because abortion is the “backstop” against a condom failing to prevent pregnancy. If there had been no access to abortion, many couples would not have switched to condoms and the AIDS epidemic would have been more serious. An interesting research question is the elasticity of demand for sex with respect to disease risk – there might have been an overall decline in sexual activity.
10 This is analogous to the very famous seatbelt story. There is good evidence that mandatory seat-belt laws actually
