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Parenthood and effective altruism

Summary

The choice to become a parent is one of the biggest and most binding life decisions we can make. How might that decision go if you want to incorporate principles of effective altruism in the big decisions of your life? In considering the costs and attractions of parenthood, I will make the case that having children can indeed be consistent with those principles. I’ll also explain why I think the EA movement should be open to the idea of parenthood as part of an EA life.

How does parenthood fit into a life based on effective altruism?

I am not a parent myself: I have to make my estimation of the costs and some of the benefits from the data I can gather, including experiences and opinions of parents. However this decision can only be made from such a point of inexperience. Indeed, one of the reasons this is a difficult decision is that there are few realistic options for changing one’s mind after one has had a child, and for women the option is only open for a limited (but unknown) timeframe.

What are we asking?

It can be useful to consider big decisions abstractly, to determine the ideal sequence of actions to take in our life without consideration for our individual psychologies. This can make us aware of the decision space, and encourage us to cultivate helpful desires. However, when we make decisions we must consider who we are. Within the effective altruist movement we seek to ask how we as individuals can achieve the most good possible. If a proposed action would render a particular person miserable, it’s highly unlikely they will be able to stick to it. Moreover, the question of potential parenthood is usually being asked by two people whose relationship offers them mutual support. The well-being and psychological needs of both those people must factor in the analysis.

What are the costs of a child?

Estimates of the financial costs of child-raising range from the considerable to the enormous, but the figures available are not robust or free from bias. A UK insurance group has estimated £220,000 to raise a child from birth to 21[1], with childcare (£60k) and education (£70k) forming the bulk of this. The number has been criticised on a number of grounds[2] by economist Tim Harford,[3] who also a pointed out the obvious benefit to a company which sells life insurance of inflating the accepted cost of parenthood. The Joseph Rowntree Foundation and the Child Poverty Action Group made a more conservative estimate of £148,000 for a couple raising one child to the age of 18.[4] This figure is derived from their minimum income standard (or MIS[5]), which is their calculation of the minimum support needed for two adults and one child. Currently set at £468 per week, the MIS outstrips the minimum wage two people would earn in the UK, suggesting that two adults earning minimum wage would be unable to support any children. The fact that many do suggests the MIS is not actually a minimum.[6]

While meeting the needs of your child will cost a significant amount – especially paid childcare in the early years – the manner in which you do it has some flexibility. As adults, as part of an EA life, we have chosen to limit our consumption and live more simply. These simpler lives may certainly exceed a ‘minimum standard’ – they can be downright lovely. Some of the reasons for this include cultivating tastes for less expensive pleasures and recreations, as well as leveraging non-financial resources such as education, or proximity to friends and family. The same principles, I believe, can be extended to our children without deprivation.

Bryan Caplan’s excellent book Selfish Reasons to Have More Kids[7] reviews the evidence from 40 years of adoption and twin studies with a frankly liberating result: barring actual deprivation or trauma, children are largely who they are going to be as a result of their genetic makeup. In long-term measures of well-being, education and employment, parental influence exerts a temporary effect which disappears when we are no longer living with our parents. So costly added extras (music lessons, coaching and tutoring, private school fees) are probably not going to change your child’s life in the long term.  (However, data on the antenatal environment suggests benefit to taking iodine, but avoiding ice-storms and licorice during pregnancy.[8]) Sharing time together and finding common interests can build a good relationship and help a child develop without major costs.

Taking this information into account, I estimate that for two parents living in the UK, the cost of raising a child to independence while providing what’s needed for their health, education and wellbeing will be between £150-£200,000. If we estimate 18-21 years for them to reach such independence, this gives an approximate range of £3500-£4800 per parent per year. But we don’t ‘lose’ our children when they are no longer dependent upon us: it might be better to consider the cost as a lifetime cost, so that if you become a parent at 30 and expect to live till you are 80, the cost is more like £2000 per parent per year over one's remaining years of life.

This considerable cost can be put into perspective with other spending decisions. The annualised lifetime cost of parenthood is less than many spend annually on a car and petrol. It is less than the cost differences at stake in deciding which city to live in, or whether to live rurally. It’s much less than the difference in wages between two potential careers. For this reason I think it is a real mistake to consider the financial costs of parenthood as being categorically different to many of the other lifestyle choices we make. It would seem irrational to choose a profession that would have significant adverse effect on your well-being for the sake of a £2000 p.a. increase in wages.

