Economics Of Abortion Essay, Research Paper

Abortion has been an ongoing issue in the United States in recent history. There is a constant debate between pro-choice and pro-life issues. People for pro-choice argue that it should be up to the individual to decide whether or not an abortion is right for them. On the other hand, pro-life supporters argue that a fetus is a human being, and that abortion is murder. The debate has focused primarily on these two arguments, but little emphasis has been placed on the economic analysis of the story. In this article, I will discuss the individual costs and benefits of abortion, the social costs and benefits of abortion, and optimal government policies and regulations pertaining to abortion. From my economic analysis, I will conclude that the government should keep abortion legal to maximize social aggregate welfare, and provide funding for abortions for lower income individuals who cannot afford an abortion otherwise.

The Individual

Costs To the Individual-

If an individual chooses to have an abortion, there are some costs that the individual will face. We can derive a simple function to represent the individual’s costs of a legal abortion:

C=P(time)+u+I+W+c

where P(time) is the monetary price of the abortion, which is represented as a function of time (the further into the pregnancy, the more expensive it is to have the abortion), u is any medical expenses, such as medication or hospital stays, I is the individuals health costs (which include the possibility of death or internal damages as well as any psychological trauma), W is the wage lost in the labor force due to the operation and recovery time, and c is a parameter for personal feelings towards abortion. If an individual has a large moral objection to abortion, than their c parameter will be high, increasing the cost of the abortion. Likewise, the c value will be low if the person has few objections to abortion.

The cost function just represented here is for a legal abortion. The costs can change significantly when the procedure is illegal. A new variable, s, must be added. s represents the search costs for finding a doctor who will perform the procedure. The monetary variable for the procedure, P(time), will increase since the doctor will charge more because of his costs (possibility of being arrested). u and I also have the potential to increase. This is because illegal abortions will not always take place at sterile hospitals. This leads to an increase in the chance of infection or health complications, an increase in the likelihood of a longer hospital stay, and an increase in the chance of physical harm to the patient. It is possible for the costs to increase much more than this though. If the operation is illegal, those who carry out the procedure may not be the most qualified individuals. As the National Abortion Federation states, “when abortion was illegal in the U.S., desperate woman often paid exorbitant fees to obtain abortions, even from unlicensed, untrained practitioners working in frightening, non-sterile conditions.” When abortion is illegal, the overall costs increase not only due to monetary costs, but also because the professional quality decreases along with the level of sterility. These are the hidden costs of an illegal abortion. Overall, an individual faces a much higher cost function when the procedure is illegal.

Benefits to the Individual-

When deciding whether or not to have an abortion, the individual must also take into account the benefits from an abortion. We can express an individual’s benefits from having an abortion as:

B=M+W*+O+d

Where M is the money saved from not having to raise a child, W* is the money earned in the labor sector which would have been time previously devoted to the child, O is the opportunity cost of raising a child (if the child is unwanted, then there is a terrible burden to raise the child), and d is a parameter which is a measure of how much the child is unwanted. For instance, d is very high if the pregnancy results from an affair or if the person is very young. The d parameter is very situation and person dependant- not every abortion decision will have similar d values for the same person. The individual benefits derived from an abortion are, however, the same regardless if the procedure is legal or not.

When to Have an Abortion-

When deciding whether to have an abortion, an individual will choose to do so if the benefits derived from having the abortion are greater than the costs. That is to say, an individual will have an abortion if:

M+W*+O+d P(time)+u+I+W+c

Although the model is simple enough, some of the variables are hard to predict. Even for a well educated, rational person, it would be tough to anticipate some of the variables due to their long run nature. For instance, M might be tough to estimate because it involves consumption for the next 18 years of the child’s life (which we assume is the duration for the mother’s care and financial support). Similarly, W* may also be difficult to predict, due to the fact that expected wage can vary significantly over a time period of 18 years. These long run variables, however, appear to only effect the benefit side of the equation. The cost function involves primarily short run variables, and therefore the costs due to an abortion are more evident to the individual than the benefits. Given that the benefits derived from the abortion are tough to anticipate, and that the future is not always discounted 18 years in advance, the actual predicted benefits are generally smaller than the real benefits from abortion.

