Is family planning an economic decision?

Abstract

In most Western countries couples can decide for themselves how many children they want to have and when they want to have them. This means that family size is a choice variable. In this paper we argue that this choice variable plays an important role in economic models. A couple may rationally determine the optimal number of children it wishes to have, but this choice can only be based on expectations. Since children are usually born one by one, the optimal number may be adjusted during the process of total family formation, as a result of the experiences that the parents have with their first children. The timing of the births can result from a rational decision process. However, deviations from this optimal pattern may be caused by a high subjective time preference.