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A second major theme emphasizes the interrelatedness of choices. Decisions made in one area, such as the family, frequently have significant implications for other areas, such as work or health. There are also important connections between choices at different stages of life: schooling decisions affect future earnings, choices about smoking affect future health, and work when young affects work opportunities later in life. An under-standing of the interrelatedness of life’s stages is particularly important in framing public policies. Policies aimed at behavior at a given stage can affect behavior not only at that stage but later in life and, if anticipated. at earlier stages as well. We will also see how programs undertaken for one purpose, such as aid to disadvantaged children, can have other consequences, such as in-creases in divorce and in births to unwed mothers.
Within this framework of inescapable, interrelated choices, the data examined in this book lead to three other themes: “the fading family,” “demography and destiny,” and “wanting and waiting.” Several recent studies claim that the family is as strong as ever; but such claims lack credibility when, as we shall see, the birth rate has been below replacement level for a decade, when almost 25 percent of children live in one-parent or no-parent households, when two out of five marriages end in divorce, and when most of the elderly depend on the government for their daily sustenance. My reading of the data leads to a more troubled conclusion about American families, In describing the decline in importance of the conjugal family, however, I am not predicting its disappearance; neither am I denying others the right to redefine the term “family” as they wish. But there is overwhelming evidence that individuals rely less on their families today than in the past for the production of goods and services and as a source of financial and psychological
support in time of need.

How are we to make sense of these radical alterations in our social fabric? How can we use the masses of data assembled by the Bureau of the Census, the Bureau of Labor Statistics, the National Center for Health Statistics, and other agencies to get some understanding of why things are happening, as well as what is happening?
This is not purely an intellectual exercise, fascinating as that might be. We need this understanding because inevitably we all face decisions concerning these phenomena. We must make decisions as family members and breadwinners and as participants in community organizations. Many of us also give advice in these areas as physicians, lawyers, teachers, social workers, clergy, and other professionals. Business executives need to be familiar with these trends in order to adapt goods and services to changing markets and to develop new personnel policies more appropriate to emerging life styles. And officials in the legislative, executive, and judicial branches of government constantly face difficult choices in these areas. Clearly, a deeper understanding of the changes that have occurred over time as well as of current intergroup differences in behavior can contribute to better private choices and more effective public policies.
The phenomena that it deals with are not solely economic, and economics alone cannot provide a complete explanation of theme They all have an economic dimension, however, and can be more fully understood when approached from an economic point of view. In the following chapters we will look at the significant changes that have occurred since World War II in family life, work, health, and education, The book synthesizes recent research in these areas, drawing on the results of my colleagues at the National Bureau of Economic Research, other social scientists, and my own studies in health and labor economics. I will also identify and discuss major public policy issues that affect men and women at various stages of the life cycle from birth to death.
As we consider each stage of life, many subjects are presented in varying degrees of detail. A. few themes, however, appear almost every time. Probably the most central is the usefulness of viewing broad national trends as the result of choices made by individuals in response to changes in their external circumstances. These changes may involve a rise or fall in income or changes in the prices of goods and services; they may be technological, such as improvements in contraception; or they may be demographic, such as increases in life expectancy. Economics provides a relatively simple and broadly applicable method of analyzing the way in which circumstances affect choices. It is, therefore, a powerful tool for building an understanding of changes in human behavior and social institutions.

One consequence of the decline in the relative importance of higher-order births is that fewer children will have to share parental resources with large numbers of siblings. lf, as many observers believe, such sharing contributes to physical and intellectual deficits in some children, the next generation should in this respect be much better off. Dennis DeTray, for instance, studied the relationship between number of children and amount of schooling that the children received and concluded that, on average, children in large families receive less education than children in small families, even after controlling for family in-come, the value of the mother’s time, and the education of parents (1978, p. 36).
The decline in the relative importance of higher-order births (and in the number of large families) has been more marked for nonwhites than for whites. During the 1940s and 1950s a non-white infant was much more likely to be the fourth, fifth, or even higher-order birth than to be a first-born. By the late 1970s the situation was completely reversed. The consequences of this large change for the educational attainment, health, and labor market success of nonwhite children may be particularly favorable.

The rapid decline in higher-order births is consistent with the economic explanations for the overall decline in fertility: de-creasing benefits and increasing costs of large families, plus lower costs of birth control through improved contraception and legalized abortion. The demand for one or two children to satisfy the psychic desires of parents is undoubtedly stronger than the demand for higher-order births, and women now find it much easier to control the number of children they bear. It is not just a coincidence that the decrease in the relative importance of higher-order births during the 1960s and early 1970s coincided with the diffusion of birth-control pills and intrauterine devices, two highly effective methods of contraception. When fertility dropped rapidly in the 1930s, the decline was not so heavily concentrated in the higher-order births.

