Journal of Population Economics

, Volume 24, Issue 3, pp 1053–1070 | Cite as

Hyperbolic discounting and fertility

Original Paper

Abstract

This paper analyzes the impact of hyperbolic discounting on the timing and on the number of births. Using a simple three-period model, it shows that, without the opportunity to shift the burden of rearing children into the future, hyperbolic discounters will give birth to fewer children. If child-care costs can be shifted completely to later periods, the impact of hyperbolic discounting on births depends on the underlying motive for motherhood, namely, whether children are regarded as consumption or investment goods. A large-sample empirical analysis, which uses an inconsistent savings pattern as an indicator of time inconsistency, confirms the theoretical results.

Keywords

Fertility Hyperbolic discounting Time inconsistency 

JEL Classification

J13 D19 D91 

References

  1. Becker GS, Barro RJ (1988) A reformulation of the economic theory of fertility. Q J Econ 103(1):1–25CrossRefGoogle Scholar
  2. Becker G, Lewis HG (1973) On the interaction between quantity and quality of children. J Polit Econ 81(2):S279–S288CrossRefGoogle Scholar
  3. Bernheim BD, Rangel A (2007) Behavioral public economics: welfare and policy analysis with non-standard decision makers. In: Diamond P, Vartiainen H (eds) Behavioral economics and its applications. Princeton University Press, Princeton, pp 1–84Google Scholar
  4. Boldrin M, De Nardi M, Jones LE (2005) Fertility and social security. NBER working paper 11146Google Scholar
  5. Cigno A (1993) Intergenerational transfers without altruism. Family, market and state. Eur J Polit Econ 9(4):505–518CrossRefGoogle Scholar
  6. Cigno A, Rosati FC (1996) Jointly determined saving and fertility behaviour: theory, and estimates for Germany, Italy, UK and USA. Eur Econ Rev 40(8):1561–1589CrossRefGoogle Scholar
  7. d’Addio AC, d’Ercole MM (2005) Trend and determinants of fertility rates: the role of policies. OECD Social Employment and Migration working papers 27Google Scholar
  8. Diamond P, Köszegi B (2003) Quasi-hyperbolic discounting and retirement. J Public Econ 87(9–10):1839–1872CrossRefGoogle Scholar
  9. Frederick S, Loewenstein G, O’ Donoghue T (2002) Time discounting and time preference: a critical review. J Econ Lit 40(2):350–401CrossRefGoogle Scholar
  10. Gruber J, Köszegi B (2002) A theory of government regulation of addictive bads: optimal tax levies and tax incidence for cigarette excise taxation. NBER working paper 8777Google Scholar
  11. Happel SK, Hill JK, Low SA (1984) An economic analysis of the timing of childbirth. Popul Stud 38(2):299–311CrossRefGoogle Scholar
  12. Heckman J, Willis R (1975) Estimation of a stochastic model of reproduction: an econometric approach. In: Terleckij N (ed) Household production and consumption. Columbia University Press, New YorkGoogle Scholar
  13. Hotz VJ, Klerman JA, Willis RJ (1997) The economics of fertility in developed countries. In: Rosenzweig MR, Stark, O (eds) Handbook of population and family economics. Elsevier Science, Amsterdam, pp 275–347Google Scholar
  14. Immervoll H, Barber D (2005) Can parents afford to work? Childcare costs, tax-benefit policies and work incentives. OECD Social Employment and Migration working papers 31Google Scholar
  15. Laibson D (1997) Golden eggs and hyperbolic discounting. Q J Econ 112(2):443–477CrossRefGoogle Scholar
  16. Lampi E (2006) The personal and general risks of age-related female infertility: is there an optimistic bias or not? Working paper in economics 231. Göteborg UniversityGoogle Scholar
  17. Loewenstein G, O’Donoghue T, Rabin M (2003) Projection bias in predicting future utility. Q J Econ 118(4):1209–1248CrossRefGoogle Scholar
  18. Moffitt R (1984) Optimal life-cycle profiles of fertility and female labor supply. In: Schultz TP, Wolpin, K (eds) Research in population economics. JAI, Greenwich, pp 29–50Google Scholar
  19. Salanie F, Treich N (2006) Over-savings and hyperbolic discounting. Eur Econ Rev 50(6):1557–1570CrossRefGoogle Scholar
  20. Strotz RH (1956) Myopia and inconsistency in dynamic utility maximization. Rev Econ Stud 23(3):165–180Google Scholar
  21. Thaler RH (1981) Some empirical evidence on dynamic inconsistency. Econ Lett 8(3):201–207CrossRefGoogle Scholar
  22. Wigniolle B (2008) Fertility in the absence of self-control. CES working papers 2008.68Google Scholar

Copyright information

© Springer-Verlag 2009

Authors and Affiliations

  1. 1.Faculty of Business Administration and EconomicsUniversity of MarburgMarburgGermany

Personalised recommendations