Economics of Abortion

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Economics of Abortion
Economics of Leisure Recreation, and Sports Econ
29120 Roberto Martinez-Espiñeira Winter 2007
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1 Introduction to Economics of Abortion

• Moral and emotional dimensions of abortion
  dominate the debate on abortion
• But over last several decades, economists have
  carried out research on issue, e.g.
• supply of and demand for abortion
• effects of availability of abortion on crime
  rates
• abortions effect on incidence of shotgun
  marriages
• We examine how economists have analysed abortion
  in a number of ways

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2 Terminology and demographics of abortion

• Earlier the procedure, the greater the variety
  and simplicity of methods to end pregnancy
• (1) RU-486 abortion pill - lt 9 weeks pregnancy,
  can use this drug developed and made available in
  France (1988). Legalised in UK (1991), Sweden
  (1992), and US (2000)
• (2) Uterine Evacuation - up to 14 weeks
  pregnancy. More invasive method involving uterine
  evacuation using a vacuum
• (3) Partial birth abortion - gt13 weeks
  pregnancy, most controversial method involving
  dilation, destruction and removal of fetus
  (President Bush signed into law the Partial Birth
  Abortion Ban Act of 2003)

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3 Abortion usage - number of abortions and
abortion rate (1995)
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4 Abortion Rate in England Wales and US
(1969-2000)
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An Overview of Abortion in the United States
(Guttmacher Institute)

• Half of all pregnancies to American women are
  unintended four in 10 of these end in abortion
• About half of American women have experienced an
  unintended pregnancy, and at current rates more
  than one-third (35) will have had an abortion by
  age 45
• Overall unintended pregnancy rates have stagnated
  over the past decade, yet unintended pregnancy
  increased by 29 among poor women while
  decreasing 20 among higher-income women
• In 2002, 1.29 million abortions occurred, down
  from 1.36 million abortions in 1996

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• Nine in 10 abortions occur in the first 12 weeks
  of pregnancy
• A broad cross section of U.S. women have
  abortions
• 56 of women having abortions are in their 20s
• 61 have one or more children
• 67 have never married
• 57 are economically disadvantaged
• 88 live in a metropolitan area and
• 78 report a religious affiliation.

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Canada

• In Canada
• http//www40.statcan.ca/l01/cst01/health43.htm

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5 Availability of abortion services

• About 61 of worlds population live in countries
  that have legalized abortion (Rahman et al.,
  1998)
• Numbers of providers - downward trend in US. 37
  decline between 1982 (peak) and 2000 (Finer and
  Henshaw, 2003). Why?
• Greater awareness of contraception affecting
  demand and then supply in turn
• Direct discouragement of supply due to activities
  of those who oppose abortion
• Three types of provider hospitals, clinics, and
  physicians offices

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6 Availability of abortion services

• Finer and Henshaw (2003) surveyed 1819 abortion
  providers in 2001 in US
• (1) 95 of all abortions in non-hospital
  facilities
• (2) Mean price at gestation of 10 weeks 468
• (3) Price increases as gestation increases (20
  weeks 1179)
• - greater gestation, greater the complication of
  procedure (more time-consuming and requires
  greater skill, hence higher price)
• (4) As gestation increases, fewer facilities
  offer abortions (only 33 for 20 weeks). Greater
  the complications, the fewer the number of
  providers with expertise and facilities

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7 Availability of abortion services

• Finer and Henshaw (2003) survey (cont.)
• (5) Economies of scale - 30 abortions/year mean
  price of 787/abortion and 400-990/year mean
  price of 368/abortion. But EOS diminish - 5000
  abortions/year mean price of 356 per abortion
• (6) 8 of women having abortion in non-hospital
  facilities had to travel gt 100 miles. 16 travel
  between 50 and 100 miles.
• - travel distance a barrier to service as it
  adds to overall cost of abortion

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8 Abortion as an outcome vs. abortion as a cause

• Economic theory and empirical methods used on
  topic of abortion in two ways
• (1) abortion as an outcome - abortion (usually
  demand) is the dependent variable to be explained
  and is hypothesised to be a function of various
  explanatory variables (abortion as an outcome)
• (2) abortion as a cause - abortion is an
  explanatory variable and economist considers how
  incidence of abortion may be a determining factor
  of something else