In addition to straightforward financial outlay, parenthood comes with costs of time and opportunity. Loss of flexibility and leisure mean you won’t be able to take all opportunities (like taking on extra work to make more money or advance your career). Late notice travel is unlikely to be possible. You will probably be sleep deprived for a large part of the first year or more of your child’s life, and this may impact on your work performance. The work of parenting will take time, though some of it may be outsourced at the cost of increased financial outlay.

So, this baby is going to cost you about £2000 a year and take a variable but large amount of your time, which will equate in the end to another chunk of money. For parents taking parental leave or working less than full time to provide childcare, there may be delay to career progression as well as income.  Does this represent an unacceptably large sum of money and time to be compatible with the goal of maximising our impacts for the good?

I would argue it’s possible to integrate this cost into one’s personal rather than charitable budgets. When deciding if we would try to start a family, my partner Toby and I planned a ‘baby budget’: we would each contribute a portion of our income to the fund for our child’s needs. By doing this we can still meet our giving pledges, but adjust other spending patterns. In effect, we would channel money from ourselves to this other person, without reducing our commitments to give. If the costs turn out to be higher than we can absorb this way, I may reduce my giving, but am confident of still being able to give over £1,000,000 in the course of my career.

Likewise, we would plan to continue to work in our careers full time (after a period of parental leave). We envisage that our personal time budgets would change pretty dramatically.  I don’t work all the hours in a day (even if it sometimes feels like it!) and neither does my partner.  We spend time talking over coffee, we listen to music, we read, we walk, we hang out with friends, I knit and sometimes I watch a lot of crappy television. How might that time budget change? There would be fewer sleep-ins, and more wakeful nights. I would probably exchange bad TV for audiobooks while breastfeeding. Our walks would be shorter and slower, and will be more likely to end in a playground than a pub.

Some of this – the sleeplessness, bits of pregnancy and the process of childbirth – would not be fun. Again, I don’t think this represents a categorical difference from the sacrifices we elect to make in pursing other long term goals. In my case, I’ve worked 84 hours of night shifts in a week, a feat which requires several days to recover physically and mentally, because it was integral to training in my career. I’ve studied for hours at either end of a full time working day because I want to progress in my specialty.[9] If the payoff is worth it, I am prepared to do this too.

So what’s the gain?

First, there can be personal benefits. While parenting is work, it’s also a challenge and a discovery. To observe and take part in the growth of a human from a ball of cells to someone who can talk, think, reason and love sounds to me like a most amazing journey. I expect that parenthood will challenge me to the end of my character. I expect to learn and change and grow.

I don’t think you have to become a parent to learn these lessons, but nor do I think I’ll learn them just by working at my paid job. I might learn them from traveling widely, from climbing mountains, from learning another language, by arguing with strangers in a bar at 3am, by reading all of Derek Parfit’s works, by singing songs with friends in the backyard on a sunny afternoon. For most of us, living a life means doing a lot of things that don’t necessarily earn money or prestige. Some people might be able to work 80 hours a week, to just work and sleep and thrive on that. My observation is that even among highly motivated and talented coworkers, such people are the exception rather than the rule. If I did that I am reasonably sure I’d be burned out and unhappy within 5 years, making such a plan not merely demanding but directly self-defeating.

The desire to be a parent – to have children, either biologically or by other means – does not always arise as a clear-eyed appraisal of the potential benefits. The (faintly derisive) term ‘baby fever’ was coined to denote the intense desire for children that many people experience without being able to fully explain, and possibly in the face of their own analysis of the arguments for and against having a child.  Some preliminary psychological research suggests the phenomenon has complex origins and is observable in both men and women.[10]

It is clear that the longing for children that some people experience can not be overcome by clearly viewing the obstacles to and pitfalls of parenthood. The nature of this desire can be so strong, that even when achieving parenthood seems impossible, people’s wish to become parents will drive them to extraordinary efforts. Fertility clinics treat patients prepared to endure years of waiting[11], followed by uncomfortable and invasive testing, difficult procedures and at least a 65% chance of failure[12] in an effort to become parents. If they were able to rationalise themselves out of wanting children, they would stop before exhausting every possible resource – medical, emotional and financial – in efforts to start a family that might span a decade.  In the light of this reality, the rationalist suggestion I have encountered – that one guard against a desire to become a parent by pre-emptively being sterilised before the desire has arisen – seems a recipe for psychological disaster.

