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Hidden Brain: Relationship Between Having Babies And The Economy

Mar 6, 2018
Originally published on March 6, 2018 6:21 am
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STEVE INSKEEP, HOST:

We have a new way to forecast the timing of the next recession. Economists look for leading economic indicators - you know, what happens first on the way to a recession. Well, social science research suggests that we should look at people making babies. NPR's social science correspondent Shankar Vedantam is here.

Hi, Shankar.

SHANKAR VEDANTAM, BYLINE: Hi, Steve.

INSKEEP: What would making babies have to do with the health of the economy?

VEDANTAM: Well, economists have known for a long time, Steve, that there's a relationship between the state of the economy and the number of births in a country. Typically, people choose to have kids when times are good, postpone having kids when times are bad. Economists call this relationship between the birthrate and the economy procyclical, meaning the two tend to go up and down together.

INSKEEP: Oh, which makes perfect sense because having a kid can be expensive. And you don't want to do that if you think you're heading into downtimes.

VEDANTAM: Exactly. Now, I was talking to Kasey Buckles at Notre Dame. Along with Daniel Hungerman and Steven Lugauer, she just analyzed more than 100 million births between 1989 and 2015. By examining the birth certificates and other data, the researchers worked backward and calculated when these babies were conceived. Buckles found a relationship between conceptions and the last three recessions that isn't just procyclical but something that I would call pre-cyclical.

KASEY BUCKLES: If you think about the great recession, for example, we didn't start to see collapse in the financial industry or in the automotive sector until 2008. But when we look at conceptions, we see that they were already starting to decline by mid-2006. So the decline in conceptions preceded the decline in the economy by at least a year.

INSKEEP: Ah, people felt something coming or experienced something negative in their own lives before it made the news.

VEDANTAM: That's exactly right. So I asked Buckles why it is that the conception rate seems to predict recessions. Here's what she said.

BUCKLES: We certainly don't mean to suggest that people are psychic. But it does seem that, you know, if you think of the recession as being like an earthquake, that there are early tremors that people are able to pick up on. It may be just that they hear things that are happening around their firm, with their employer. People take that into account when they make decisions about their families.

VEDANTAM: You know, in some ways, Steve, this finding is not surprising. If your firm is not filling open positions, you may think, OK, things might not be going so well now. Now's not the right time to be expanding my family. If enough people make the same decision, you get a version of the wisdom of the crowd. The aggregated signal identifies weakness in many parts of the economy, and this is how recessions begin.

INSKEEP: Some of us may just sense that this or that economic recovery has gone on about as long as it's going to and that something is going to change soon.

VEDANTAM: Precisely.

INSKEEP: Shankar, thanks very much.

VEDANTAM: Thank you, Steve.

INSKEEP: That's NPR's Shankar Vedantam, our social science correspondent, also the host of a science podcast and radio show that explores the unseen patterns in human behavior called Hidden Brain.

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