Poor Economics

by Abhijit Banerjee

  Sanjay Gandhi, the younger son of the Indian prime minister Indira Gandhi and her heir apparent until his death in a plane crash in 1981, was convinced that population control needed to be an essential part of India’s development plan. It was the central theme of his many public appearances during the period called the Emergency (mid-1975 until early 1977), when democratic rights were temporarily suspended and Sanjay Gandhi, despite holding no official position, was quite openly running things. The family-planning program must be given “the utmost attention and importance,” he said in a characteristically understated quote, “because all our industrial, economic, and agricultural progress would be of no use if the population continued to rise at the present rate.”1

  India had had a long history with family planning, starting in the mid-1960s. In 1971, the state of Kerala experimented with mobile sterilization services, the “sterilization camps” approach that was to be the cornerstone of Sanjay Gandhi’s plan during the Emergency. Although most politicians before him had identified population control as an important issue, Sanjay Gandhi brought to the problem both an unprecedented level of enthusiasm and the ability (and willingness) to twist as many arms as necessary to implement his chosen policies. In April 1976, the Indian Cabinet approved a formal statement of national population policy that called for a number of measures to encourage family planning, notably, large financial incentives for those who agreed to be sterilized (such as a month’s wages or priority on a housing list), and more frighteningly, authorization for each state to develop compulsory sterilization laws (for, say, everyone with more than two children). Although only one state proposed such a law (and that law was never approved), states were explicitly pressured to set sterilization quotas and fulfill them, and all but three states “voluntarily” chose targets greater than what was proposed by the central government: The targets totaled 8.6 million sterilizations for 1976–1977.

  Once laid out, the quotas were not taken lightly. The chief of the Uttar Pradesh bureaucracy wrote by telegraph to his principal field subordinates: “Inform everybody that failure to achieve monthly targets will not only result in the stoppage of salaries but also suspension and severest penalties. Galvanise entire administrative machinery forthwith repeat forthwith and continue to report daily progress by crash wireless to me and secretary to Chief Minister.” Every government employee, down to the village level, and not excluding railway inspectors and school teachers, was supposed to know the local target. Parents of schoolchildren were visited by teachers, who told them that in the future, their children may be denied enrollment in school if they did not agree to get sterilized. People traveling by train without a ticket—a widely accepted practice among the poor until then—were handed heavy fines unless they chose sterilization. Not surprisingly, the pressure occasionally went much further. In Uttawar, a Muslim village near the capital city of Delhi, all male villagers were rounded up one night by the police, sent to the police stations on bogus charges, and sent from there to be sterilized.

  The policy appears to have achieved its immediate target, although the incentives probably also led to some overreporting in the number of actual sterilizations. In 1976–1977, 8.25 million people were reportedly sterilized, 6.5 million of them during just the period July–December 1976. By the end of 1976, 21 percent of Indian couples were sterilized. But the violations of civil liberties that were an integral part of the implementation of the program were widely resented, and when in 1977, India finally held elections, discussions of the sterilization policy were a key part of the debate, as captured most memorably by the slogan “Indira hatao, indiri bachao (Get rid of Indira and save your penis).” It is widely believed that Indira Gandhi’s defeat in the 1977 elections was in part driven by popular hatred for this program. The new government immediately reversed the policy.

  In one of those ironic twists in which historians delight, it is not inconceivable that in the longer term, Sanjay Gandhi actually contributed to the faster growth of India’s population. Tainted by the emergency, family-planning policies in India retreated into the shadows and in the shadows they have remained—some states, such as Rajasthan, do continue to promote sterilization on a voluntary basis, but no one except the health bureaucracy seems to have any interest in it. In the meantime, however, generalized suspicion of the motivations of the state seems to be one of the most durable residues of the Emergency; for example, one still routinely hears of people in slums and villages refusing pulse polio drops because they believe it is a way to secretly sterilize children.

  This particular episode and China’s draconian one-child policy are the most well-known examples of severely enforced population control measures, but most developing countries have some form of population policy. In an article published in Science in 1994, John Bongaarts, from the Population Council, estimated that in 1990, 85 percent of the population of the developing world lived in countries where the government had the explicit view that their population was too large and needed to be controlled through family planning.2

  There are certainly many reasons for the world at large to be worried about population growth today. Jeffrey Sachs talks about them in his book Common Wealth.3 The most obvious is its potential impact on the environment. Population growth contributes to the growing carbon dioxide emissions and hence to global warming. Drinking water is getting scarcer by the day in some parts of the world, in part directly because there are more people drinking and in part because having more people means growing more food and therefore using more water for irrigation (70 percent of fresh water is accessed for irrigation). The World Health Organization estimates that one-fifth of the world’s population lives in areas where fresh water is scarce.4 These are of course vitally important issues, and individual families deciding how many children to have probably do not fully take them into account, which is precisely why a population policy might be needed. The problem is that it is impossible to develop a reasonable population policy without understanding why some people have so many children: Are they unable to control their own fertility (due to lack of access to contraception, for example), or is it a choice? And what are the reasons for those choices?

