Most goods are “normal” (cars), and people want to spend more money on them as they get richer. But some things are “inferior,” and people reduce their consumption of them as they get richer. Very cheap foods like rice have this characteristic. Richer people get interested in meat and fresh vegetables and tend to cut back on the rice and beans. Justin Wolfers says children are an inferior good like this, citing international data:
This, to me, shows something different. Specifically it shows that Africa (dark blue) is both full of poor countries and full of high birthrates. But starting at a relatively low level of per capita GDP (somewhere between $1,000 and $5,000), the negative correlation between birthrates and income goes away. But Catherine Rampell adds in-country data from a Gallup survey of the United States to back Wolfers up:
Only a third of people with annual household incomes over $75,000 say they want families with three or more children. Of all Americans with income levels below $75,000, 44 percent say they want families with at least three children.
Karl Smith critiques the conclusion that this shows children to be an inferior good, but I think he’s too quick to dismiss the possibility that the causation is running the other way. It seems to me very plausible that people are obtaining higher incomes because they don’t want to have large numbers of children. After all, a person who doesn’t want many children seems to me to be a person who’d be likely to prioritize education and career over romantic relationships in her teen years and early 20s. A household that doesn’t want many children is also a household that’s likely to locate itself in a high housing cost metropolitan area where median incomes are higher. If you move from New York City to Oklahoma City, your nominal income is overwhelmingly likely to fall, but your per square foot housing costs will also fall. Whether or not this makes sense as a tradeoff is going to have a lot to do with how much desire you have for space. People who want unusually large families should have an unusually high demand for space, which will make them unusually likely to be willing to forgo income-earning possibilities of the coasts in favor of the space-consuming possibilities of lower-income metro areas.