Contra Hanson on Fertility Incentives

specifically, child tax deeds

Robin Hanson has proposed a new policy proposal for dealing with low fertility:

Fortunately, there is a pretty similar arrangement that offends people far less: governments now typically endow each new resident kid with a proportional share of its debt. Apparently it is offensive to owe your parents for your life, but good community health to owe your government for its general spending before you were born. Go figure.

So governments borrowing to pay parents to have kids, and then taxing those kids later to pay back the loans, gets us pretty close to the free market solution, solving the market failure created by our preventing mutually-beneficial parent-kid deals. There just one catch: the free market solution would tend to pay parents more for making kids who later make more money to pay back loans or equity. In contrast, a government paying the same per kid, regardless of quality, wouldn’t do this. 

But we can get closer if we endow kids with equity, not debt, obligations. Give parents a transferable right to a fixed percentage of the taxes those kids will later pay governments. Parents of kids who will later make more money could sell those rights for more, just as in a free market solution. Market failure problem solved, mostly. This costs governments nothing now, and is a net gain for them later. 

The idea is more or less this: that parents are given a share of their child’s taxes (which I will call the child tax deed), and a right to sell it. Putting aside the fact that I think monetary incentives would have a weak effect on fertility at the aggregate level, and that large incentives are probably dysgenic, the policy he proposed has one major issue: social signalling.

Parents have children for different reasons. Some of them did so by accident. Some feel pressured by their general social circle. Some of them are pressured by closer relatives like parents or their significant other. But I think that a large number (perhaps even a majority) do so for personal reasons: that they like kids or want to leave behind a legacy.

What would these parents do with their child tax deed? “Sell” it to their children.

In fact, parents who decided to have kids for other reasons who nonetheless grow to have loving relationships with their children will probably ceremonially sell their deed to their children. If so, then children who do not have their deed will (rightfully) question the nature of their relationship with their parents. And if the parents don’t want that, then they would be pressured into giving it to them, even if they may not have naturally made that decision based on their own feelings.

The choice of who to give the child tax deed to will not only affect their relationship with their child, but also their social status. Loving your kids is high status. Not giving the deed to the child will become low status, so it should be expected that most parents will give the deed to their child. And if that is the cultural expectation, then the policy of child tax deeds should not have a large increase on fertility, as parents will no longer expect to receive that money.