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Government Incentives to Overcook Babies
Australia has a baby bonus. The birth rate shot up on the day the bonus first went into effect, July 1, 2004. As Andrew Leigh and Joshua Gans explained, over 1000 births were delayed from June to July and about 300 births were delayed by more than two weeks.
The bonus is scheduled to rise from $4,187 to $5,000 this July 1 and Leigh and Gans have pleaded with the government to phase it in order to prevent too much birth delay which they think could be unhealthy for the child. Alas, the government has declined.
All of which leads Andrew to denounce, in delightful Aussie-speak, the bonus as an "unhealthy incentive for women to over-cook their babies."
I couldn't agree more. As a libertarian and a humanist I join with Andrew to denounce all government incentives to overcook babies.
Hat tip to Dave Undis.
Posted by Alex Tabarrok on March 24, 2008 at 07:45 AM in Economics | Permalink
Comments
I agree this is a strange act on the part of government.
However, the welfare state's disincentivizing of child birth has a significant bit to do with the plunging child birth rate. Now the welfare state is trying to undo what it has caused over the last century.
Thomas E. Woods has done some good writing on this front tying plunging international birthrates to the expansion of social safety-net programs world-wide.
Posted by: Jip at Mar 24, 2008 7:56:23 AM
I'm not sure how you can overcook babies because one could argue that really
doctors are undercooking babies. Has the relationship between the incentives
of doctors getting paid more for c-sections been looked at? Also I wonder
how this compares to the US tax policy and how often parents "help" babies get
born before Jan 1.
Mike
Posted by: Mike at Mar 24, 2008 8:51:32 AM
If a parent is worried about the damage that leaving a child
in the womb for an extra two weeks or more will cause, then
perhaps they should be responsible and not worry about the
extra money, as nothing is more valuable than a healthy child.
Posted by: Brian Headrick at Mar 24, 2008 8:58:10 AM
I believe there is a similar incentive (in the opposite direction) in the US. The tax-deduction for dependent child is retroactive to the first of the year, so there's a substantial bonus for having your child born on 12/31 rather than 1/1
Posted by: ryan at Mar 24, 2008 9:01:25 AM
We may be seeing various delaying - or accelerating - tactics in use in America, this time involving the other end of the lifespan, when the federal estate tax will be repealed for 2010 and reinstated the following year.
It's late December 2009 and Granny's circling the drain? Do whatever is necessary to keep her alive and kicking (okay, not necessarily kicking) until you hear "Happy New Year," and it could save a lot of $$$. On the other hand, if it's late in December 2010 and she's in a similarly distressed state, well, nobody will mind a little plug-pulling.
Posted by: Peter at Mar 24, 2008 10:12:06 AM
According to the article: "Most of the effect was due to changes in the timing of inducement and cesarean section procedures."
Given that these procedures would have led to births before they otherwise would occur, perhaps for the convenience of the parents or M.D., the program seems more like a government incentive NOT to undercook babies.
Either way, its an interesting example of the power of incentives.
Posted by: A student of economics at Mar 24, 2008 10:21:49 AM
I thought more time in the womb was a good thing?
Posted by: Jacqueline at Mar 24, 2008 10:40:54 AM
Mike/A student of economics:
Undercooking babies for the convenience of the doctor or parents may be common, but there are plenty of pregnancies that really do go on too long. Once the baby is about two weeks overdue, as I understand it, the placenta can start to break down and amniotic fluid levels can drop, which can lead to some fairly serious complications. If Australians are not in the habit of inducing their babies early (and I don't know if they are or not), then failing to induce labor when the health care provider recommends really could cause problems for those babies that are already overdue.
Posted by: jonvw at Mar 24, 2008 11:33:07 AM
I'll give Alex his self-proclaimed "libertarian" label. But "humanist?" I've read the posts here - seems like a reach.
Posted by: meter at Mar 24, 2008 11:43:43 AM
Oh, but overcooked in just the right way, they are so tasty!
