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The Family GDP: How Marriage and Fertility Drive the Economy

October 5th, 2010

by Patrick F. Fagan, Ph.D., Senior Fellow at the Family Research Council, and Ruth Institute Advisory Board member.

Republicans and Democrats differ on a wide range of issues, but almost all elected officials in Washington, D.C., believe that a key responsibility of both the White House and Congress is keeping the economy running at full-speed, providing an ever-increasing number of jobs, products, and services for the American people. Elections are won or lost on the public’s perception of the ability of a president and his party to implement policies that contribute to a rising Gross Domestic Product and rising standards of living. The parties differ as to the means to achieve these ends.

Yet from George W. Bush’s $700 billion Troubled Asset Relief Program signed into law in October 2008 to Barack Obama’s $787 billion stimulus package passed in February 2009, the parties share a commitment—especially during a recession like the current one that started in 2007—to keep the American Dream alive by getting the economy back on track as quickly as possible.

The preoccupation of Washington with immediate crises and quick fixes, however, prevents both parties from sowing seeds today that may not bear fruit tomorrow but will nonetheless generate a rich harvest in the next generation. If they did, policymakers would have long ago responded to an equally important crisis—the meltdown of the American family—that started in the late 1960s and is an underlying cause of the current economic slowdown, according to former Wall Street analyst and Forbes columnist David Goldman.

It appears that the strategists that advise both political parties have lost sight of the indispensable building block upon which the fortunes of the economy depends: the married-parent household—especially the child-rich family that worships weekly. Not only have the experts overlooked this “fundamental,” but also few have expressed concern that the absolute number of married-parent families with children under 18 years of age, a key driver of economic growth, has remained largely flat since Richard Nixon served in the Oval Office.

Despite its invisibility to the news media and the economic guild, the family GDP, or the contribution of the family to the economy, is nonetheless massive. At a rudimentary level, every marriage creates a new household, an independent economic unit that generates income, spends, saves, and invests. The vast majority of these new households produces babies and transforms what are largely self-centered children into responsible adults, contributing the necessary next generation of human capital to the economy.

But that new household does more than simply increase the labor force or consumer spending. As this essay will demonstrate, marrying and staying married for life, bearing and raising a sufficient brood of children, and participating in public worship on a weekly basis transforms the behavior and attitudes of men and women, and their children, in profound ways that not only strengthen the economy but also serves as its very lifeblood. Like any successful entrepreneur or businessman, continuously married men and women not only tend to think less of themselves and more of others but also focus less on the immediate and more on the long-term. Like any responsible portfolio manager, they are thinking about the future, channeling their energies into achievements of lasting value and true wealth, including children they are raising with the same future orientation.

That the English term economy originates from the Greek word, oikos, which means household, confirms these truths. Also illustrative is that the father of modern capitalism, Adam Smith, saw marriage, family, and children as foundations of the subject of his classic work The Wealth of Nations.

Like Alexis de Tocqueville in 1835, the Scottish moral philosopher was impressed with what he saw in America in 1776. He noticed how men and women in the colonies were twice as likely to marry—and at younger ages—and had twice as many children as their European counterparts. Unlike officials in Washington today, Smith believed that the American exceptionalism that he saw coming would be the outgrowth of bullish marriage and fertility rates. Despite Britain’s superior wealth at the time, Smith saw North America “advancing with much greater rapidity to the further acquisition of riches.” He even claimed, “The most decisive mark of the prosperity of any country is the increase in the number of its inhabitants,” which he linked to “a numerous family of children.”

The Economic Trump Card Smith wrote more than two hundred years ago, yet social science literature, as well as demographic and tax data, quantify how the married-parent family is the economic trump card that policymakers and economic forecasters in Washington need to take seriously. Government and survey data overwhelmingly document that married-parent households work, earn, and save at significantly higher rates than other family households as well as pay the lion share of all income taxes collected by the government. They also contribute to charity and volunteer at significantly higher rates, even when controlling for income, than do single or divorced households, leading Arthur Brooks of the American Enterprise Institute to write that “single parenthood is a disaster for charity.”

The most recent version of the Survey of Consumer Finances shows that married couples with children under 18 years of age had the highest median-household income ($67,900) in 2007 of all family households, including single-parent households with or without children under 18 and even married-parent households without children under 18.

Data from an earlier wave of the survey reveal the disparities of household income among a greater range of household types with children under 18. For 2001: intact, married families had a median income of $54,000; stepfamilies, $50,000; cohabitants, $30,000; divorced-single parents, $23,000; separated-single parents, $20,000; widow parents, $9,100; never-married single parents, $9,400.

Census data likewise confirm that married parents fall into the highest income brackets. In 2006, 67 percent of married-parent families had median incomes of more than $50,000 and 30 percent of such families had median incomes of more than $100,000. In comparison, only 26 percent of single mothers had median incomes of more than $50,000; in fact, 59 percent of single mothers had median incomes of less than $35,000.

According to Internal Revenue Service data, the reported income of more than one out of every three married couples places them in the top-income quintile of tax filers, whereas only one of every seven single or non-joint tax filers fall in the top 20-percent category.

