Let us do a little dialog tackling common criticisms of the idea that high cost cold play a role in reducing birth rates in the West.
Skeptic: “Economic cost as a reason for falling birth rates? Please. Poor families used to have six, eight, even nine kids! If they managed, today’s ‘richer-than-ever’ families have no excuse.”
Response: At first glance, it does seem contradictory. How can financial strain be a reason when today’s GDP per capita far surpasses that of our great-grandparents? But it’s important to understand how our modern economy has shifted costs, particularly for services that are crucial to raising a family.
Skeptic: “Come on, we’re just talking about producing and providing for kids. Surely, with all our wealth, that should be easier.”
More GDP, But Higher Costs for Key Services
What “richer” means today is that we produce more things: more clothes, more food, more electronic gadgets. But growth hasn’t been equal across all areas. We’ve gotten much better at producing things that can be automated in factories—phones, clothes, toys—but services like education, healthcare, and childcare rely on human labor and haven’t become significantly more productive.
Economist William Baumol coined the term cost disease to describe this: sectors that don’t gain from productivity improvements, like teaching or healthcare, still see rising wages to compete with more productive sectors. This increase in costs affects precisely the things families need most. In essence, while we have cheaper gadgets, family-relevant services have only gotten more expensive. (See more on Baumol’s cost disease here).
Skeptic: “But kids don’t need fancy services! My grandparents managed without paying for daycare or tutoring, and they had a big house for a fraction of today’s costs.”
Housing: Higher Demand Meets Limited Supply
That’s true—but housing costs have changed dramatically. Real estate is in high demand across Western cities, but unlike electronics, it isn’t easy to automate or scale up. Many countries restrict where and how much you can build, especially in urban areas where people increasingly want to live.
Take Norway and Sweden, for example. Deregulation in the 1980s made borrowing easier, which fueled a rapid increase in housing prices and led to a banking crash. This boom, however, was largely about accessible loans rather than a genuine increase in available housing. As a result, today’s young families face a bidding war for homes, leading to far higher housing costs than previous generations had to contend with.
Skeptic: “But isn’t that their own fault for insisting on living in cities? Kids don’t need to grow up in penthouses!”
The “Crunch”: Debt and Delayed Family Formation
While location plays a part, another shift is the amount of education people now need to be competitive in the workforce. This extended education period means young adults typically start earning and saving much later than in the past. Add to that the burden of student loans, and the timing for financial stability has shifted. By the time many feel financially ready to settle down, the costs of housing and childcare have already risen even higher.
Skeptic: “This all sounds like excuses. Even if all this is true, people should just do what past generations did. Kids don’t need a ton of resources.”
Changing Parental Investment: Fewer Kids, Higher Investment per Child
Historically, families did have more children, but survival rates were also lower. As child survival rates have improved, the focus has shifted: parents now tend to have fewer children and invest more resources into each one. Researchers call this a “quantity-quality trade-off” in economics: as the likelihood of children surviving into adulthood has increased, parents have started to focus more on maximizing the educational and developmental resources per child.
This pattern is supported by research on how birth rates decline as economies develop. With fewer children, parents have greater opportunity to invest time, money, and attention into each child, hoping to ensure their success in increasingly competitive societies. This shift in expectations adds another layer of financial pressure to raising a family today.
Skeptic: “Alright, but isn’t feminism to blame for all this? Back when women stayed home, everything worked just fine. Families managed on a single salary, and we didn’t have these problems.”
Why We Can’t—and Shouldn’t—Go Back to a Single-Income Household Model
While it’s true that single-income households were more common in past generations, the idea that we could simply “go back” is misguided for several reasons. First, the economic context has fundamentally changed. From the 1950s to the 1970s, housing, education, and healthcare costs were much lower relative to the average salary. This allowed many families to live on one income without sacrificing a decent standard of living. Today, those same essentials are significantly more expensive in relation to average wages.
Secondly, the single-income model wasn’t a universal experience. Women’s participation in the workforce has always been present, and many families relied on both parents working, even if that work was unofficial or underpaid. The idea of “traditional family roles” is largely a myth that overlooks the historical reality of economic need, especially for working-class families.
Additionally, women entering the workforce has driven economic growth, expanding productivity and boosting family incomes. A sudden return to a single-income model would likely have harsh economic consequences, shrinking the labor force, slowing economic growth, and reducing household income—ironically making it harder, not easier, for families to afford children.
If half the population isn't workin anymore then you are losing half the GDP. For the US that would mean reducing economy down to Italian level.
Finally, the two-income household also reflects a shift in social expectations and individual freedom. Today, women have the opportunity to pursue careers, contribute financially, and make choices beyond household roles, which represents a meaningful societal advance. Reverting to a single-income model would roll back many of these gains and limit personal choice.
Skeptic: “Fine, but you’re still richer today! Just stop spoiling kids with all these extras, and focus on the basics.”
More Goods, Fewer Essentials
The argument that “we’re richer than ever” only holds if we’re comparing today’s families to past generations in raw GDP terms. In reality, today’s parents may have more gadgets and material goods, but they often have fewer of the essentials—like affordable housing, accessible childcare, and other family-supportive services. This economic reality shapes family planning in Western countries, where couples may delay or even forgo having children due to the sheer cost of essentials, not just luxuries.
In Conclusion
The skepticism around economic cost as a barrier to having children overlooks some fundamental shifts. Yes, in GDP terms, we’re richer, but today’s wealth distribution favors industries that have little to do with family life. From Baumol’s cost disease in non-automated services to the housing supply crunch, modern economies have made the “essentials” more expensive. The decision to have fewer children isn’t just about lifestyle—it’s an economic reality shaped by rising costs in areas critical to family life.
To add to my own personal experience. Had I had the health and energy I would have wanted a third child, but I simply do not have space for it. My two kids already share a room. Research in Norway show that the primary reason why birth rates have dropped is not that couples have stopped having children but that parents like me are choosing to have two children rather than three.
Average dwelling space in Norway has actually fallen since the 1980s so this is not an imaginary observation.
Nordic style welfare services with parental leave, affordable child care and similar has long helped keep Nordic birth rate higher than other Western countries. But now that cost issue is overpowering those incentives.