Children Are 'Inferior Goods' for the Poor

rich have fewer kids
Disproving the Theory?
The Freakonomics people are making my head hurt again by making the argument that children are "inferior goods," as opposed to "normal goods." Personally, I think if you start referring to children this way they'll soon become "damaged goods," but that's an entirely different topic.

A can of worms was opened up by this blog post as they introduced the economic argument that children must be inferior goods, as they fit the classic economic definition: something people don't buy as much of, the more money they have. As in, you would buy more cars if you had more money, but less Ramen noodles. Therefore Ramen noodles = inferior goods, and cars = normal goods. And rich people are having fewer children, so voila -- kids are inferior. (Let's just hope all the rich aren't actually buying kids.)

But wait, what about all those wealthy Manhattanites having between 4 and 14 kids?

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It looks like those people featured all over the news and in reality TV are an anomaly and not a trend. Dang it, and I was getting ready to have three more kids and pretend I was wealthy. In real reality, higher income couples do produce fewer children. It's a historical fact, backed up by data.

This is where I argue that children aren't actually goods, and (hopefully) are not bought and paid for. Acquiring children is not the same as acquiring vacation homes, even if the amount of money you spend at the end of the day may be similar. Note -- the average cost of raising a child to adulthood is $250,000, as is this beautiful lake house in upstate New York. It's your call -- have another baby, or grab a 4-bedroom, remodeled home with a hot tub and private boat deck.

Which one of these goods do you think is inferior?


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