I have tried [here and here] and largely failed to explain how the classic free-rider problem in economics applies to child rearing in the modern world, so I thought I would give it one last stab. In reading through the 300+ comments on the issue it became clear to me that the use of the word “child” and the phrase “free rider” caused many people to loose the capacity for abstract thought.
To avoid this mental shutdown on the part of many, we’re not going to talk about children and the problem of free riders but instead talk about horses and the problem of the “gratis giddyup.”
Let’s perform a thought experiment in which horses still occupy the same critical economic role as they did in 1850s. The economy must have tens of millions of new horses of many different specialized breeds in order to function. Horses are so important that if a plague wiped out all the horses, the economy would collapse.
Now economically useful horses don’t just fall from the sky. Wild horses are useless for most purposes and even then they must be caught and trained. Domestic horses must be breed, foaled, provided with food, shelter and veterinary care and, most importantly, trained to saddle, yoke or pack. It takes four years from the point of conception to produce an adult horse. All this costs money up front. A lot of resources must be invested in a horse years before it matures to the point that it produces more than it consumes.
Fortunately, there is plenty of money available because horses are private property and every breeder knows that he has a right to recoup whatever he spends on raising the horse when he sells it. Bankers and investors know that as well. So do the customers who buy the horses from the breeders. Everyone just expects that the cost of using a horse automatically entails compensating the breeder for all the costs incurred in raising the horse in the first place, in addition to the day-to-day cost of maintaining the animal.
As a result, the free market works efficiently to channel resources into the production of the horses that the economy needs to function. Many people make a good living breeding horses, investors get good returns and people who need horses to perform work have a steady, high-quality supply.
Now let’s pretend disaster strikes. Animal-rights activists push through a law saying that animals are no longer private property that can be bought and sold. People can still breed and keep horses and use them for work (indeed the economy still needs large numbers of horses) but they can no longer sell them. Horse breeding stops being a business.
Many people continue to breed horses because they love doing it. However, the free market has ceased to allocate resources to horse breeding. Horse breeders support what is now a hobby by other non-related economic activities. When the horses reach adulthood they just give them away to anyone who promises to spend money to take care of them. Now the assumption is that if you need a horse the only cost is the cost of the horse’s day-to-day upkeep. Over time, people forget that they ever had to pay for horses in the first place.
A shortage of horses soon develops that prompts a political response. In order to insure a supply of horses, the state begins to subsidize hobbyist-breeders by providing free grazing land, horse trainers and veterinary care. The subsidies are funded by taxes paid by everyone whether they breed horses or not.
Soon a backlash develops. People who don’t breed horses resent having to pay taxes to subsidize other people’s hobbies. They point out that becoming a horse breeder is purely voluntary and that horse breeders derive great pleasure from the activity which more than compensates them for all the time and money they voluntarily chose to spend. Further, non-breeders say they already support horses when they pay for the day-to-day upkeep of the horses that they personally use. They argue that breeders should be grateful that somebody is out there providing upkeep for the horses they so enjoyed raising. Non-breeders claim that since they derive no personal benefit from the subsidies, they shouldn’t have to pay them and then they get on their horses and ride off.
Then a blogger points out that even with the subsidies included, non-breeders were not paying anything close to the total life-cycle cost of their horses. In effect, they were getting their giddy-ups pretty much gratis. More importantly, they never paid any amount equal to or greater than an otherwise identical horse-breeder. This meant that economically, raising horses is a sucker’s bet and that we could expect that, as in all other similar circumstances, the gratis-giddyup problem would cause the affected economic product, in this case horses, to vanish from the market.
Non-breeders were outraged. Didn’t everyone know that they rode their horses to many important jobs or used their horses to accomplish many important economic tasks? The blogger pointed out that the only thing that mattered economically was that the true life-cycle cost of the horses was actually paid by those who benefited from the labor of the adult horses. Any other arraignment would be economically unstable and would eventually lead to a possibly fatal horse shortage. Most non-breeders didn’t listen.
Let’s say our little thought experiment has a happy ending. The animal-rights activists, who were all radical vegans, all eventually died of vitamin B12 deficiency and horses become private property again. The non-breeders were shocked to rediscover the true cost of horses, but the free-market kicked in and everyone had all the horses they needed. Everybody, including the horses, lived happily ever after. The End.
Many people simply will not apply basic economic concepts to child rearing. They think that once the subject becomes children the laws of economics suddenly no longer exist. People who can immediately see that asking people to raise horses without any compensation would lead to a sharp drop in the number and quality of horses produced can’t see that asking people to raise children without compensation causes a steep drop in the number and quality of children produced. People who would never think of making use of a horse without compensating the horse breeder nevertheless have no qualms (even in principle) about using the labor of adults without compensating the parents who raised them. People who would never argue that we could depend on hobbyists to produce sufficient horses (or steel or food or software) out of sheer love of doing so have no problem believing that we can depend on hobbyist parents producing enough productive adults. People who can instantly identify a free-rider problem in virtually any other context cannot see it in child rearing.
The sad truth is that the laws of economics apply to every economic activity, including child rearing. Pretending that they don’t and that a shrinking subset of the population will sacrifice more and more in order to provide the trained labor that the rest of population needs is a fool’s bet. We don’t expect horses, steel, food, antibiotics or any other economic goods to just appear when we need them, without cost, and we shouldn’t expect children to do so either.
[update 2006-03-10 18:24:00: I think a lot of people let their fear of what they imagine the political response will be if a certain model of problem is accepted as true effect how they evaluate the accuracy of the model itself. (Its like people who can’t tolerate any suggestion that males and females might have different cognitive strengths and weaknesses because they think that politically that automatically will lead to second class status for women.)
I see that a lot in the comments on this issue. People go to silly extremes trying to invalidate the free-rider model because they image that accepting the model automatically mandates socialized subsidies as a solution. Well, it doesn’t and it certainly isn’t the solution I would support.
The first requirement of solving any problem is to get a good model of the problem. You should evaluate the model on its own merits first and then worry about the political fallout later. If you let political concerns drive you analysis you will end up in a functionally delusional state.]