Society as a Whole

Costs to Society-

Society faces a much different set of costs for abortion than the individual. Many private health insurance companies cover the financial costs of abortion. If the companies cover these costs, then they divide that cost amongst their clients, and therefore insurance premiums increase as a result of insurance-covered abortions (source- National Abortion Federation). Individuals who have never had an abortion or never plan to have one pay higher premiums on their insurance because of insurance funded abortions. For those without health insurance, such as lower income families, the government has programs that provide funding for abortions. Currently, only 13 states and the District of Columbia provide state funding for all Medicaid-eligible citizens to get an abortion (source-N.A.F.). If the government pays for abortions, the funding comes from taxes. Since the funding comes from taxes, all taxpayers must share the cost of providing abortions for those who cannot afford one themselves. Furthermore, abortions can lead to promiscuous sex, which is generally considered a negative social behavior. With abortions being an option, the costs of becoming pregnant decrease, and therefore people will engage in more sex. There is also the social stigma attached with killing the fetus. Many individuals feel that abortion is nothing except the murder of a child, and therefore there is a social cost from abortion. Essentially, the social costs can be represented by:

Cs=Ip+T+g%DS+b

where Ip is the insurance premium increase, T is the taxes paid for abortion funded programs, g%DS is the coefficient of social harm from promiscuous sex times the percent change in sexual activity, and b is the stigma attached from the knowledge that abortion is murder.

Benefits to Society-

Again, the benefits that society sees are much different than that of the individual. A key benefit to society from abortions is that individuals are allowed to make their own decisions, the main argument of pro-choice advocates. If we assume that people are rational, than it is in their best interest to allow them to make decisions which are optimal for them. With abortion we also see less unwanted children. Unwanted children have a great social cost, especially those who are given up for adoption. Abortion also leads to a lower birth rate. If we assume that a higher birth rate leads to a lower women participation rate in the labor force (since women generally work less to help raise their child), then abortion increases the female participation rate in the work force. The increase in female labor force participation leads to higher domestic output, so the economy becomes better off because of abortion. Furthermore, a decrease in the birth rate leads to a decrease in taxes that are put towards child oriented programs, such as state funded education. We can write the benefits to society from abortion as:

Bs=k+B%DU+(W%DL)(Tr)+G+m+H

where k is the value placed on allowing people to make their own decisions, B%DU is the benefits from aborting an unwanted child times the change in the amount of unwanted children, W%DL is the wage times the increase in labor force participation for women, Tr is the tax rate (W%DLTr is essentially the increase in government revenue due to an increase in labor force participation), G is the government money that is saved from child programs such as education that results from abortion, m is all other economic factors unaccounted for, such as higher domestic output, and H is the hidden benefits of abortion that I am about to discuss.

Hidden Benefits-

Aside from the more obvious benefits from abortion, there are several hidden benefits that effect every American. Father Jerome Pilon has argued that the high living standards of today are due to abortion. Pilon argues, “In the last 25 years we have killed one-third of all babies before they were born. Without abortion, whatever resources and income we have as a nation would have to be spread around over 35 million more citizens not to mention the babies the 16-25 year old women would have had by now. Think of the added cost for the programs being touted now by the president in education, day care, health care, energy usage, etc.” Pilon argues that had abortion been illegal, and women were forced to have their babies if pregnant, we would see a decrease in living standards today due to the increase in people. Furthermore, legalized abortion has led to an increase in women’s health. No longer are desperate women forced to have an abortion from an unqualified professional in a non-sterile environment, they can seek out professionals to perform the procedure at a hospital. As stated by the National Abortion and Reproductive Rights Action League (NARAL), “the decriminalization of abortion in the U.S. in 1973 has led to tremendous gains in protecting women’s health.” These benefits from legal abortion have helped both individuals and the United States as a whole.

Optimal Decisions for Society-

Similar to the decision for an individual, society should support abortion if the benefits outweigh the costs, or if:

k+B%DU+(W%DL)(Tr)+G+m+H Ip+T+g%DS+b

Interestingly enough, the bulk of the debate on abortion has focused on k and b, which is the debate between pro-choice and pro-life. As you can see from the model, nearly all of the economic factors are disregarded in the debate. No attention is being paid to the effects of abortion on living standards, gross national product, or many other important aspects. In order for society to maximize total aggregate welfare, all of these factors need to be taken into account, not just the variables associated with pro-choice and pro-life arguments. But this type of analysis is difficult to ascertain, and in the end, only a few selected individuals will decide the fate of the abortion argument.

