Robust Efficient Fertility

In our rich world today, almost all descendants are willing to pay more to exist than they cost most potential ancestors to create them. Making kids is thus economically efficient. And a completely free market (all possible property & trades) would achieve this outcome via parents negotiating mutually beneficial deals with their kids. Sure, many parents might give their kids the gift of life, asking for little in return, but even without such generosity, lots of kids would get made. 

Yes, kids don’t yet exist when key parenting choices are made. But even so, we could use betting markets to ensure that most parent-kid arrangements are approved by kids. Let parents post their proposed make-a-kid deal, and then let anyone bet on if, as an adult, the made kid would eventually say they’d have preferred to not exist. (Maybe they commit suicide to prove?) Deal goes forward if markets give <10% chance of this outcome. (Why this cutoff? Hard to believe harm of regretted existence typically > 9x gain from existing.)

Such deals might endow kids with debt to be repaid to parents, or with equity obligations to give some fraction of their income to parents. And such rights might be transferable, to let parents get cash to pay for parenting. Alas, most people today find such deals morally abhorrent, and thus we ban them. And that causes a market failure: kids are only made if parents choose to give them the gift of life, without being able to legally obligate them to return the favor. We thus get too few kids.

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. 

You might object: is this reaally the most cost effective way to spend money to make kids? Shouldn’t we study each particular society in detail for decades, to figure out the max policy by this criteria? Well, no, that’s not obviously the right policy criteria, the world is complicated, and we shouldn’t wait decades. I think it makes more sense to just look for simple robust ways to fix market failures. Endowing parents with transferable kid tax fractions looks simple and robust to me, and I don’t see a way to get closer to the efficient but to-me-inexplicably-offensive free market outcome. 

(Yes, might make sense to forbid parents from making kids if markets estimate >10% chance the kid would later say they regret existing. But this may happen so rarely as to make these markets not worth the bother.)