Transcript The Cost of Family Decline in Lost Social Capital and Increased

The cost of Family Decline
in Lost Social Capital and
Increased Poverty
Dr. Maria Sophia Aguirre
Department of Business and Economics
The Catholic University of America
World Family Forum
Provo, Utah
July 9-11, 2007
Is the Family Relevant for Economic
Development?
 Some would argue that the family is key because:
The earth is limited
The family is a hostile place for women and children
Large families threaten countries’ stability
 Others argue that the family is key because:
Healthy families are needed for the economy to fulfill
its purpose. Therefore it is a reference point for
policy
Growth of the population does not equal poverty
The aging population “trap” threatens sustainable
economic growth and development
I Would Like to Argue
 The focus on family and population is not necessarily
incorrect, but both the population control policies used and
the approach of some international organizations and
countries to the family are mistaken.
 This is because:
 Healthy families are essential for a country as they have a
direct impact on human, moral, and social capital, and
therefore, on resource use, economic activity, and economic
structures.
 Resources are used inefficiently when directed towards
policies that weaken families in stead of policies that
strengthen them. This, in turn, hampers the sustainability
of real economic growth and perpetuates poverty.
How Does the Family Fit in the Economy?
Basic
Activities
Means Used
Role of the
Family
Purpose
Production
Resources
Human
Capital
Basic Needs
Exchange
Market
Human,
Moral, Social
Capital
Profit
Consumption
Optimization
and
Distribution
Appropriate
distribution
Wellbeing
(welfare)
We know from economic analysis
that in economic development
 There is a positive correlation between
human capital, infrastructure and economic growth
healthy institutions and economic development
health and income per capita
 These positive correlations reflect an essential
causal link running from human capital to
healthy institutions (social capital)
infrastructure and technology
 Life expectancy is a significant predictor of
economic growth
Life Expectancy at Birth
100
Years
80
60
40
20
0
High
Latin East Asia Central,
Arab South Asia SubIncome America & & Pacific Eastern States
Saharan
OECD Caribbean
Europe &
Africa
CIS
Source: Human Development Report, 2005, Table 1
Socioeconomic Relevance
Children develop best within a family that is
functional, i.e., with their biological parents in a stable
marriage
The academic and social performance of a child is
very closely related to the structure of the family in
which he lives and this is important for the quality of
human and social capital
The psychological stability and health of a child is
closely related to healthy families and this is
important for worker productivity and government
finances
The breakdown of the family
is a symptom of a sick and
weak society
Abuse of women is 25 times more likely to occur in
an irregular family.
Men who have witnessed domestic violence are
three times more likely to abuse their own wives
and children.
Substance abuse and teen-age pregnancy is higher
in broken families.
Women and children of broken families have a higher
probability of living in poverty.
Increase of the social welfare expenditures burden.
Percentage of Families that are in Poverty by
Family Structure and Ethnicity, 2005
70
60
47.7
46.4
50
46
40
26.4
30
23.7
21.2
20
10
9
7.6
0
Married Single Married Single
White
Asian and Pacific
Married Single Married Single
Black
Hispanic
Source: Annual Demographic Survey, Poverty in the U.S.: US Census Bureau, March 2006,
Table POVO2.
Percentage of Women who are in Poverty by
Family Structure and Ethnicity, 2005
45
40
35
30
25
20
15
10
5
0
40
38.8
26
16.1
9.7
5.9
Married
White
Single
Married
Black
Single
Married
Single
Hispanic
Source: Annual Demographic Survey, Poverty in the U.S.: US Census Bureau, March 2006, Table
POVO2.
Percentage of Children who are in Poverty by
Family Structure and Ethnicity, 2005
60
51.9
49.2
50
41.9
40
30
20.7
20
10
12.6
8.9
0
Married
White
Single
Married
Black
Single
Married
Single
Hispanic
Source: Annual Demographic Survey, Poverty in the U.S.: US Census Bureau, March 2006, Table
POV13.
Developed Countries Welfare Expenditures
vs. Developing Countries Debt in 2004
Nigeria
34
16
Mexico
70 140
WE
FD
235
221
Brazil
UK
433
France
561
867
Germany
1250
US
0
200
400
600
800
Million of Dollars
Source: CIA World Handbook, 2006
1000
1200
1400
The family faces serious health and poverty
problems, especially in the developing world
• Lack of income and assets to attain basic
needs:
Human assets
Natural assets
Physical assets
Financial assets
Social assets
Aging security
• Vulnerability to adverse shocks are linked to
an inability to cope with them
Environmental Health, Welfare and Living Conditions in
Low Income vs Developed Countries
Indicator
% access
House Connection: water
48 / 99
House Connection: sewerage
46 / 99
House Connection: electricity
62 / 100
Access to Improve Water Sources
61 / 100
Access to Sanitation
43 / 100
Solid waste disposal: landfill or incinerated
31 / 78
Solid waste disposal: other (dump,recycled,etc.)
