Children as 'investment goods'

Two Italian economists have a new study that asks why birth rates are falling in more developed countries. They look at an Italian policy change that decreased expected pension income for a lot of people, and found that couples with a bigger drop in future income prospects were significantly more likely to have a child. They conclude that children are more likely seen as "a source of future financial support for their retired parents, as opposed to the traditional 'consumption' motive which suggests that a reduced pension income should lead to a reduction in parents' consumption and, therefore, fertility." In other words, one way to see kids is as a future source of financial support (investment) or a drain on one's budget (consumption). I assume that the connection to lower birth rates in developing countries in general is that as people have higher incomes and better standards of living, there is less of a concern about having that future financial support.

Even if this makes sense, I have to say that it's stuff like this that makes people think we economists have no heart...

Troubled

I know I've been neglecting this blog the last several weeks but I hope you will forgive me and read on because I could use your input. Tonight I find myself deeply troubled, and I'm wondering if I'm not alone. It's partly the financial meltdown, which I have been following closely, probably more closely than the average person, trying to understand what's going on and why. But even with a Ph.D. in economics, I'm not really sure I get it and it's gotten to a point where I'm not sure I even want to know anymore. The headlines are starting to feel unreal and if I let myself think about it too carefully, I'd probably panic, which is exactly what I know we all need NOT to do.

Another part of my feeling troubled is the presidential campaign. I've been following that pretty closely too, watching the debates and reading a lot of the spin. For a while now, I have been really disappointed in John McCain, a man I once considered voting for, because I feel like he is just not the same man he was even a year ago. But the nastiness that has been evident at his (and even more, at Sarah Palin's) recent rallies, goes beyond disappointing - it's just plain scary. David Gergen was on the Colbert Report last night and I think he summed it up well when he said (of McCain): "He needs to rein it in. He is a better man than that." I know there are plenty of nut jobs in this country, not to mention perfectly sane people who happen to be racist bigots; but the truly scary thing is that "leaders" like John McCain are condoning their hate.

Utlimately, maybe that is what's at the root of my troubled heart tonight: a fundamental lack of leadership, and therefore a lack of trust in our government. I am praying that Obama, who inspires me more than any politician has since Clinton in 1992, will be able to stop this downward spiral but given current rhetoric, I also fear for his life if he actually wins. The thing is, for the last eight years, Americans have seen our civil liberties eroded and our standing in the world deteriorate. I think many in my particular socioeconomic class have not been personally affected and so we have watched it all with a sort of detached horror - intellectually, we know all the things Bush has done are awful but it's not clear what we could/should do about it. But if Obama loses, or is assassinated before taking office, I honestly wonder if we are all aware of how bad it could get...

I hate to be such a downer (those who know me know that this is not my usual m.o. at all). So help me out - am I being too pessimistic? Or do you feel the same frustration? How are you dealing with it?