1. The Family and Economic Development: Socioeconomic Relevance and Policy Design Dr. Maria Sophia Aguirre Department of Business and Economics The Catholic University of America World Family Forum Provo, Utah July 9-11, 2007

2. Is the Family Relevant for Economic Development?  Some would argue that the family is key because:  The earth is limited  The family is a hostile place for women and children  Large families threaten countries’ stability  Others argue that the family is key because:  Healthy families are needed for the economy to fulfill its purpose. Therefore it is a reference point for policy  Growth of the population does not equal poverty  The aging population “trap” threatens sustainable economic growth and development

3. I Would Like to Argue  The focus on family and population is not necessarily incorrect, but both the population control policies used and the approach of some international organizations and countries to the family are mistaken.  This is because:  Healthy families are essential for a country as they have a direct impact on human, moral, and social capital, and therefore, on resource use, economic activity, and economic structures.  Resources are used inefficiently when directed towards policies that weaken families in stead of policies that strengthen them. This, in turn, hampers the sustainability of real economic growth and perpetuates poverty.

4. How Does the Family Fit in the Economy? Basic Activities Means UsedRole of the Family Purpose ProductionResourcesHuman Capital Basic Needs ExchangeMarketHuman, Moral, Social Capital Profit ConsumptionOptimization and Distribution Appropriate distribution Wellbeing (welfare)

5.  There is a positive correlation between human capital, infrastructure and economic growth healthy institutions and economic development health and income per capita  These positive correlations reflect an essential causal link running from human capital to healthy institutions (social capital) infrastructure and technology  Life expectancy is a significant predictor of economic growth We know from economic analysis that in economic development

6. Life Expectancy at Birth Source: Human Development Report, 2005, Table 1 32.8 Years

7. Socioeconomic Relevance  Children develop best within a family that is functional, i.e., with their biological parents in a stable marriage  The academic and social performance of a child is very closely related to the structure of the family in which he lives and this is important for the quality of human and social capital  The psychological stability and health of a child is closely related to healthy families and this is important for worker productivity and government finances

8.  The breakdown of the family is a symptom of a sick and weak society Abuse of women is 25 times more likely to occur in an irregular family. Men who have witnessed domestic violence are three times more likely to abuse their own wives and children. Substance abuse and teen-age pregnancy is higher in broken families. Women and children of broken families have a higher probability of living in poverty. Increase of the social welfare expenditures burden.

9. Percentage of Families that are in Poverty by Family Structure and Ethnicity, 2005 Source: Annual Demographic Survey, Poverty in the U.S.: US Census Bureau, March 2006, Table POVO2.

10. Percentage of Women who are in Poverty by Family Structure and Ethnicity, 2005 Source: Annual Demographic Survey, Poverty in the U.S.: US Census Bureau, March 2006, Table POVO2.

11. Percentage of Children who are in Poverty by Family Structure and Ethnicity, 2005 Source: Annual Demographic Survey, Poverty in the U.S.: US Census Bureau, March 2006, Table POV13.

12. Developed Countries Welfare Expenditures vs. Developing Countries Debt in 2004 Source: CIA World Handbook, 2006

13. The family faces serious health and poverty problems, especially in the developing world Lack of income and assets to attain basic needs: Human assets Natural assets Physical assets Financial assets Social assets Aging security Vulnerability to adverse shocks are linked to an inability to cope with them

14. Environmental Health, Welfare and Living Conditions in Low Income vs Developed Countries Indicator% access House Connection: water48 / 99 House Connection: sewerage46 / 99 House Connection: electricity62 / 100 Access to Improve Water Sources61 / 100 Access to Sanitation43 / 100 Solid waste disposal: landfill or incinerated31 / 78 Solid waste disposal: other (dump,recycled,etc.)66 / 22 Paved Road19 / 94 Literacy53.6 / 100 Under-five mortality (per 1000)153 / 6 Public Expenditures on Health (%GDP)1.5/ 6.2 Sources: World Bank, UN, 2006

15. Causes of Death in Women and Men WHO, World Health Report, 2004, Annex Table 3. 5 million new cases per year 8 million new cases per year 300-500 million new cases per year

16. One-Year-Olds Fully Immunized Source: Human Development Report, 2005, Table 8 22% Decrease Tuberculosis Immunizations 35% Decrease Measles Immunizations

17. Infant Mortality Rates Source: Human Development Report, 2005; Table 10 92% Decrease

18. Low Cost Effective Interventions Cost of Treatment and (annual cost per capita) US Dollars TreatmentCostsEffectiveness Chemotherapy for TB (6 months )$20.00 ($0.60) 95% Contraceptives (HIV)$14.00 ($1.90) 99% (85%-95%) Hydration salts for Diarrhea$0.33 ($1.60) 95% Pneumonia Antibiotics (5 days antibiotics)$0.27High Measles (1 dose of vaccine)$0.26 ($0.50) 98% Malaria Pills / Nets $1 / $0.5 ($0.05/$4.5) 100% Sources: CDS, WHO

