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July 10, 2024
Source: Bigstock
The U.S. total fertility rate briefly exceeded the replacement rate of 2.1 babies per woman’s lifetime during the Housing Bubble of 2006–2007 but has since dropped steadily, hitting a new record low of 1.62 in 2023. Total births fell 2 percent last year to under 3.6 million, the lowest total since the Birth Dearth of the 1970s:
The fertility drop is not all bad. For example, births to teen single mothers are way, way down since 1991; and the Hispanic fertility rate is no longer all that much higher than any other group’s.
But, still, the decline will have to end eventually? I mean, I sure hope it does before we go extinct.
Now, two finance professors, Umit G. Gurun and David H. Solomon, have posted a preprint of their paper “E Pluribus, Pauciores (Out of Many, Fewer): Diversity and Birth Rates.” They suggest there may well be a causal connection between the two major demographic trends of the age: the growth in diversity and the decline in fertility:
In this paper, we document a new and important stylized fact linking the central demographic changes of our time. Women living in areas of higher racial diversity robustly have fewer children.
In case you are wondering how you go about “robustly” having fewer children, I recall that when I was in business school in 1982, “robust” was the hottest new jargon term among quant professors. Still, it deserves to have survived all these decades. “Robust” meant: “We’re not pulling your leg by using our statistical wizardry to concoct a fragile finding: We think this will turn out, any way you look at it, to be for real.”
Lots of economists have put forward theories for why the birth rate goes up and (mostly) down since Gary Becker explained two generations ago to other professors that parents don’t need as many kids to do the farmwork anymore. (Economists tend not to be very worldly about farm life.) But Gurun and Solomon may be the first to put some of the blame for declining fertility on increasing diversity.
After all, you are not supposed to say bad things about diversity, which is, as Dan Quayle said, our strength. Recall the comic 2006 incident in which famed Harvard political scientist Robert D. Putnam, author of Bowling Alone, admitted that he had hidden away for five years the results of a big survey he’d done because it revealed that increased demographic diversity led to lowered social trust.
Of course, diversity could hardly explain all the declines in fertility seen around the world: For example, South Korea remains pretty Asian while its total fertility rate has dropped well below one baby per woman.
But Gurun and Solomon might be onto something when it comes to explaining what’s going on in the United States. They suggest that if people prefer (whether consciously or unconsciously) to marry a member of their own race, the higher the percentage of people of their own race they meet, the more likely they are to find Mr./Miss Right, and the sooner that happy day is to arrive.
For example, say that your chance of marrying the next person of the opposite sex you meet at work or church or a bar or the gym is X percent if that person is of your race, but is only half of X percent if he or she is of a different race. If half the people there are of a different race, then your chance of meeting your future spouse is only 75 percent as high as it would be if everybody there were of your race.
The authors call this tendency to be more likely to marry within your own race “homophily.” Being finance professors, they don’t get on their high horse and denounce it as racist. Academics in business school fields tend to be more tolerant of common human tendencies than are most professors these days. For instance, here’s a marketing professor’s admiring explanation for why the Coca-Cola corporation introduced Coke Zero when it already sells Diet Coke: “Because men believe that anything with ‘Diet’ in its name is gay and that ‘Z’ is the second coolest letter after ‘X.’”
As the number of people of different races in each area has increased, people have fewer encounters with others of their own race. Various studies document that people on average have a preference for homophily—they prefer to marry those with similar characteristics, particularly people of the same race…. If the number of potential same-race partners drops in an area, then either one incurs higher search costs to find a good match, or the quality of matches decreases, or both. While the evidence for homophily is large, the possibility that this may have implications that link the rise in diversity and the decline in birth rates does not seem to have been considered.
A noteworthy exception to the general pattern of homophily is that Chinese and Japanese women tend to have more children when there are lots of white guys around.
Gurun and Solomon also suggest that a possible second causal pathway may be the one that Putnam socked away until he could dream up some spin for why diversity is, despite all his data, still our strength: Diversity lowers trust. As Putnam confessed to John Lloyd of the Financial Times:
The core message of the research was that, “in the presence of diversity, we hunker down,” he said. “We act like turtles. The effect of diversity is worse than had been imagined. And it’s not just that we don’t trust people who are not like us. In diverse communities, we don’t trust people who do look like us.” Prof. Putnam found trust was lowest in Los Angeles, “the most diverse human habitation in human history.”… The more people of different races lived in the same community, the greater the loss of trust. “They don’t trust the local mayor, they don’t trust the local paper, they don’t trust other people and they don’t trust institutions,” said Prof. Putnam. “The only thing there’s more of is protest marches and TV watching.”
The two researchers looked at differences in diversity and birth rates across the United States. They ran their data through all sorts of statistical controls to adjust away any likely confounders. They still conclude:
We find that the average racial isolation explains 44 percent of variation in the US total fertility rate since 1971, and 89 percent since 2006. The predicted decline between 2006 and 2021 based on the coefficients is 0.426 children per woman, very close to the actual decline of 0.444. Diversity is large enough as a factor to potentially explain a large amount of birth rate time series variation, especially the most puzzling changes in recent years.
Consider one mundane explanation for Putnam’s finding that more diversity means more social isolation (i.e., more TV watching). If your chance of going out and meeting that special someone, already pretty low each time you try it under the best of circumstances, is only 75 percent as high in a diverse setting, are you going to go out as much? Sitting on the couch with the remote control starts sounding like a good use of your time.