Delayed Grandparenthood: An Economic Analysis

I am 60 years old. I am a father and I’m not a grandfather. These are facts. I know why these facts are the facts. As a quantitative social scientist, I want to understand these facts for every person who is over the age of 50 and every person who has ever been over the age of 50 since 1900 and out into the future. I want to know these facts in Japan, Thailand, Austria, Israel and Saudi Arabia and Nigeria.

Dora Costa and I have released our descriptive paper studying long run U.S trends. In this Substack, I want to discuss the “quiet part out loud”. First some facts;

#1 Back in 2000, Dora Costa (my wife and co-author) and I published our Power Couples paper.

Costa, Dora L., and Matthew E. Kahn. “Power couples: changes in the locational choice of the college educated, 1940–1990.” The Quarterly Journal of Economics 115, no. 4 (2000): 1287-1315.

This paper is now 30 years old. We document that women’s educational attainment soared and they married educated men and sought to live in expensive big cities where they both could pursue their career and quality of life goals. Home prices are high in these cities and these power women have a high value of time. This leads to them having fewer children and having them later.

#2 We have now released our sequel. Hilary Clinton became a first time grandma at age 74. Laura Bush became a first time grandma at age 74. Michelle Obama is 62 and she isn’t a grandma. Do you see a pattern here? We do.

Non-economists are reading our abstract and the word “rotten” is making them go a pinch nutty. I agree that “rotten” has connotations for non-economists and here I want to discuss this.

The Nobel Laureate Gary Becker introduced the “Rotten Kid Theorem” into economics more than 50 years ago. Here is JPE paper explaining it in mathematical terms.

In our statistical work, Dora and I study the choices of millions of adult young people to delay their fertility. When they delay or do not have a child, their actions have impacts on their parents.

This 2024 New York Times piece deeply moved me.

For a 70 year old woman today who is not a grandmother and who has two adult children, has she had an honest discussion with her “kids” about her needs? What are her rights? If the family has had this discussion, then nobody is “rotten”. If the family hasn’t had these discussions because they are so awkward, then the Coase Theorem arises. While it is “tacky”, why didn’t the aging woman make an offer of $ or childcare to the adult kids to encourage them to have a child? Becker’s Rotten Kid Theorem focuses on this point about the gains to trade within a family.

Coase discussed the fact that “transaction costs” can limit the gains to trade. I claim that embarrassment and the desire not to offend adult children means that these discussions are not taking place.

Am I calling the adult children “selfish”? Not really, they may love their 70 year old parent but not be internalizing how much she gains from the birth of a grandchild. This is the “Rotten Adult Kid” Problem that we mention in our abstract. I do not believe that the outcomes we document ; the decline in the probability of becoming a grandma at a given age is a socially optimal outcome. For some families it is, and for other families it is not. If our paper leads one family to have this awkward discussion then I will feel like we had some social impact with our scientific work.

Our empirical work documents the trend. The population of young adults is some mixture of young adults who have had the discussion with their aging parents and others who have not.

Our choices have consequences for our family dynasties and for society . We need more people on this planet.

When an only child chooses not to have children, this person chooses to make that family extinct. Our paper explores the causes and the consequences of this within family externality. “Heavy is the head that wears the crown!” Adult children are no longer children and their choices have consequences.

In a world where people are having fewer children, these children decide the fate of the dynasty.