When is a life worth living? A dynastic efficiency criterion for fertility

Pierre-Edouard Collignon

No 2021-21, Working Papers from Center for Research in Economics and Statistics

Abstract: This paper extends the Pareto efficiency to setups with endogenous fertility. Adding an extra child will be a social improvement if her life is worth living. For any criterion for lives worth living, an allocation is efficient when it is Pareto efficient (i.e. with a fixed population) and when no one with a life (not) worth living can be added (removed) without reducing someone’s well-being. I also define the ALW(All LivesWorth Living) equity criterion which requires that all agents have lives worth living. The first welfare theorem stands and I connect with results in the literature (e.g. Golosov, Jones, and Tertilt (2007)). Furthermore, I show that binding constraints on bequests are not necessarily inefficient. Criteria for lives worth living necessarily convey value judgements. As a benchmark, I propose a Dynastic criterion relying solely on parents’ revealed preferences: a child’s life is worth living when, ceteris paribus, her altruistic parent is better off with her being born. Then, setting constraints on bequests exactly such that parents may be paid back for the raising costs implies that the equilibrium is efficient and that all children have lives worth living. Finally, putting these concepts at work, I explore real world policy implications. I show that 1) direct population control (e.g. China’s one-child policy) may be efficient and 2) with external effects to childbearing, Pigouvian taxes restore efficiency.

Keywords: Pareto efficiency; fertility; altruism; bequests (search for similar items in EconPapers)
JEL-codes: D61 H21 J13 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2021-10-27
New Economics Papers: this item is included in nep-dem and nep-dge
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