The original editorial by Edward L. Glaeser is a fairly straightforward piece underlining how the AMT penalizes upper-middle-class people for the wrong things: having children and paying local taxes. However, to support this argument, he makes an interesting statement:
When parents decide to have kids, they are creating a massive benefit for their children. As much as parents may love their children, they are unlikely to reap all the benefits those children will offer during their lives. Economists often think that it makes sense to subsidize behavior that generates big "external" benefits for others: parenting seems like a particularly natural example of such behavior.Note, he's arguing that the parents create a benefit for their children, which the children seldom sufficiently repay, and thus suggesting that the parents' action be subsidized in order to encourage this altruistic behavior.
It's this argument which Greg Mankiw objects to his in his blog post:
The pragmatist in me recoils at this argument. Ed is implicitly comparing the utility of having been born with the utility of never having been born. But since we do not observe those people who were never born, how can we possibly know their utility? Any theory that relies on things that are intrinsically unobservable (such as the utility of potential people who were never even conceived) seems suspect as a basis for public policy.What's odd about this reaction is that he seems to be trying to make some sort of reverse-ontological argument for the non-existence of children.
As some may recall, the Ontological Argument was formulated by St. Anselm and basically goes: "If God is the most perfect possible being, and if it is more perfect to exist than not to exist, then therefore God must exist."
Mankiw is instead saying: It is impossible to know if it is better to exist than not to exist because we can't look at how any non-existent beings feel about the matter, therefore it cannot be known that to give being to someone is to provide them with a benefit.
Unless you are a Shakespearean character soliloquizing on the possibility of suicide, the benefits of existing over not-existing will seem pretty obvious to most. However, the interesting thing is that (accounting that I believe some of these are rather tongue in cheek) a number of Prof. Mankiw's commenters seem reluctant to conclude that existence is necessarily a benefit:
Clearly, this is an instance of revealed preferences. Obviously everybody who has been born gets more (expected) utility from being born than not being born, since they decided to be born! But those who were never born must get more expected utility from not being born, or they wouldn't choose to not exist.Or:
I think Ryan has a point: you can assume that nonexistent people have zero utility. But his other premise is wrong. Living people do not reveal a preference for being alive; they (most of them) merely reveal a preference for not attempting suicide. Suicide attempts are illegal, often painful, and almost always extremely risky. (You wouldn't say that someone who invests in low-return assets is revealing a preference for lower returns; suicide attempts are kind of like NASDAQ stocks or junk bonds.) Moreover, the utility of remaining alive is not necessarily the same as the utility of being alive in the first place, just as the utility of the next dose of heroin to an addict is not the same as the utility before he became an addict. Furthermore, even if you assume that life is non-addictive and that suicide is costless and non-risky, there are distribution issues to consider. Some people do commit suicide: maybe the disutility of their lives prior to suicide outweighs the utility for the others. We have no basis to compare them, except subjectivity.One hesitates to be the straight man at the party where everyone else is having a good time -- but I get the sense that perhaps when some economists try to philosophize, they get a little too clever for their own pants. It's all very well to talk about not being able to measure the negative impact of non existence, but since we are existent beings (and indeed, it seems rather mistaken to imagine that a non-existent person is something one could say anything about, much less examine the utility of), it seems rather odd to suggest that a non-existent person might be just as good or better than an existent one.
My subjective belief, which takes into account all the arguments I made in the last paragraph, as well as the fact that people are irrational, is that the expected utility of being alive is negative, though the realized utility is often positive. So I would argue just the opposite of Ed Glaeser and say that we should tax procreation.
Nevertheless, I will grant that Glaeser is trying something difficult when he could try something easy. Regardless of whether it's a good idea to subsidize the benefit which a child receives by being born, it seems reasonable for society to both subsidize the benefit of receiving new members, and also reimburse some of the costs involved with rearing a family. Perhaps part of the problem is a mentality in which some think of a tax break as "subsidizing" or "giving money" when in fact it is simply allowing people to keep money. The basis, it seems to me, for having a tax break associated with the number of children you provide for is that the number of children you provide for will have a lot to do with the expenses of your household. A family making 150k (to pick a potential target for the AMT) which has eight children at home clearly has a different expense structure than a family with one child. And so if the purpose of income taxes is not simply to tax income but to attempt to tax surplus income or available income or income beyond certain basic expenses, then the child deduction makes perfect sense.