I don’t have the answer to the origin of the longing for children that many experience. It’s almost certainly due to a complex mixture of biological and social factors. It might even be an evolutionary trick. However, the fact remains that this desire is real and difficult to manage if unfulfilled.  It can’t be simply discounted or argued away as irrational. It needs to form part of our considerations in whether or not we choose to (attempt to) become parents, because we must consider how tenable it is to sacrifice our chance to fulfil these desires

Finally we may ask whether parenthood – and the resulting person created – will benefit the wider world? This is a harder good to calculate or rely upon. The inheritance of specific character traits is difficult to predict. It’s certainly not guaranteed that your offspring will embrace all of your values throughout their lifetime. The burden of onerous parental expectations are extensively documented, and it would appear foolish to have children on the expectation they will be altruistic in the same way you are. However, your child is likely to resemble you in many important respects. By adulthood, the heritability of IQ is between 0.7 and 0.8,[13] and there is evidence from twin studies of significant heritability of complex traits like empathy.[14] This would give them a high probability of adding significant net good to the world.

For EA’s making this decision, there is a further benefit in changing how the world sees the EA life. A core message of Giving What We Can is that many people can do a significant amount of good. We are so comparatively wealthy that without significant sacrifice, we can help thousands of people. If the way we live implies that to make this difference you must sacrifice parenthood, this will drastically narrow the range of people who can consider doing the same.

How do we weigh these up?

It’s a complicated ledger.

On the one hand: the vast bulk of your leisure time for perhaps five years and a significant portion for the next 13, a less flexible work and home life, the emotional cost of knowing your heart may never be your own again, and finally your share of the financial cost of £150,000-£200,000. Two parents might be able to save 70 lives by donating this money to Against Malaria Foundation

On the other hand: we demonstrate the level of sacrifice required to make the world significantly better does not require a dramatic deviation from what most people consider ‘a normal life’; we gain all the good that might be contained in one life; two parents grow and develop and enjoy a lifetime with their child, and, for some, there is the fulfilment of a deep desire.

The nature of an individual will almost certainly play a determining role. For myself, I could theoretically cut my personal spending anyway, work more and be able to give more money, to save more lives. I could live just to work, earning to give. But I know such a life plan would be self-defeating and would not last. I’m happy donating 50% of my income over my life, but if I also chose not have a child simply to raise that amount to 55%, then that final 5% would cost me more than all the rest, to the extent I don’t believe I could continue to do so. Julia Wise writes beautifully about how it changed her outlook on life to allow herself the possibility of children,[15] and it’s a feeling that I totally understand because I’ve felt the same. I believe that by making this decision to spend my personal money and time budgets in this way, I’m deciding to meet a major psychological need and to plan a life I can continue to live in the long term. I think this decision will also benefit my future child, and I think there is a significant chance it will benefit the wider world.

Is EA “family friendly”? Why does it matter?

Within the EA movement I’ve sometimes encountered a fairly dismissive attitude to parenthood in the abstract. Sometimes the best on offer is a sort of resigned tolerance, with EA’s advocating we not “shun” people just for having children.[16]  At other times I’ve seen parenthood characterised as foolish, selfish or both, to be discouraged with great zeal. I genuinely wonder where this hostility comes from. Is it simply that the hostile attitudes I’ve encountered have been expressed by people quite early in their lives? The onset of a desire to have a family may post-date one’s third decade (creating difficulties for the half of our species with a limited reproductive lifespan). Possibly it’s so prevalent because in our society women are more likely to express a desire for children than men are, and men dominate some internet EA conversations.

I hope these attitudes aren’t representative. Providing some counter evidence is that since announcing that we are expecting a baby, my husband Toby and I have both experienced a universally warm and excited response from friends and colleagues in the EA community. I’m reasonably sure – and I certainly hope – they aren’t just deciding not to shun us.

I think it’s vital that as a movement, EA enthusiastically embraces parents and potential parents. In order to spread EA values, and to build a robust movement, these values must be tenable as part of a whole life. We are not machines who can spend every waking moment working or earning money to give. We are not able to ignore our fundamental needs in order to eliminate the needs that divert us from spending every moment maximising our actions to a single goal. We need to take into account our psychological needs as we set the goals and paths for our lives.