Posted by: Barkley Rosser at Mar 24, 2008 12:37:21 PM
But if consenting adults want to overcook their babies, is it really appropriate for the state to prevent them?
Posted by: Justin at Mar 24, 2008 1:11:53 PM
More time in the womb is usually to the good. On balance I would guess these delays were beneficial, since we're talking mostly about changes in C-section scheduling and induction, not (for example) the administration of drugs to delay the onset of labor.
But it is possible for pregnancies to go on too long. It just isn't that common.
Posted by: bbartlog at Mar 24, 2008 1:47:12 PM
uhhh, this is stupid? Why doesn't australia just import enterprising immigrants from all the countries that are, ahem, totally fucked?
Posted by: TitaniumDreads at Mar 24, 2008 1:47:29 PM
I see that as a libertarian and a humanist you oppose - but as a gourmand, what do you think?
Posted by: secret asian man at Mar 24, 2008 2:05:58 PM
TitaniumDreads: Because they absolutely hate immigrants. To the point where if you make it to the mainland you'll be interned, and in the case of one set of refugees, they had them interned on a foreign island in the pacific.
Posted by: Marcin Tustin at Mar 24, 2008 3:52:49 PM
Alex, thanks for the link. And Jonvw, thanks for anticipating our response. We show in the paper some evidence that low-range Apgar scores are more common among very big babies. Both undercooking and overcooking are bad (in a non-Swiftian way, Barkley!).
One thing that the whole enterprise demonstrated to me was the difficulty of two economists establishing expertise in the field of public health. Several of the media stories quoted obstetricians who either implied that parents do not respond to financial incentives, or failed to understand our paper. The fact that they didn't consistently side with us probably made it easier for the Australian government to ignore what we thought was a straightforward and obviously sensible recommendation: phase in the increase in the Baby Bonus, don't raise it by $742 overnight.
Economic imperialism works better in the journals than in the policy arena, it seems.
Posted by: Andrew Leigh at Mar 24, 2008 5:28:11 PM
It was my understanding they are desperate for immigrants and encourage immigration. Skilled immigration, anyway.
Posted by: Cliff at Mar 24, 2008 5:56:14 PM
Marcin
According to the 2001 census, 22% of the Australian population was foreign-born. Compare this to those other famous immigrant-hating countries Canada (20%) and the USA (11% in 2000).
The previous Australin government did take a very firm line on illegal immigrants, possibly because they neighbour a very large, very poor country with porous borders.
With all due respect, your argument is not so much overcooked as incinerated.
Posted by: forty degrees south at Mar 24, 2008 6:12:07 PM
APGAR isn't everything, or, really, very much, in the long term. And A $742(AU) incentive to keep babies in isn't much compared to the US incentives to pop 'em out before the new year. The back-of-envelope calculation which induced (ultimately) the birth of a child I know (at 9:45 PM on Dec. 31, 2006) put the value of his tax incentive at about $3000 US. And early is almost always less good than late.
Posted by: Dingbat at Mar 25, 2008 2:22:47 PM
Andrew Leigh: Are you sure it's correct to equate "very big baby" with "overcooked baby?" There are other, known causes for overly large babies (defined as >4 kg birth weight).
In the western world, the trend is clearly towards "undercooking," because (a) you're most often guessing at the actual conception date, and (b) at least in the US, doctors are taught that the length of gestation is 40 weeks, even though pregnancies that are not interfered with last, on average, 41 weeks plus one day.
So please, let's not overlook the dangers of applying an average (particularly a skewed average) as though it were a prescription. There's a mean value, and there is also a bell curve. Some slow-growing pregnancies are still undercooked when the average time is reached.
And of course, some babies are ready before the average time. It would indeed be foolish to insist on keeping a fully-cooked baby in utero once it's done. But because the medical establishment skews 8 days towards the undercooked side, the danger of a pregnancy going on too long is a lot lower than the danger of a baby being induced before it's really ready.
Posted by: Rich at Mar 26, 2008 2:42:56 PM