66 / 22
Paved Road
19 / 94
Literacy
53.6 / 100
Under-five mortality (per 1000)
153 / 6
Public Expenditures on Health (%GDP)
1.5/ 6.2
Sources: World Bank, UN, 2006
Deaths Per Year (In Millions)
Causes of Death in Women and Men
18
16
14
12
10
8
6
4
2
0
5 million
new cases
per year
8 million
new cases
per year
300-500
million new
cases per year
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WHO, World Health Report, 2004 , Annex Table 3.
One-Year-Olds Fully Immunized
22%35%
Decrease
Tuberculosis
Decrease
Measles
Immunizations
Immunizations
Percentage as of 2003
100
90
80
70
60
50
40
30
20
10
0
Central,
Latin America
Eastern
& Caribbean
Europe & CIS
East Asia &
Pacific
Against Tuberculosis
Source: Human Development Report, 2005, Table 8
Arab States
South Asia
Against Measles
Sub-Saharan
Africa
Infant Mortality Rates
Number Per 1,000 Live Births
120
100
92% Decrease
80
60
40
20
0
SubSaharan
Africa
South
Asia
Arab
States
East Asia
Latin
Central,
& Pacific America & Eastern
Caribbean Europe &
CIS
Source: Human Development Report, 2005; Table 10
Highincome
OECD
Low Cost Effective Interventions
Cost of Treatment and (annual cost per capita)
US Dollars
Treatment
Costs
Effectiveness
Chemotherapy for TB (6 months )
$20.00
($0.60)
95%
Contraceptives (HIV)
$14.00
($1.90)
99%
(85%-95%)
Hydration salts for Diarrhea
$0.33
($1.60)
95%
Pneumonia Antibiotics (5 days antibiotics)
$0.27
High
Measles (1 dose of vaccine)
$0.26
($0.50)
98%
Malaria
Pills / Nets
$1 / $0.5
($0.05/$4.5)
100%
Sources: CDS, WHO
 Cost of malaria to African countries is 1.3% of GDP
per year, productivity of the worker is reduced by 60%.
Direct and indirect costs of malaria in sub-Saharan
Africa in term of overall GDP is equivalent to a loss of
$100 billion annually.
 75% of TB infections and deaths occur in the 15-54
year age group (the most productive group). 20%-30%
of Income is lost due to TB.
 AIDS places seventh among the leading causes of
death. The main mode of transmission are homosexual
and heterosexual promiscuity and injected-drug-use
(IDU) (all high risk behavior).
 Majority of maternal deaths are due to poor access to
health care (1.9% of female death)
Sources: Scaling Up the Response to infectious Diseases, 2002 and RBM 38, WHO, 2005
Solutions often Proposed
 Outlined in the 8 UN Millennium Development
Goals.
 Population control
Aging population trap
 “Safe sex” and antiretroviral drugs.
Although condoms give the “best” protection against HIV
for men, the risk reduction for women is not as high
(Davis and Weller,1999)
Use of condoms increases the risk of contracting AIDS
(UNAIDS 1996 and NACHHD 1999)
Not a solution for IUD and Heterosexual transmission
Access to family planning increases sexual promiscuity
(Kaiser 2000, Paton 2002, USAID 2002)
The Population Control Argument
 First: rapid growth in population means the spread of poverty
and aggravates conditions such as as poor health, malnutrition,
illiteracy, and unemployment (Bucharest, 1974)
 Second: population threatens government stability in developing
countries, and encourages confrontation between developed
and developing countries (Memorandum 200)
 Third: it pushes future generations to scarcity, and an
unsustainable environment carrying capacity (Rio, 1992)
 Fourth: it sees population growth to be symptomatic of the
larger problem of women's oppression—the more children a
woman has, the less opportunity she has for her own selfactualization and development (Cairo, 1994 and Beijing, 1995)
Aging Trap
 Social security system funding: the family cannot
support the elderly
 Competition between the younger and older people
 Early retirement
 To provide for the economic needs of the elderly, there
is a reduction of funding allocated to training new
generations
 The transmission of cultural, scientific, technical,
artistic, moral, and religious goods is endangered:
"moroseness” results. Add to this immigration.
 Saving rates are affected by a society's age structure,
mirroring the change in an individual's saving rate over
the life cycle.
Speed of Population Aging
Number of years for % of population aged 65 and over to rise from 7% to 14%
Colombia
Brazil
Thailand
Tunisia
Sri Lanka
Jamaica
Chile
Singapore
China
Azerbaijan
Japan
Spain
United
Poland
Hungary
Canada
United
Australia
Sweden
France
20
21
22
23
23
24
25
27
27
41
26
Source: US Census Bureau, 2000
45
45
47
53
65
69
73
85
115
Allocation of Funds
 World Bank budgeted for 2005-2008 $500 to combat
malaria and for tuberculosis amounted to $560 million.