Finally, I believe we need to recognise that to understand and engage with our complex world, we need to encompass a range of experiences and perspectives. Recent criticisms of the EA movement have raised the concern that we risk cultivating a monoculture.[17] Parenthood is only one variance we can embrace: education, gender, ethnicity are several others, as we continue to build a movement that really does strive to achieve the best it can in the world.

References

1] http://www.lv.com/life-insurance/useful-information/cost-of-a-child, Accessed: 19 Jan 2014]

[2] For instance, more than £50,000 of their figure assumes parents will be pay university fees for their adult offspring (rather than take a universally available fee loan, repayable when their earnings reach a threshold which is currently set above median wage).

[3] Harford, Tim (presenter) More or Less  (audio podcast) 2014, Jan 31. Retrieved from http://www.bbc.co.uk/podcasts/series/moreorless/all [Accessed: 31 Mar 2014]

[4] Meikle J “Cost of raising child in UK increases to nearly £150,000” The Guardian, available at http://www.theguardian.com/money/2013/aug/19/cost-raising-child-uk-increases [Accessed: 23 Jan 2014]

[5] “Minimum Income Standard” http://www.jrf.org.uk/topic/mis [Accessed: 23 Jan 2014]

[6] As advocates for increased welfare support in the UK, we might expect the JRF to have some bias when deciding which costs to include as a ‘minimum’.

[7] Caplan B, Selfish Reasons to Have More Kids: Why Being a Great Parent is Less Work and More Fun Than You Think Basic Books, 2011

[8] The Biodeterminists Guide to parenting [blog] December 12, 2012, available at http://squid314.livejournal.com/346391.html [20 retrieved Jan 2014]

[9] Training as a doctor has also involved some even less pleasant things, but its been suggested to me that most people don’t enjoy reading about them in essays like this.

[10]Brase, GL and Brase SL,  “Emotional regulation of fertility decision making: What is the nature and structure of “baby fever”?” Emotion, Vol 12(5), Oct 2012, 1141-1154.

[11] “NHS Choices: Can I get IVF treatment on the NHS” http://www.nhs.uk/chq/Pages/889.aspx?CategoryID=54 [Accessed 23 January 2014]

[12] “NHS Choices: IVF”  http://www.nhs.uk/conditions/IVF/Pages/Introduction.aspx [Accessed 23 January 2014]

[13] Plomin R, Pedersen NL, Lichtenstein P, McClearn GE. Variability and stability in cognitive abilities are largely genetic later in life. Behav Genet. 1994 May;24(3):207-15. PubMed PMID: 7945151.

[14] Davis MH, Luce C, Kraus SJ. The heritability of characteristics associated with dispositional empathy. J Pers. 1994 Sep;62(3):369-91. PubMed PMID: 7965564.

[15] Wise, J. 2014. Cheerfuly. Giving Gladly, [blog] June 8, 2013, Available at: http://www.givinggladly.com/2013/06/cheerfully.html [Accessed: 01 Apr 2014]

[16] Tomasik, B 2012, ‘The Cost of Kids’ Essays on reducing Suffering August 4, 2012, Available at: http://www.utilitarian-essays.com/cost-of-kids.html [Accessed: 02 Apr 2014]

[17] Kuhn, B “A critique of Effective Altruism” [blog] available at http://lesswrong.com/lw/j8n/a_critique_of_effective_altruism [Accessed 21 January 2014]

Thanks to Michelle Hutchinson and Toby Ord for their useful feedback on earlier drafts of this piece.

Comments (25)

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Comment author: Michael_Dickens 14 April 2014 02:29:00AM 0 points [-]

It looks like all the footnote links in this post go to a non-existent file instead of to the footnotes at the end.

Comment author: Pablo_Stafforini2 14 April 2014 02:51:00AM 0 points [-]

Sorry about that. I'm currently working on fixing this problem.

Comment author: Guest 14 April 2014 03:10:00AM 0 points [-]

Nice post - many interesting points!

One minor comment, regarding this bit:

"In the light of this reality, the rationalist suggestion I have encountered – that one guard against a desire to become a parent by pre-emptively being sterilised before the desire has arisen – seems a recipe for psychological disaster."

It strikes me that one straightforward way to test this claim empirically would be to look at the extent to which the lives of people who are infertile due to some pathology tend to end in "psychological disaster.”

