Friday, April 10, 2009

Kids are not Recession Proof

"Uptick in Vasectomies Seen as Sign of Recession" reads the New York Times' headline. My first thought was, ummm...come again? Sure kids are expensive, but so are vasectomies and if incomes are tight why should there be an increase? Should they not see a decrease and less expensive alternatives like condoms see a big increase? I didn't think most insurance covered an elective surgery like this. Besides, as retirement accounts crash, and with future social security payouts likely to go down, children are a good form of old-age insurance, right?

Well, no it turns out. Most insurance does pay, or so claims the reporter, and in our society the present discounted value of the cost of kids is surely much higher than the expected present discounted value of the insurance aspect. So perhaps this is evidence of recession effects - kids as luxury goods, you might say.

However the cost (in terms of money, time and discomfort) seems really low and it strikes me that perhaps this has seen a big change in recent years which would, of course, lead to an increase in quantity demanded. Is this true? Anyone?

I am not ready to accept the hypothesis of the article, but it is an interesting theory...

1 comment:

lisamona said...

Have you ever paid for birth control pills? Usually not covered by insurance, cost of $25-35 a month. Vasectomy can be done without insurance for $500. So if the issue is the prevention of pregnancy than the payback is under 2 years with a Vasectomy vs the pill. Alacarte Birth control with condoms or such is aprox $1/each so the math here would be very individual.
I think the uptick in vasectomies is another sign of the new frugality and the common sensical attitude that one should still have fun. Candy sales are up, Donut sales are up, I can think of another cheap treat here. My theory: vasectomies is viewed as a cheaper version of birth control.