The Government

Ultimately, the ones who have the power to decide the fate of abortions are our government officials. The government has the ability to decide whether or not to make abortion legal, and to decide what types of funding and programs will be provided. Each argument and side of the legality of abortion has its own economic analysis.

Making Abortion Illegal-

If the government decides to ban abortions, then essentially they are saying that the costs, including higher insurance premiums, taxes provided for abortion programs, the increase in sexual promiscuity, and the murder stigma, outweigh the benefits from keeping abortion legal. Of the four main social cost factors, two are primarily economic related, the abortion funding and the insurance premiums. Given that private companies generally handle insurance, the government does not suffer if insurance premiums are increased due to abortions. Likewise, the tax dollars saved from eliminating abortion funded programs are minimal compared to the amount of tax revenue generated from the increase in the labor force due to an increase in female participation (a result of legal abortions). In order for the government to conclude that social welfare is maximized with making abortions illegal, they will have to place very high values on the g and b parameters. This emphasis on keeping promiscuous sex low and valuing a fetus as a life, however, would have to outweigh all of the economic benefits from legal abortion in order for the government to outlaw abortions. It is with this that I examine the argument for keeping abortion legal.

Keeping Abortion Legal-

By keeping abortion legal, the government is saying that the economic benefits from abortion outweigh the negative social aspects from abortion, the g and b values. These benefits include higher living standards, more tax revenue generated by an increase in labor force participation from women, and higher domestic output. Keeping abortion legal also minimizes the individual costs. This is because women can seek trained professionals to perform the operation in sterile environments. The taxes money put towards child funded programs, such as education and day care, are also minimized in the long run as a result of abortion. Furthermore, the government should provide funding for those to have an abortion that couldn’t afford one otherwise. This funding prevents unwanted children. Unwanted children, as stated earlier, can impose financial burdens on society. In the long run, providing funding for the abortion will be much less costly than for the government and taxpayers to support these unwanted children in foster homes or shelters. The government should not only keep abortion legal, but should also provide funding to allow lower income families to have an abortion if they so choose. By doing so, the government can maximize aggregate social welfare in the long run.

However, there would need to be limits placed on tax-funded abortions. Minors, for instance, should be required to have parental approval before having an abortion. Minors need to have parental permission to have their tonsils removed or for any other surgery, so parental consent would be necessary for a minor to have an abortion. Ignoring the fact that the line between fetus and child during pregnancy is thin, the government should also support abortions during any stage of the pregnancy, strictly from an economic standpoint. The government, however, may place high values on b late in the pregnancy. If this happens, then the social costs may outweigh the benefits from abortion at late stages in the pregnancy. This may lead to restrictions, such as abortion being illegal after the second trimester. Ideally, the government should fully support abortions, both verbally and financially, but place restrictions as they seem necessary to maximize aggregate social utility.

Conclusions-

In order to minimize individual costs of abortion, to keep the high living standards of today, and to promote a higher overall economic wellbeing, the government should keep abortion legal and provide funding for those who cannot afford an abortion. Legal abortion means low costs for the individual due to lowered health risks. A lower birth rate due to legal abortion means higher labor force participation rate for women, which leads to greater tax revenue for the government, as well as a higher domestic output. Restrictions, such as parental consent and making abortion illegal after a certain period, should be imposed as they become necessary to maximize aggregate utility. Funding should be provided to lower income families for abortions, decreasing the amount of unwanted children, which can put a strain on the country’s resources. Ignoring the debate between pro-choice and pro-life, aggregate social utility is maximized when abortion is legal, and funding is provided for individuals who cannot afford an abortion otherwise.

Sources-

1)National Abortion & Reproductive Rights Action League; www.naral.org

3)”The Economics of Abortion” by Father Jerome Pilon, Catholic Post, 05/98

4)”Fact Sheet: Economics of Abortion,” National Abortion Federation, www.prochoice.org