  WHAT IS WRONG WITH LARGE FAMILIES?

  Richer countries have lower population growth. For example, a country like Ethiopia, where the total fertility rate is 6.12 children per woman, is fifty-one times poorer than the United States, where the total fertility rate is 2.05.

  This strong relationship has convinced many, including academics and policy makers, of the validity of an old argument first popularized by the Reverend Thomas Malthus, a professor of history and political economy at the East India Company College, near London, at the turn of the eighteenth century. Malthus believed that the resources countries have are more or less fixed (his favorite example was land), and he therefore thought that population growth was bound to make them poorer.5 By this logic, the Black Death, believed to have killed half of Britain’s population between 1348 and 1377, should get credit for the high-wage years that followed. Alwyn Young, an economist at the London School of Economics, recently reinstated this argument in the context of the current HIV/AIDS epidemic in Africa. In an article entitled “The Gift of the Dying,” he argued that the epidemic would make future generations of Africans better off by reducing fertility.6 This reduction of fertility occurs both directly, through the reluctance to engage in unprotected sex, and indirectly, because the resulting labor scarcity makes it more attractive for women to work rather than have babies. Young calculated that in South Africa in the coming decades, the “boon” of a reduced population would be large enough to outweigh the fact that many of the AIDS orphans would not get a proper education; South Africa could be 5.6 percent richer in perpetuity as a direct consequence of HIV. He concluded by observing, no doubt for the benefit of his more squeamish readers, “One cannot endlessly lament the scourge of high population growth in the developing world and then conclude that a reversal of such processes is an equal economic d
isaster.”

  Young’s article generated a heated controversy that centered on whether the HIV/AIDS epidemic indeed causes a decline in fertility. Careful follow-up7 has since refuted this claim. However, people were mostly willing to concede his other premise—that a cut in fertility would make everyone richer.

  Yet this is less obvious than it sounds. After all, there are many times more people on the planet today than when Malthus first formulated his hypothesis and most of us are richer than Malthus’s contemporaries. Technological progress, which did not figure in Malthus’s theories, has a way of making resources appear from nowhere; when there are more people around, there are more people looking for new ideas, and so perhaps technological breakthroughs are more likely. Indeed, for most of human history (starting in 1 million BC), regions or countries that had more people were growing faster than the rest.8

  The case is therefore unlikely to be settled on purely theoretical grounds. And the fact that today, countries with higher fertility rates are poorer, doesn’t tell us that they are poorer because of high fertility: It could instead be that they have high fertility because they are poor, or some third factor could cause both high fertility and poverty. Even the “fact” that periods of rapid economic growth often coincide with sharp declines in fertility, as in Korea and Brazil in the 1960s, is ambiguous at best. Did families start having fewer children when growth accelerated, perhaps because they had less time to take care of them? Or did the reduction in fertility free up resources for other investments?

  As we have had to do many times already, we need to shift perspective, leave the large question aside, and focus on the lives and choices of poor people—if we want to have any hope of making progress on this issue. One way to start is by looking at what happens within the family: Are large families poorer because they are large? Are they less able to invest in the education and health of their children?

  One of Sanjay Gandhi’s favorite slogans was “A small family is a happy family.” Accompanied by a cartoon image of a beaming couple with their two plump children, it was one of the most universal sights in late 1970s India. This could have been the illustration of an influential argument offered by Gary Becker, a Nobel Prize–winner in economics. Families, Becker argued, face what he called a “quality-quantity trade-off.” That is, when there are more children, each of them will be of lower “quality” because the parents will devote fewer resources to feeding and schooling each of them properly.9 This would be particularly true if the parents believed, rightly or wrongly, that it is worth investing more in the most “gifted” of their children, which, as we have already discussed, is what happens in the S—shaped world. Some children could then end up being entirely denied their life chances. If children born into large families are less likely to receive proper education, nutrition, and health care (what economists call investment in human capital), and if poor families are more likely to be large (say, because they cannot afford contraception), this creates a mechanism for the intergenerational transmission of poverty, in which poor parents beget (many) poor children. Such a poverty trap could potentially provide a rationale for a population policy, an argument that Jeffrey Sachs makes in Common Wealth.10 But is it actually true? Do children who grow up in larger families have obvious disadvantages? In our eighteen-country data set, children born into large families do tend to have less education, though this is not true everywhere—rural Indonesia,11 Côte d’Ivoire, and Ghana12 are among the exceptions. However, even where it is true, there is no presumption that it is because the children have many siblings that they are poor and less educated. It could just be that poor families who choose to have many children also do not value education as much.

  To test Becker’s model and find out whether an increase in family size leads to reduced investment in children’s human capital, researchers have tried to focus on instances where the increase was in part beyond the control of the family. Their results are surprising: In such cases, they found no evidence that children born in smaller families are really more educated.