7Consequently, even as married couples file less than half of all incometax returns, they pay nearly three-quarters of all income taxes paid by the American people. In fact, 85 percent of filers in the top-income quintile are married joint filers. The numbers reverse themselves at the bottom quintile of the income spectrum, where single and non-joint filers, including single parents (who file as heads of households), make up 85 percent of filers of that quintile.

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  1. Molly Fanning
    October 5th, 2010 at 18:35 | #1

    “Keep reading” link doesn’t seem to be working. Would like to keep reading :-)

  2. October 5th, 2010 at 19:27 | #2

    I can’t find the rest of this posted anywhere online! Boooo! I protest! After all, I am a Protestant. It’s what we do.

  3. Betsy
  4. October 5th, 2010 at 20:42 | #4

    Men and women need each other. That is why the Holy Spirit informs us in Genesis that “It is not good that man should be alone.” He didn’t even need to point out that it is not good either for women to be alone either. This is just too obvious.

    In that light, the trends in marriage for the whoel developed world –America and Europe in particular — are so very disturbing. Recent articles in the news point out that among adults in the range from 25 to 35 years, less than half are married, and more of them have never been married than are married today. Most of the writers of these stories blame this on the recession, but detailed data starting in 1965 show that it has been a consistent trend at least from that date.

    One factoid stands out especially. Among those with no education beyond high school — among those who do not have the kind of income that would make all sorts of other gratifications affordable — the marriage rate has fallen from 90% to 45% in 45 years! Among the college educated it has fallen from 85% to 55%.

    It still is not good for man to be alone. Public policies can encourage that development but they can’t make it good and ultimately they can’t make it work.

    I think that while we rightly present the case for marriage and family on somewhat theoretical terms, we need also to present the actual history. It highlights some rather embarrassing questions, such as “why is it the right of homosexuals to marry when it is no longer the right of heterosexuals to marry?” I once pointed out in a book on law and natural law, in a discussion of the long term implications of divorce, “Which is the greater right? The right to divorce or the right to marry? In the long run, we cannot have both of them.”

  5. Betsy
    October 5th, 2010 at 21:23 | #5

    Oh, I see. It doesn’t work if you don’t have a google docs account. Sorry about that, all. I will see if we can get an on-line version elsewhere. In the meantime, as this is a 15 page document!!! I’ll paste a little more in here.

  6. Leo
    October 5th, 2010 at 23:42 | #6

    Fertility not only drives the economy, it will be absolutely essential to maintain programs such as Social Security, unless we open the country to massive foreign immigration, which will draw on the fertility of the less industrialized countries.

  7. Karen
    October 6th, 2010 at 06:53 | #7

    what a pity. document was only online for 24 hours. Google site says it is unretreivable.

  8. Courtney
    October 6th, 2010 at 07:21 | #8

    Betsy, you can share the doc on google docs so that anybody can read it – no google docs account required. Just open the doc and click “share” in the top left corner and go to “sharing settings.” Make sure under Permissions that it’s set to public or “anyone with a link can view this” and it will give you the link to give people (it’ll say “paste this link in email or IM”). Pasting the link from your browser’s URL field doesn’t work because that’s the link for your individual account which, obviously, we can’t access.

  9. Mark
    October 6th, 2010 at 08:41 | #9

    Joel Clarke Gibbons: “It highlights some rather embarrassing questions, such as “why is it the right of homosexuals to marry when it is no longer the right of heterosexuals to marry?”

    I do need see anyone fighting to prevent heterosexuals to marry. Where is that written?

    “Which is the greater right? The right to divorce or the right to marry? In the long run, we cannot have both of them.”

    So, if I read what you are saying, people need to remain married no matter what happens? If the wife is cheating, or the husband beats his wife, they should stay married? Really?

  10. October 6th, 2010 at 11:37 | #10

    THANK YOU! Its just that it’s awesome and I don’t want to miss out. Thanks for finding all this stuff…

  11. Betsy
    October 6th, 2010 at 15:36 | #11

    What smart readers we have! Thank you, Courtney. So, here’s the new link:

    And I’ll change it up above, too. Let me know if it somehow still doesn’t work, somebody!

  12. Betsy
  13. Melissa
    November 4th, 2010 at 10:15 | #13

    Interesting. The Survey of Consumer Finances also says that married couples without children are worth more than couples with children. In 2007, the median net worth (the amount by which a family’s assets are greater than their liabilities) of couples with children is $141,000. Couples without children, by contrast, are worth $191,000. For the same year, the mean net worth of couples with children was $594,500, while the mean for couples with no children is $804,500. I imagine this is because children are expensive.

  14. Betsy
    November 4th, 2010 at 10:24 | #14

    But worth it for those who care more about love and family than cars and jewelry.

  15. Melissa
    November 4th, 2010 at 10:38 | #15

    Of course, Betsy, I certainly don’t dispute that people attribute intangible benefits to their family structure. But this article wasn’t about that; it was about the economics of a family unit. I was especially interested in Dr. Fagan’s observation that married couples with children have the highest median household income, but, of course income is differently distributed in different families. The Survey also notes that the biggest reason families save money is for retirement, which is great — burdening your children or society once you can no longer work is not helpful to anyone.

    I was a little disappointed that I couldn’t find the data comparing and contrasting stepfamilies in the Survey. Dr. Fagan must be using an earlier version than I was able to find online.

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