19.  Cost of malaria to African countries is 1.3% of GDP per year, productivity of the worker is reduced by 60%. Direct and indirect costs of malaria in sub-Saharan Africa in term of overall GDP is equivalent to a loss of $100 billion annually.  75% of TB infections and deaths occur in the 15-54 year age group (the most productive group). 20%-30% of Income is lost due to TB.  AIDS places seventh among the leading causes of death. The main mode of transmission are homosexual and heterosexual promiscuity and injected-drug-use (IDU) (all high risk behavior).  Majority of maternal deaths are due to poor access to health care (1.9% of female death) Sources: Scaling Up the Response to infectious Diseases, 2002 and RBM 38, WHO, 2005

20. Solutions often Proposed  Outlined in the 8 UN Millennium Development Goals.  Population control Aging population trap  “Safe sex” and antiretroviral drugs. Although condoms give the “best” protection against HIV for men, the risk reduction for women is not as high (Davis and Weller,1999) Use of condoms increases the risk of contracting AIDS (UNAIDS 1996 and NACHHD 1999) Not a solution for IUD and Heterosexual transmission Access to family planning increases sexual promiscuity (Kaiser 2000, Paton 2002, USAID 2002)

21. The Population Control Argument  First: rapid growth in population means the spread of poverty and aggravates conditions such as as poor health, malnutrition, illiteracy, and unemployment (Bucharest, 1974)  Second: population threatens government stability in developing countries, and encourages confrontation between developed and developing countries (Memorandum 200)  Third: it pushes future generations to scarcity, and an unsustainable environment carrying capacity (Rio, 1992)  Fourth: it sees population growth to be symptomatic of the larger problem of women's oppression—the more children a woman has, the less opportunity she has for her own self- actualization and development (Cairo, 1994 and Beijing, 1995)

22. Aging Trap  Social security system funding: the family cannot support the elderly  Competition between the younger and older people  Early retirement  To provide for the economic needs of the elderly, there is a reduction of funding allocated to training new generations  The transmission of cultural, scientific, technical, artistic, moral, and religious goods is endangered: "moroseness” results. Add to this immigration.  Saving rates are affected by a society's age structure, mirroring the change in an individual's saving rate over the life cycle.

23. Speed of Population Aging Number of years for % of population aged 65 and over to rise from 7% to 14% Source: US Census Bureau, 2000

24. Allocation of Funds  World Bank budgeted for 2005-2008 $500 to combat malaria and for tuberculosis amounted to $560 million.  The WHO funds totaled $309 million in 2004-2005 for malaria and tuberculosis.  For HIV/AIDS, the World Bank allocated $1.8 billion in grants, loans, and credits to fight HIV/AIDS 2000-2005.  Cost of Antiretroviral regimen has decreased significantly ($12,000 per year to $100)  Annual population assistance levels reached $2 billion a year.  The misuse of funds does not only affect health but also other fundamental elements of economic growth

25. Expenditure on Grant-Financed Development Activities of the United Nations System by Sector (Percentage of Total)

26. Expenditures on Grant-Financed Development Activities of the United Nations System by Sector Source: Compiled from Comprehensive Statistical Data on Operational Activities for Development, years 1990-2006.

27. Questions to be Addressed Is the family relevant to the process of production within the economy only because it affects human capital or it affects investment as well? If so, How? With this goal we analyzed the relationship between family structure and wealth in three countries: Canada Guatemala USA

39. How Government Policies Can Help: Some Examples  Legislation that supports families vis a vis other types of living styles  Programs that support and promote healthy marriages and stable families  Changes in family subsidies/penalties for children  Parental leaves, work strucutre  Promotion and protection of the family as a means to eradicate poverty, especially the feminization of poverty  Programs directed towards fostering functional societies and markets, where corruption is not a fundamental part of governmental operations.

40. Education Transfer all government aid throughout voucher system Differentiate voucher, targeting more resources to the most needed (with higher cost of education) Spread out info about the key role of family within society and effect on educational outcomes Enhance parents’ owes and rights to educate their children (e.g areas such as sexual education) Allow parents (and or teachers) to get engage in municipal school management

41. Competitive Funds Prevent domestic violence and enhance health family relationships Sexual education programs designed and chosen at school level by parents and teachers Pre-marriage orientation Support programs for couple in crisis Programs aim to prevent alcoholism and drug abuse

42. Conclusion  The family is a necessary good for economic development: it should be promoted and protected if poverty reduction wants to be achieved. Children develop in the best way within a family that is functional, i.e., with his biological parents in a stable marriage. The breakdown of the family: damages the economy and the society since human, moral, and social capital is reduced and social costs increased.

43.  The Neo-Malthusian approach is seriously flawed on many levels and policy actions based on such assumptions are inefficient and damage real sustainable development. They lead to: Aging trap: one child policy Weakening of the family Health problems Financial burden for government  Some of the recent reevaluations of family policies in developed countries seem to point in the right direction.

44.  Family structure is relevant for wealth. This happens to be the case after other characteristics are controlled by.  The impact of children on family wealth is best within marriage.  Evidence seems to hold across countries. In socialized market economies the negative impacts seem to be mitigated but not eliminated.  Life-cycle theory of savings seems to be supported by empirical evidence.  Healthy family structures support private property.