  One example of a situation where a family ends up with more children than it expected, given that most of the world’s poor do not use fertility-enhancing therapies, is the birth of twins: If the family was planning to have two children, for example, but twins are born at the second birth, the first child then has one more sibling than he or she would otherwise have had. The sex composition of children is another factor. Families often want to have both a boy and a girl. This means that a couple whose second child was of the same gender as their first is more likely to plan for a third than a family that already has a boy and a girl.13 In many developing countries, parents are also more likely to have an additional child if they have not yet had a boy. Compare a girl who is a first child, and has one female sibling, with one who has a male younger sibling: The former is more likely to grow up with two or more siblings than the latter, for the purely accidental reason (at least till the advent of child sex-selection technologies) that she had a younger sister rather than a younger brother. A study in Israel that focused on these sources of variation in family size found, surprisingly, that large family size appears to have had no adverse effects on the education of the children, even among Israeli Arabs, who are mostly very poor.14

  Nancy Qian found an even more provocative result when she looked at the effect of the one-child policy in China. In some areas, the policy was relaxed to allow a family whose first child was a girl to have a second child. She found that girls who, because of this policy, got a sibling they would not otherwise have had received more education, not less,15 in apparent defiance of Becker’s theorem.

  Another piece of evidence comes from Matlab, Bangladesh. This area was the setting for one of the most impressive experiments in voluntary family planning in the world. In 1977, a sample of half of 141 villages was selected to receive an intensive family-planning outreach program called the Family Planning and Maternal and Child Health Program (FPMCH). Every two weeks, a trained nurse brought family-planning services to the homes of all married women of childbearing age who were willing to receive her. She also offered help with prenatal care and immunizations. Perhaps not surprisingly, the program led to a sharp reduction in the number of children. By 1996, women in the program areas between the ages of thirty and fifty-five had about 1.2 fewer children than those in the areas that didn’t get the program. This change was accompanied by a drop in child mortality by one-fourth, but since the program also directly intervened to improve child health, there is no reason to attribute the increase in child survival to the change in fertility. Yet despite the facts that fertility decreased and lots more money was spent on making children healthier, by 1996, there was no significant difference in the height, weight, school enrollment, or years of education achieved for either boys or girls. Again, the quality-quantity relationship seems to be absent.16 Of course, these three studies alone may not be the last word, and there is certainly a need for more research, but for now, our reading of the evidence, contrary to what Sachs argues in Common Wealth, is that there is no smoking gun to prove that larger families are bad for children. As such, it is hard to justify top-down family planning as a means of protecting children from having to grow up in large families.

  That family size does not adversely affect children seems counterintuitive, however: If the same resources have to be shared among more people, some of them at least should end up with less. If children do not suffer, who does? One possible answer is the mother.

  The Profamilia program in Colombia suggests that this is definitely something to worry about. Launched by a young obstetrician named Fernando Tamayo in 1965, Profamilia was the major provider of contraception in Colombia over the next few decades and is one of the longest-standing family-planning programs in the world. By 1986, 53 percent of Colombian women of reproductive age were using contraceptives, mainly obtained through Profamilia. And women who had access to family planning as teenagers through this program had more schooling and were
7 percent more likely to work in the formal sector than those who did not.17

  Along similar lines, the Bangladeshi women who benefited from the program in Matlab were heavier and taller than those in the comparison group and also earned more. The availability of contraception gives women more control over their reproductive lives—they can decide not just how many babies to have but also when to have them. And there is clear evidence that getting pregnant too early in life is very bad for the health of the mother.18 Moreover, early pregnancy, or even getting married, often results in dropping out of school.19 But to locate the case for family planning in society’s desire to protect the mother raises an obvious question: If getting pregnant at the wrong time is not in her interest, why does it happen? More generally, how do families make fertility decisions, and how much control do women have over these decisions?

  DO THE POOR CONTROL THEIR FERTILITY DECISIONS?

  One reason the poor may not be able to control their fertility is that they may not have access to modern contraception methods. According to the official UN report on progress toward the Millennium Development Goals, filling “unmet demand” for modern contraceptives could “result in a 27 percent drop in maternal deaths each year by reducing the annual number of unintended pregnancies from 75 million to 22 million.”20 Poor and uneducated women are much less likely to use contraception than richer and more educated women. Moreover, in the last decade, there has been no increase in the use of modern contraception among poor women.

  Yet, low usage is not necessarily a sign of lack of access. The same kinds of demand-supply wars that have animated the field of education have their equivalents in the family-planning arena and, perhaps not surprisingly, the supply and demand wallahs are often the same people. The supply wallahs (such as Jeffrey Sachs) emphasize the importance of access to contraception, noting that people who use modern contraceptive methods have much lower fertility rates; the demand wallahs retort that this relationship just reflects the fact that those who want to reduce fertility mostly find their way to the right kind of contraception without any outside help, so just making contraception available will not do very much.