According to the most cited article on the topic ,

"The descriptive literature on the psychological consequences of infertility presents infertility as a devastating experience, especially for women. Attempts to test the psychological consequences hypothesis have produced more equivocal results. In general, studies which look for psychopathology have not found significant differences between the infertile and others. Studies which employ measures of stress and self-esteem have found significant differences."

Perhaps someone feels like investigating this particular sub-issue in more detail!

Comment author: Bernadette_Young 14 April 2014 01:01:22PM 2 points [-]

Thanks for your thoughtful response.

As a medical professional, as well as within my friendship group, I've actually had very extensive experience of people experiencing sub-fertility or infertility. On the basis of that experience I have quite a high prior for this statement. One friend, who underwent 3 years of testing and treatment before becoming pregnant described her feeling on being pregnant as 'the first time in 3 years I haven't felt sad, stressed and unhappy for every hour of the day'.

The essay cited seems to conclude that the literature reveals only 'stress' but not enough to result in a diagnosis of a psychiatric disorder. I would argue the levels of stress involved do not need to meet the criteria for major depression in order to have a significantly negative impact on one's life and productivity. A more recent review of the literature (2007) suggests prevalence of depression and anxiety in patients seeking treatment for infertility that are 2 to 4 times the general population. http://www.sciencedirect.com/science/article/pii/S1521693406001611

Finally, one of the most pervasive emotions experience by people suffering sub-fertility or infertility is a sense of guilt and failure, even among those who know this rationally not to be the case. If you knew you had deliberately produced this difficulty, it seems reasonable to predict those feelings would be very much amplified.

Comment author: Bernadette_Young 14 April 2014 01:22:00PM 0 points [-]

Thanks for your thoughtful response.

As a medical professional, as well as within my friendship group, I've actually had very extensive experience of people experiencing sub-fertility or infertility. On the basis of that experience I have quite a high prior for this statement. One friend, who underwent 3 years of testing and treatment before becoming pregnant described her feeling on being pregnant as 'the first time in 3 years I haven't felt sad, stressed and unhappy for every hour of the day'.

The essay cited seems to conclude that the literature reveals only 'stress' but not enough to result in a diagnosis of a psychiatric disorder. I would argue the levels of stress involved do not need to meet the criteria for major depression in order to have a significantly negative impact on one's life and productivity. A more recent review of the literature (2007) suggests prevalence of depression and anxiety in patients seeking treatment for infertility that are 2 to 4 times the general population (with rates between 20 and 40% compared with 10%) http://www.sciencedirect.com/science/article/pii/S1521693406001611

Finally, one of the most pervasive emotions experience by people suffering sub-fertility or infertility is a sense of guilt and failure, even among those who know this rationally not to be the case. If you knew you had deliberately produced this difficulty, it seems reasonable to predict those feelings would be very much amplified.

Comment author: Matt_in_AZ 14 April 2014 06:33:00PM 1 point [-]

Great post. As the father of a daughter in her second year of college, I'd make two quick comments: 1. The cost estimates of raising a child -- at least in our case -- our vastly overblown. 2. This might be impossible to answer for sure, but seems a more important question than it seems to be given credit: "Finally we may ask whether parenthood – and the resulting person created – will benefit the wider world?" Not that this would be the norm, but because of our daughter, there are many more vegetarians and non-chicken-eating people in the world. At least so far, many people have supported my work and my wife's work in part because of their fondness for our daughter. And, more importantly, she is pursuing a utilitarian career. PS -- Good luck!

Comment author: Bernadette_Young 16 April 2014 12:19:00AM 1 point [-]

Thank you.

I think my reluctance to give a lot of argumentative weight to the benefits my child might add to the world come from how hard it is to be certain - at least from this end. I'm very much aware of being new to the parenting game with untested skills. Also, while both Toby and I have parents who feel strongly about justice and equality, and who almost certainly helped form us to who we are, we also have siblings who differ from us. I am trying not to have too specific a set of expectations for my child. However your daughter sounds like someone to be very proud of - congratulations, and well done!

Comment author: Brian_Tomasik 14 April 2014 07:15:00PM 0 points [-]

Nice post, Bernadette. You make a good case that some people may need to have children to be most effective. My guess is the situation depends heavily on the individual, although assessing which type of individual you are may not be easy. (You might think you don't want kids and then change your mind, or you might think you need kids for a brief time, after which the need fades.)