 The WHO funds totaled $309 million in 2004-2005 for
malaria and tuberculosis.
 For HIV/AIDS, the World Bank allocated $1.8 billion in
grants, loans, and credits to fight HIV/AIDS 2000-2005.
 Cost of Antiretroviral regimen has
significantly ($12,000 per year to $100)
decreased
 Annual population assistance levels reached $2 billion a
year.
 The misuse of funds does not only affect health but also
other fundamental elements of economic growth
Expenditure on Grant-Financed Development Activities
of the United Nations System by Sector
(Percentage of Total)
20
15
10
5
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
0
19
90
Percentage of Total
25
Year
Population
T ransport
Science and T echnology
Energy
Communications
Employment
Industry
T rade and Development
Expenditures on Grant-Financed Development Activities
of the United Nations System by Sector
Percentage of Total
25
20
15
10
5
20
04
20
03
20
02
20
01
20
00
19
99
19
98
19
97
19
96
19
95
19
94
19
93
19
92
19
91
19
90
0
Year
Population
Education
Source: Compiled from Comprehensive Statistical Data on Operational Activities for Development,
years 1990-2006.
Questions to be Addressed
 Is the family relevant to the process of production within
the economy only because it affects human capital or it
affects investment as well?
 If so, How?
 With this goal we analyzed the relationship between
family structure and wealth in three countries:
 Canada
 Guatemala
 USA
Wealth in Canada
160,000
140,000
120,000
Canadian
Dollars
100,000
80,000
60,000
40,000
20,000
Housing
0
Wealth
Housing
Married
Wealth
Co-Habiting
Marital Status
Single-Parent
Wealth
Distribution
Net Wealth in Canada
250,000
200,000
150,000
Canadian Dollars
100,000
50,000
0
Less HS
Terciar College
HS
y
Level of Education
Not-Married
Married
Marital Status
Property Ownership by Marital Status
14000
12000
10000
Number of 8000
Households 6000
4000
2000
0
cohabiting
married
Separated
Divorced
Widowed
Marital Status
1 Propia totalmente pagada 4 Alquilada 5 Cedida o prestada
Savings by Marital Status
12000
10000
8000
Frequency 6000
4000
2000
0
cohabiting
married
Separated
Divorced
Marital Status
Savings Yes
Savings No
Savings N/A
Widowed
School Attendance by Marital Status and Race
Sum of ATTSCH
3500
3000
2500
2000
IRACE
1500
0
1
1000
500
0
1
1
2
3
4
MARRIED
0
5
6
Wealth by Marital Status and Location
Average of EDUC
3.5
3
2.5
2
MARDUM
0
1.5
1
1
0.5
1
0
0
0
1
DUMURB
How Government Policies Can Help:
Some Examples
 Legislation that supports families vis a vis other types of
living styles
 Programs that support and promote healthy marriages and
stable families
 Changes in family subsidies/penalties for children
 Parental leaves, work strucutre
 Promotion and protection of the family as a means to
eradicate poverty, especially the feminization of poverty
 Programs directed towards fostering functional societies and
markets, where corruption is not a fundamental part of
governmental operations.
Education
• Transfer all government aid throughout voucher
system
• Differentiate voucher, targeting more resources to
the most needed (with higher cost of education)
• Spread out info about the key role of family within
society and effect on educational outcomes
• Enhance parents’ owes and rights to educate their
children (e.g areas such as sexual education)
• Allow parents (and or teachers) to get engage in
municipal school management
Competitive Funds
• Prevent domestic violence and enhance health
family relationships
• Sexual education programs designed and
chosen at school level by parents and teachers
• Pre-marriage orientation
• Support programs for couple in crisis
• Programs aim to prevent alcoholism and drug
abuse
Conclusion
 The family is a necessary good for economic
development: it should be promoted and protected if
poverty reduction wants to be achieved.
Children develop in the best way within a family
that is functional, i.e., with his biological parents in
a stable marriage.
The breakdown of the family: damages the
economy and the society since human, moral, and
social capital is reduced and social costs increased.
The Neo-Malthusian approach is seriously
flawed on many levels and policy actions
based on such assumptions are inefficient and
damage real sustainable development. They
lead to:
Aging trap: one child policy
Weakening of the family
Health problems
Financial burden for government
Some of the recent reevaluations of family
policies in developed countries seem to point in
the right direction.
 Family structure is relevant for wealth. This happens to
be the case after other characteristics are controlled by.
 The impact of children on family wealth is best within
marriage.
 Evidence seems to hold across countries. In socialized
market economies the negative impacts seem to be
mitigated but not eliminated.
 Life-cycle theory of savings seems to be supported by
empirical evidence.
 Healthy family structures support private property.