The probability of being a first-born has fluctuated consider-ably since 1940. During the 1940s almost 40 percent of all white births were first-borns; the proportion for nonwhites was between 25 percent and 30 percent. Subsequently, first-order births declined in relative importance for both races,
reaching a low point in the late 1950s and early 1960s. Thereafter the proportion rose rapidly, especially for nonwhites; by 1975 it was well over 40 percent for both races. At the opposite end of the birth-order distribution the reverse pattern prevailed. The proportion of births that were fourth-order or above rose in the 1950s and then declined very sharply in the 1960s and 1970s,

Two phenomena that are closely related to cohort size and that have important consequences for children are birth order and number of siblings. Birth order is important because many studies have indicated that first-born children enjoy a small advantage with respect to achievement in school and in later life. According to one theory, this advantage results from their receiving more
parental attention than their siblings do.

These theoretical conclusions seem to have been confirmed by the experiences of the small cohorts that were born in the 1930s and of the large ones, that were born in the 1950s. The former group appears to have had a relatively smooth journey over the life cycle, in part because they were few in number. Schools and colleges had ample room for them, and as young adults they found employers competing strenuously to hire them. By contrast, the unusually large cohorts of the 1950s have had to contend with crowded classrooms from kindergarten on, and when they reached maturity in the late 1970s and early 1980s their large numbers depressed the market for entry-level jobs and inflated the demand for apartments and houses. Such large swings in fertility create special problems for women born during years in which cohort size is increasing rapidly. Women in these cohorts have a smaller supply of eligible husbands because most women marry men from cohorts a few years ahead of theirs. The same reasoning suggests that men who are born when cohort size is decreasing rapidly (in the 1960s, for example) will face a similar problem, sometimes referred to as a “marriage squeeze.”
Birth Order and Number of Siblings

The fertility rate multiplied by the number of women of child-bearing age determines the number of babies born in any time period- that is, the cohort size, Cohort size and fertility normally change together, but the echo effects of previous shifts in fertility can produce divergent trends such as those that emerged in the late 1970s. At that time the large cohorts born in the 1950s reached child-bearing age; thus, the number of births rose even though the fertility rate did not.
Does it matter to children whether they are born as part of a small or a large cohort? On average, the answer is certainly yes, Economic theory suggests that the demand for goods and services (such as schooling) that are cohort-specific will, other things equal, increase as cohort size increases. If the supply of those goods and services is not completely elastic–will not increase without limit unless the price rises – this increase in demand will result in a higher price, or poorer quality. Similarly, when a large  cohort enters the labor market, the increase in supply will depress the relative wages of entry-level jobs, unless the demand for such labor is completely elastic.

Henry Adams, son of a distinguished American diplomat, grand-son of the sixth president of the United States, and great-grandson of the second president, began his famous autobiography by noting the extraordinary circumstances of his birth. He wrote: “Had he [Adams] been born in Jerusalem under the shadow of the Temple and circumcised in the Synagogue by his uncle the high priest, under the name of Israel Cohen, he would scarcely have been more distinctly branded” (Adams 1918). The Declaration of Independence states that “all men are created equal,” but it is obvious that men (and women) are born into unequal circumstances. It is also obvious that these circumstances, while not all-determining, strongly affect future development, How we live depends a great deal on when and to whom we are born, This section considers some of the principal factors that, on average, have important implications for an infant’s prospects in life.

This same line of reasoning could help explain why fertility dropped sharply in the .1970s even though real hourly earnings were 35 percent higher than in the 1950s, Earnings were high in an absolute sense, but many young people who grew up and formed their expectations in the 1950s and 1960s perceived economic conditions in the 1970s as unsatisfactory, The unemployment rate averaged 6,2 percent of the labor force during the seventies, compared with 4.8 percent in the sixties and 4.5 percent in the fifties. The deterioration in the rate of growth of real hourly earnings was even more striking. During the 1950s this basic indicator of earning power grew at 2,4 percent per annum. In the 1960s the rate of increase was 1.8 percent per annum, but during the 1970 real hourly earnings rose a scant 0.2 percent per annum. Not only did the overall economic situation worsen, but employ
ment and earnings prospects were particularly poor for young men and women — the very ones who had grown up during two of the most prosperous decades in our country’s history. The failure of the 1970s to meet the rising tide of expectations undoubtedly contributed to the increase in the age of marriage and the low fertility rate in that decade.