Comment author: Bernadette_Young 16 April 2014 12:23:00AM 0 points [-]

Absolutely it's going to vary with individuals greatly. The irreversible nature of the decision (and with a limited reproductive lifespan the decision for women and stable couples is irreversible either way) certainly adds to the difficulty in appraising what is right for you as an individual. It's quite difficult to study this, especially as most people will try to come to a position where they believe their decisions have been 'for the best', and so may downplay the degree of suffering not becoming a parent has involved for them.

Comment author: Pablo_Stafforini2 14 April 2014 07:36:00PM 1 point [-]

This is a very interesting essay addressing a very important decision EAs face. Thank you for writing it!

I think your estimates for the annual financial cost of having children underestimate the real costs, because they don't account for the time value of money and because they omit opportunity costs.

To account for the time value of money, we can use the formula used to calculate amortization in business. Assuming a present-value cost of £175,000, an interest rate of 5% and 50 periods, the annual cost for each couple turns out to be about £4,700 per parent per year.

To account for opportunity costs, we can use Brian Tomasik's estimates. He claims that the present-value opportunity costs of parenting are about $380,000, or £225,000. Adding this to the financial costs, we get a total cost of £400,000. Using the formula above, this translates into about £11,000 per parent per year.

However, as Brian notes in private correspondence, the opportunity costs could be much lower if parents outsource them. And parents persuaded by Bryan Caplan's arguments should be less reluctant to outsource these costs. So for you and Toby, and for many other EAs, the estimate is probably lower than £11,000.

Comment author: Brian_Tomasik 15 April 2014 02:29:00AM 0 points [-]

You could outsource the costs if that's something you're inclined to do. I would probably feel guilty about doing so myself.

The opportunity costs can vary a lot based on what your alternative career might have been (e.g., for a would-have-been CEO they're much bigger than for a would-have-been librarian), as well as whether the parenting time comes from your existing leisure time or your existing work time.

Comment author: Bernadette_Young 16 April 2014 12:14:00AM 1 point [-]

I'm not familiar with the theory behind the time value of money to appraise it, but it looks to me like your calculation here has taken my per parent figure and come out with a per couple figure, which (I'm sure unintentionally) makes it look at first read like my estimate is <50% of the true cost). But the figure of £4700 per couple is not wildly different from £4000 per couple per annum, given the uncertainty bounds I'd put on it.

Regarding the opportunity costs estimate here I'd dispute that figure with gusto. I think that estimate is inaccurate and probably inflated for two major reasons.

Firstly, I don't think we have anything like the amount of certainty about that figure - at the very least it deserves some error bars! (Incidentally, I find this is a big problem with back-of-the-envelope calculations that come out with a single figure - the number looks much more authoritative than it should given the uncertainty regarding the factors behind it).

I was deliberately not specific as to the amount of the time cost involved because I was unable to find reliable data to make such an estimate. Brian's essay does not provide any data from which he draws his estimate of 21 hours per week per parent in time opportunity costs (I think I am correct in believing he's not a parent). He simply states it after a long list of the types of work that parenting involves. In his account, the following are 'work': "playing with your toddler…spending quality time with your kid on the weekends, taking your kid to events and friends' houses, going to school functions…giving advice on jobs, and everything else in between." I don't dispute that some elements of parenting are straightforwardly work - probably unpleasant and with no immediate reward for the individual performing them. However to describe playing with your child, engaging in social activities or giving interested advice to a young person exploring future career options as 'work' is a little boggling to me. I suspect that for most people who would class these things as work, parenthood is unlikely to be an attractive prospect.

So I am sceptical of the apparently randomly drawn figure of the hours of work involved. Of course, I'm happy to report back with data on this in a few years.

Secondly (and this criticism also applies to Brian's figure of 21 hours per parent per week even if it were accurate), I would dispute the assumption that each marginal hour of time can be spent in earning money at the same rate as your basic income.

