Incentives Matter, Even When Making Babies
A tax credit may not be the most compelling reason to have a child, but research shows that children born in December have real advantages.
A little bundle of joy, and possible tax write-off.
Photographer: Didier Pallages/AFP
“Incentives matter” is the most central lesson of economics. And they matter no matter what kind of social activity you examine or which level of the economy you study.
Economists used to believe that not many people moved across state lines because of tax rates, for example, but a study published earlier this year suggests that there was indeed a tax-driven exodus from California about a decade ago. Or consider lithium, a critical component for some kinds of batteries. Fears of a shortage, and subsequent high prices, drove further exploration, and one of the biggest lithium deposits was recently discovered in Pennsylvania. Again, incentives matter.