Robin Hanson's Novel Solution to Low Fertility Rates

Economist Robin Hanson returns to discuss his proposal for increasing fertility rates through financial incentives for parents. He explains how governments could pay parents for having children by issuing shares of the future tax revenue those kids will generate. Robin argues this would provide better motivation for good parenting. The hosts consider potential impacts on social classes, racism, sexism, cultural objections, arbitrage opportunities, and more.

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Simone Collins: Hello, everyone. We are so excited today. A little bit, a little bit fanboying and girling out because we are joined by the fantastic, brilliant, and super fun Robin Hanson. He, in addition to being a professor of economics at George Mason University, has written some of my favorite books, including The Elephant in the Brain, which is just mind blowing, and The Age of M.

He, he talks about prediction markets, grabby aliens,

Malcolm Collins: signaling. Well Simone didn't know that he had invented the term grabby aliens. And I didn't know he had invented the term great filter. This is in regards to the Fermi paradox. So genuinely like a huge figure in terms of and, and, and being at the we, we go to these events where it's all like young, like up and coming, like supposed to be all the smartest hip young people.

And he's always at these events. Because he is considered like the one person not in our generation who is Seminal to these communities. He's so with it. He's so with

Simone Collins: it.

Malcolm Collins: So what we're going to talk about on this one is we were giving a lecture at one of these that have been called manifest [00:01:00] about pronatalism.

And then he just drops this idea about how it could be solved. That we had never heard before and was really interesting and we want to go into it.

Would you like to know more?

Robin Hanson: All right. So let's first acknowledge that any solution requires some policy people to do some things. And if they don't do certain things, it doesn't happen.

And I'm honestly not that optimistic. The right people would do the right thing here. And we should, we could talk a bit about that. So the fundamental problem is a lot of things in our culture. Are oriented toward low fertility and a lot of people really like those things that is they're really deeply attached to intensive parenting, long years of schooling, delayed mating, gender equality, and there's a whole bunch more and any solution that induces high fertility.

Is going to cut into some of those things. And so even if we could get people to adopt the solution, which I'm about to tell you, and they [00:02:00] try it for awhile, there's a risk that they'll see that. In fact, it cuts into those things. They'll go, Oh no, Oh no, we can't have that. And then they would turn it off because they'd rather have declining population and low fertility than to have some of those things that, that I think is a fundamental risk that is just a fundamental cultural conflict.

And a lot of. Maybe even the majority of elites really prefer the package that leads to declining population, even when they understand that they could do otherwise. But doing otherwise will change some of these key parts of their culture that they're really attached to. So that's my fundamental warning.

But given that, if you're willing to prioritize fertility high enough, i. e. doing what it takes to raise fertility I think there is in fact a simple solution. So, first of all, there's a lot of studies on how incentives to increase fertility and their effects. And so there are definitely a lot of studies that show small incentives have pretty small effects.[00:03:00]

And then there's some studies that show modest incentives have modest effects. And as an economist, I feel really confident. Huge. Big effects. No question, right? If you gave people a million dollars per baby, a lot of babies, okay, that's just going to happen. Right.

Malcolm Collins: Businesses would be started around that, you know, exactly.

Robin Hanson: Right. Now, if I say that, then people will say, who, how can we possibly afford that? Cause now you're imagining we're going to have to tax everybody else to pay for this. And that's going to be a huge tax and we're not going to like it. So the key observation is that we don't have to pay for it. We can make investors pay for it.

So here's the trick. So at the moment, in say the U. S. We have roughly a hundred trillion dollars in debt. That's not just the explicit bonds we've sold, but also the promises we made, like Medicare and Social Security, that we haven't set up a way [00:04:00] to pay for. Which is yeah, we owe it. Okay. And if you divide that by 300 million people, that's 300, 000 a person.

And there are some other estimates of unfunded promises that are even higher, say 700, 000 a person. Oh, boy. Even the literal debt per person. In terms of bonds is a hundred thousand dollars a person. So we're talking somewhere between a hundred thousand, seven hundred thousand dollars a person that's owed at the moment in the U.

S. in debt. Okay. So here's the key observation. The way we've decided to pay taxes, it may not be just or right, but it's how we do it. Every time a new baby is born, we saddle them with their fraction of that debt. They're just on the hook to pay one out of 300 million fraction of that debt. That's how we do it.

We basically take all citizens alive and we say, You all owe this debt. So every new baby literally owes a hundred to 700, 000 of debt and [00:05:00] is expected to pay it in terms of bondholders are buying these bonds because they expect them to actually get repaid. So if we go with sort of the bondholders perspective on debt, then they're expecting every new baby to pay another, say 300, 000 of the debt.

And so that means it's worth it. Up to a 300, 000 to create a new baby because they're unhooked to pay that part of the debt. So if we paid a parent, say 200, 000 to make a baby, and then they're going to pay us 300, 000 in present value is that this isn't just future. This is the present value of all that stuff.

Then we're making 100, 000 profit.

Malcolm Collins: Yeah. So, so let's talk about this functionally, because I think when we talk about it in terms of dividing up the debt, it can sort of confuse people because they're like, well, this is negative value, but it's not exactly negative value because you can buy and sell debt and this debt might not be paid back as is.

So we can almost think of this as you're telling me if I'm explaining this wrong, but I'm trying to explain it in simpler [00:06:00] terms. When a person has a kid companies. can sort of buy parts of that kid's future earnings. So when that kid is paying taxes a portion of those taxes might go directly to the government, but then a portion of those taxes would go to paying off this debt, which is owed on this kid.

Robin Hanson: Right. So you're, you're jumping ahead. I didn't say how we would hand the money out. Okay. Now you're talking about how to hand it out. So, which I agree is an important thing, but I'm just trying to first say on average, a random kid should be willing to pay not 300 thousand, but we should also Be willing to issue more bonds to cover it.

That is, we don't actually need to pay up the money among ourselves. We could just issue more debt, say 300, 000 of new debt for every kid. Hey, their parents, 300, 000. to have that kid. And then we're all better off.

Simone Collins: And it's a net neutral,

Robin Hanson: at least with that. But that's on average, we want to, you want to talk about, well, how exactly do we