Depending on your type of work, It may not be practically possible: In my case, though I can increase my earnings by taking on extra shifts, the number I can take is capped as I am not allowed to exceed a set number of hours of clinical duty per week (averaged over a period of time). In fact, just yesterday a colleague was reprimanded for having taken on locum shifts which meant he exceeded these hours, and he has had to come off the 'on-call' rota (with a concomitant salary cut) to allow the time to average out. For someone in a full-time salaried position (say a university research appointment), it's not the case that working longer hours increases your pay. For most people in this position it's unlikely to be the case that opportunities exist to find an extra 21 hours of paid work per week which will pay them at a professional wage.

In addition to the practical possibility there's the psychological reality. I don't know many people who can actually consistently and productively do paid work 50+ hours a week. I recall seeing data (on this blog) that suggested those who estimate their working hours much about the mid-40s were a) overestimating and b) no more productive than those who claimed to work fewer hours. Certainly at a population level an inverse relationship is observed between hours worked and productivity

http://www.economist.com/blogs/freeexchange/2013/09/working-hours.

So even we did work in careers that would theoretically allow us to increase our working hours by nearly 50 and be paid for it, I think it's highly unlikely we would sustain that working pattern. (I'm sure some people can, I just know I'm not them!)

Comment author: Pablo_Stafforini2 16 April 2014 01:28:00AM 0 points [-]

Thanks for the reply. You write:

I'm not familiar with the theory behind the time value of money to appraise it, but it looks to me like your calculation here has taken my per parent figure and come out with a per couple figure, which (I'm sure unintentionally) makes it look at first read like my estimate is <50% of the true cost). But the figure of £4700 per couple is not wildly different from £4000 per couple per annum, given the uncertainty bounds I'd put on it.

No, sorry: I took the middle value of your £150-£200,000 estimate (£175,000) then divided this figure by two and used one of the many amortization schedule calculators found online to reach the £4700 figure, assuming a 5% interest rate and 50 annual periods. So £4700 is what each parent would need to pay at the end of each year, over the following 50 years, to cover the costs of having the child. (This assumes £175,000 is the present-value cost of parenthood, rather than the nominal cost.)

I have nothing to add to your comments about Brian's estimates, and I agree with much of what you write. I relied on those estimates because I knew of no better ones. I do however think that if you believe his calculations are inflated you should, if possible, use figures that match your own estimates, rather than no estimates at all. But I grant that this may be quite complicated, since the opportunity costs of parenting may be highly sensitive to factors that vary significantly among different people, as Brian himself acknowledges in his comment.

Comment author: Brian_Tomasik 17 April 2014 09:17:00PM 0 points [-]

Bernadette makes some good criticisms, and I've updated my piece in response. I now put the opportunity-cost figure around $100K of present value, which seems low but not obviously too low if much of the parenting time is not "work." I also changed the opportunity cost from being about extra income to being about how much you value what you would have been doing instead.

Individual differences seem big here. While there are some people like Bernadette and Julia who give extensive thought to this issue, there are others who don't actually care about kids as much but just go along with social custom, spousal pressure, or the results of carelessness with birth control. It's this latter group that my piece is mainly intended to speak to. I don't know the relative proportions of different types of people in the population.

Comment author: Denkenberger 21 April 2015 07:27:28PM *  0 points [-]

If this is still linking to the correct Economist article, it notes that Greece is poorer than other parts of Europe but Greeks work more hours per week. However, I have not seen evidence for causation, that is if the rest of Europe worked more hours, its GDP per capita would actually fall. Has anyone seen this?

Comment author: Toby_Ord 16 April 2014 05:47:00PM 1 point [-]

Hi Pablo,

You are right that the £2,000 per year per parent lifetime cost would be better if it included an adjustment for the fact that the cost aren't evenly distributed over that timespan. However, they *are* distributed over twenty years of that time and I think the amortization calculator you used assumes it is all paid as a lump sum on year one. I set up a spreadsheet to allocate the costs evenly over the first twenty years and then look for which amount this was equivalent to paying if the costs were spread out over the whole 50 years. This was £3,000 per parent per year, which is higher than the £2,000, but quite a bit less than the £4,700. This is still not perfect as the costs are skewed a bit towards the early and late years, but it should be pretty close to the right model.

I also think that 5% above inflation is substantially higher than the best estimates of the risk adjusted rate of return. Using 3%, the cost per annum drops to £2,500, which is pretty close to the original unadjusted estimate.

(Note that you might want something even higher than 5% if you would really like to spend/donate money a lot sooner, but if so, you should also be taking out loans in order to donate more sooner and I've never met anyone doing that).

