The Best Way to Save Money Is to Stop Rich People from Having Kids

Piggybacking off of the emerging consensus led by Brookings' Isabell Sawhill, Nicholas Kristof had this to say over the weekend about stopping poor people from having families:

Family-planning programs for the needy pay for themselves: An IUD or implant costs $800, a Medicaid birth is around $13,000.

This is one of the more perplexing sentences I have read in a long while. It might seem at first glance like a sentence about delay. But it can't be. Delaying child birth doesn't reduce the amount of resources it takes to give birth to a child. Whether I have a child now or 10 years from now, it will still require the same amount of doctor labor and use of other medical resources.

The only way to free up the economic capacity dedicated to delivering children is to reduce the number of child births. But, if this is your goal, then focusing on poor children is totally backwards. Rich children command far more resources, both in birth and more generally, than poor children. Thus, initially, the best way to free up national income currently being wasted on children is to reduce the number of children rich people have, not the number of children poor people have.

Kristof notes the $13,000 of economic capacity that is dedicated to delivering a poor baby. But he omits the $18,000 of economic capacity that is dedicated to delivering a baby covered by commercial insurers. Every rich kid birth you can prevent thus delivers 38% more savings than every poor kid birth you prevent. That's cold hard cash that could be spent on other more important things like deepening the nation's capital stock.

And birth is just the start of it. As the following graph shows, children from the highest income group command more than twice the amount of resources as children from the lowest income group:

If we had a lower bucket for families making under $30,000 or $20,000 and a higher bucket for the very rich families, the gap would no doubt be wider still. And this doesn't even get into public school funding disparities (90% of children attend public schools) that result in richer pupils tending to command far more resources than poorer pupils. Given this pattern, it's clear that the best way to save economic capacity from the maw of children is to try to prevent rich kid births first and then work your way down the income ladder until you eventually get to poor kids. Every rich kid birth you prevent is worth multiple prevented poor kid births.

Thus it seems that Kristof has made a grave error in all of this. Every poor kid birth you prevent pays for itself, sure. But every rich kid birth you prevent pays for itself by a massively higher margin. Any public policy aimed at freeing up GDP that's currently wasted on children would surely need to focus most of its resources on eliminating rich kid births.