Comments on: Poverty and abortion

By: pushmedia1

pushmedia1 — Sat, 08 Mar 2008 01:28:15 +0000

Assume for a second that technological advances don’t just happen. Why this might be a realistic assumption: a company that’s thinking about bringing RU-486 to market will only do so if it thinks there will be a market for its product.

Under this assumption, we’d expect to see more innovation in industries were costs are increasing. If something is expensive, we’d expect people would pay for a low cost alternative.

Why, in the abortion case, would there be technological advance in this industry where the substitute for that technology (abortions) is getting cheaper?

Here’s my guess: innovators witness the increased quantity demanded of abortions and take that as an indication of the demand for a substitute. The supply shock helps them identify the demand curve for abortions and now have more information about the potential profit in a substitute product.

The weird thing is that this is a systematic phenomenon. Jin and Jorgensen (wp 2007) show this effect occurs in most industries. There’s more directed technological change in the industries with lower costs in the things the technology will substitute for. In other words, you see more labor saving technology improvements in industries with low wages and more capital saving technology in industries with cheap capital.

Why would innovators systematically assume demand curves are less elastic than they really are? Why wasn’t RU-486 marketed in the 60’s?

By: pushmedia1

pushmedia1 — Sat, 08 Mar 2008 01:04:22 +0000

Thanks for the link. Levitt seems to be saying that because the earlier period (when abortions were increasing) was a supply shock, the decrease in price of abortion lead to lower crime rates. Future crime and today’s abortion are substitutes. Now if the current reduction in abortions is a demand shock (e.g. culture change that make abortions more unacceptable or fewer of the types that would get abortions because they were aborted), there is no link between crime and abortion.

Thats an interesting result, if true. Dynamics really screw with the standard economic supply and demand model.

By: swong

swong — Fri, 07 Mar 2008 23:46:37 +0000

Levitt brought up that very point a few months ago.

By: pushmedia1

pushmedia1 — Fri, 07 Mar 2008 23:35:48 +0000

Hmmm…. It just occurred to me that this may have relevance for the Levitt abortion/crime hypothesis. Should we expect a resurgence of crime given the reduction in the number of abortions?

Why hasn’t Jason stopped by to criticize my data model yet?

By: DarwinCatholic

DarwinCatholic — Fri, 07 Mar 2008 23:22:59 +0000

Thanks for the link. I’m glad to hear my look at it stands up to at least a bit of cursory examination from an economics point of view. (My stats are all learned on the job, I’m afraid. I’m in marketing and deal with pricing/elasticity.)

Swong,

I’d be flattered to think that was it, coming (half) from a large Mexican Catholic family, but the data I’ve seen actually suggests that Hispanic women actually get abortions at rates above the national average.

By: pushmedia1

pushmedia1 — Fri, 07 Mar 2008 22:43:33 +0000

Given religious people don’t generally take someone calling them religious an insult, I don’t think anyone will think you a racist for pointing out Latinos tend to be more religious.

Your point is well taken. Part of the cultural story DarwinCath tells could be the large influx of religious and poor immigrants.

By: swong

swong — Fri, 07 Mar 2008 21:40:31 +0000

So, I glanced at that page and missed the part about “abortion ratio.” So I started typing something up about contraceptives and sex ed. So then I re-read that section, and reconsidered. So then I thought to myself: “Who are getting pregnant at high rates, who are from a subsection of the national population with really substantial growth since Roe v Wade, and who come from generally religious conservative cultures that disapprove of abortion?”

So, that line of reasoning pointed me toward (please don’t think I’m a racist) these fine folks.

(Some of my kith and kin are of this group so please don’t think I’m being racist please)