Comment author: Pablo_Stafforini2 17 April 2014 01:58:00AM 0 points [-]

Hi Toby,

However, they *are* distributed over twenty years of that time and I think the amortization calculator you used assumes it is all paid as a lump sum on year one.

Yes, this is what I assumed. As I note at the end of my previous comment, I took the ÂŁ150-200,000 figure to represent the present-value cost of having a child, rather than the unadjusted sum of payments that parents are expected to make over a 20-year period. I think I made that assumption because Brian's own estimates are adjusted for the time value of money. I agree that, if this assumption doesn't hold in this case, then the cost per parent per year is ÂŁ3,000 (excluding opportunity costs).

Comment author: Brian_Tomasik 17 April 2014 09:07:00PM 0 points [-]

5% above inflation seems reasonable if you invest in stocks, unless you think (as some do) that stock markets are going to systematically have lower returns in the future than they did in the past. I don't see why a risk-free rate would be appropriate, since stocks aren't risky enough to cause problems in many practical situations.

Comment author: Toby_Ord 22 April 2014 05:35:00PM 0 points [-]

Brian, there are several serious sampling biases in most estimates of long run real returns which tend to overestimate the returns. These include:

(1) Time selection bias. The 20th century was unprecedentedly good for stocks. If we instead averaged over wider periods or over the 21st century so far, we get much lower numbers. It is unclear what is the best period to use, but many estimates use the most optimistic one which is suspect. (2) Country selection bias. The US has done unprecedentedly well with stocks. International comparisons give lower returns and are probably more representative of the future (we don't know which country will do best this time round). (3) Within-index selection bias. The major indices are of the top stocks rather than a fixed set, so for example if all the stocks in the S&P 500 went to zero tomorrow, this would really change the real rate of return, but wouldn't change the index that much as the next 500 stocks would replace them -- we need to adjust for that. (4) Between-exchange selection bias. Even attempts to adjust for the country selection bias by using a range of stock markets or indices in different countries often overestimate returns because failed stock markets typically don't appear in the later data for they have ceased to exist. One needs to carefully adjust for this.

I don't recall the exact real returns when these things are adjusted for and can't quickly find a good estimate, but I seem to recall it comes down to less than 3%. If someone has a pointer to a good estimate, I'd love to see it.

Regarding risk adjustment, I didn't mean risk aversion, just that you have to adjust for the chance of losses as well as gains to get an expected rate. Any sensible aggregate will do this.

Comment author: Brian_Tomasik 23 April 2014 09:35:00AM 0 points [-]

Thanks for those notes. :)

http://economics.mit.edu/files/637 says the US Social Security Administration used a 7% real rate of return, but the paper goes on to explain why that seems too high.

https://en.wikipedia.org/wiki/Equity_premium_puzzle says the equity premium for stocks "is generally accepted to be in the range of 3–7% in the long-run." That piece lists reasons to deny an equity premium, similar to those you enumerate, but it also says "most mainstream economists agree that the evidence [for an equity premium] shows substantial statistical power." I don't know enough to evaluate this debate without further investigation, but your concerns about biases seem significant.

Comment author: Julia_Wise2 15 April 2014 09:39:00PM 1 point [-]

Thank you for treating this as the complicated set of issues it is, rather than boiling it down to one thing.

Comment author: Bernadette_Young 16 April 2014 12:15:00AM 0 points [-]

Thank you! I'm very much looking forward to sharing views on the topic in more detail with you in the summer.

Comment author: Julia_Wise2 16 April 2014 02:54:00AM 0 points [-]

I'm looking forward to that too!

Comment author: maillot_Fabregas_2014 27 August 2014 01:26:10AM 0 points [-]

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Comment author: DanielHendrycks 09 September 2014 04:52:14PM 0 points [-]

Many of the costs shared in this post are unfortunately average costs. To set a child up for an earning to give career on Wall Street, top-tier education is necessary and very expensive in most cases. I don't think universities would reduce the expected family contribution even if the parent is donating most of the income to effective charities. Ultimately, if the child does earn to give, then the cost of education is worth it, provided that humanity exists for several years while the child earns to give. As an 18-year-old, I don't intend to have children because if I would, then I'd get a child at, say, age 30, and it'd take the child ~22 years to get onto Wall Street. That's around 2048, and that's so far in the future that humanity's continuation is much more uncertain.