Roundabout solutions to calm down the abortion debate

In the wake of the recent Supreme Court decision on returning the regulation of abortions to the state level, it is hard to find anyone who does not have an opinion on the matter of abortions. Most of the positions stated are about virtue-signaling or tribal-signaling. Little of it has any productive value nor do they have a chance at persuading people. As such, let me propose a different take on the matter that few have considered: that the debate’s magnitude can only be reduced by indirect solutions.

The issue at hand is that having a child is costly. It clearly alters the life-course of women who become pregnant (regardless of age). This is in addition to the monetary cost of raising children – which is not trivial. As any economist would tell you, increasing the cost of something means you will get less of it. Or, you might see people allocate energy and money to avoiding that cost – which means that demand for abortions would rise with rising costs of childrearing. Reduce the cost of childrearing and you will reduce the demand for abortion. Fewer abortions demanded should please pro-life advocates by reducing the number of abortions while pro-choice people should be satisfied by reducing the number of instances where the choice to abort hasto be made.

Nothing radical here for anyone with a modicum of economics knowledge. However, what is generally underappreciated is how much government policies have increased the cost of childrearing. Consider two examples: childcare and housing.

Childcare is an obvious cost associated with childrearing. Families in the United States can be expected to pay somewhere between $5,110 and $21,610 for full-time service depending on the state of residence. As childcare is a cost associated with the return to work for mothers, it is no surprise that the labor economics literature finds that mothers are quite sensitive to childcare costs in their decisions of when to return to work (and how many hours to work).

However, as Devon Gorry and Diana Thomas found in an article published in Applied Economics, childcare providers are heavily regulated at the state-level regulations with measures such as minimum child-staff ratios, licensing requirements, continuous training obligations, group size restrictions, building requirements, degree requirements etc. While these measures appear to have little relevance to service quality, they clearly raise the price of the services. Gorry and Thomas found that forcing smaller group size by one child increases rates quoted by 9% to 20% whereas degree requirements for educators increased them by 22% to 46%.  Deregulation of childcare would help reduce prices. As childcare accounts for more than 50% of the weekly expenditures on a pre-school age child, such reductions would dramatically reduce the total cost of having kids. In turn, this will make the prospect of having a child less financially less daunting for parents and make them more willing to eschew the decision to abort.

Housing regulations have a similar effect. Why? One of the most important costs associated with children is the area they need in a housing unit. After all, they need bedrooms, room for toys, a play area etc. Also, parents like some privacy and no one wants to go back to the 19th century style of living where kids live in the same bedroom as them. In economist-speak, we would say that housing is a complement to children just like batteries are a complement to electronic equipment and steaks are a complement to whiskey. If you raise the price of a complement, you reduce the quantity demanded of the other good even if its price is unchanged. As my colleague Bryan Caplan notes, “the few empirical papers on this topic fit the theory” – higher housing prices reduce the demand for having children (as seen through lower fertility rates). This means that higher housing prices might incentivize some potential parents to opt for an abortion because of the financial inability to deal with the need for greater space. Housing regulations, by reducing the supply of housing and making it more inelastic, drive-up housing prices.

How much do they drive up prices? A lot! One study for the United States suggest that even mild reductions in land-use restrictions in San Francisco – a particularly egregious municipality in terms of overregulation – could reduce rents by 4% to 8% annually. Another famous study, also using San Francisco, found that land-use regulations adopted in the 1980s increased housing prices by 20% to 40%. Another study, concerned this time with Manhattan, found similar proportions when studying the effects of land-use restrictions on construction costs.  Land-use deregulation would reduce housing prices and thus increase the demand for having children. Logically, it should also decrease the number of cases where parents will consider the choice of aborting.

Moreover, these examples compound each other. Indeed, housing costs are roughly 15% of the operating costs of childcare centres. If land-use deregulation reduced rents by 25%, daycare costs would fall by roughly 4% — an effect that compounds those of deregulating the supply of daycare services.

Abortion legislation is unlikely to resolve this contentious issue to anyone’s satisfaction. While they will not resolve the issue, indirect solutions that reduce the cost of family formation will reduce the contentiousness of the issue. In other words, these solutions might dial down the tone and reduce the stakes in play. This, while not perfect, may help cooler heads to prevail.

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