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9 Abortion as an outcome demand

• The basic model of demand
• theory of demand for abortion draws upon work of
  Becker (1960, 1965), Mincer (1962, 1963) and
  Michael (1973)
• in above, fertility control governed by expected
  net benefit of birth of additional child
• if net benefit is positive, then fecund couple
  may seek to increase number of children they have
  
• if net benefit is negative, then fecund couple
  may seek to prevent birth of child, using various
  birth control methods, including abortion

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10 Abortion as an outcome demand

• So, when modelling demand for abortion, both
  direct and implicit (opportunity costs) are
  considered
• Abortion demand f (price, income, education,
  moral or cultural differences, marital status,
  other measures)

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10 Abortion as an outcome demand

• Most empirical research considers aggregate
  demand, usually across time and/or regions
• most common approach is to use US state-level
  data to determine factors explaining differences
  in abortion demand across the states
• virtually all empirical research on abortion by
  economists estimating demand is from US

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11 Abortion as an outcome supply

• Abortion supply
• Abortion supply f (price, physicians relative
  to population of women of child-bearing age,
  average hospital costs, average wage of employees
  in physicians offices)
• supply assumed to be positively related to price
  of abortion and availability of those capable of
  performing abortion
• supply assumed to be negatively related to input
  costs proxied by average cost of day in hospital
  and wages of employees

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12 Abortion as an outcome demand

• Several points of consistency from research on
  abortion demand
• (1) law of demand is upheld
• (2) most research reports that price elasticity
  of demand is less than one
• (3) abortion is a normal good - women earning
  greater income find that opportunity cost from
  having additional child is too great and so have
  abortion to avoid costs
• (4) education has ambiguous effect - on one hand,
  demand for abortion positively related to
  education (same argument as (3). On other hand,
  demand negatively related (better educated more
  aware of methods of contraception etc.)

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13 Abortion as an outcome demand

• Research on abortion demand (cont.)
• (5) several proxies for moral and cultural views
  (racial composition, religion)
• racial composition - controlling for income
  differences, non-white women have historically
  greater abortion rates implying some cultural
  differences. Empirical results show expected
  positive and statistically significant
  coefficient
• religion - expect a negative coefficient
  (individuals of a faith which opposes abortion
  likely to have moral aversion to abortion and
  hence lower demand, all else equal). But
  empirical results show insignificant effects
• (6) marital status - single women more likely to
  terminate pregnancy given greater costs (direct
  and indirect). But empirical research has found
  only weak empirical support for this

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14 Abortion as an outcome demand
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15 Abortion as an outcome anti-abortion
activities

• One of the other measures in abortion demand
  equation is effects of anti-abortion activities
• Kahane (2000) - uses cross-section data for US
  states in 1992 and estimates both supply and
  demand functions
• an independent variable included in both
  functions is of clinics that had experienced
  picketing
• hypothesised effect states where clinics
  experience greater anti-abortion activities would
  tend to have reduced demand and supply
• estimated equations suggest that anti-abortion
  activities did reduce both supply and demand
  leading to reduction in equilibrium quantity of
  19 and raising price by 4.3

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16 Abortion as an outcome anti-abortion
activities
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Part III Abortion as a cause
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17 Abortion as a cause endogenous pregnancy

• Variation in availability services may lead to
  changes in sexual behavior of women, such as use
  of contraception
• Idea can be extended to issue of pregnancy itself
  
• i.e. contrary to common view, where pregnancy is
  treated as exogenous and the pregnancy resolution
  is then considered, pregnancy may in fact be
  endogenous

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18 Abortion as a cause endogenous pregnancy

• Kane and Stigler (1996) model
• women get information during early months of
  pregnancy and choose abortion if birth turns out
  to be unwanted based on this new information
• contraception and abstinence decisions made only
  on basis of information available before
  pregnancy occurs
• abortion decision made with benefit of new
  information. Unlike contraception or abstinence,
  abortion works as an insurance policy to limit
  downside risk when new information is negative

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18 Abortion as a cause endogenous pregnancy

• Kane and Stigler (1996) model
• increasing abortion cost increases cost of
  insurance policy and discourages women from
  becoming pregnant
• some of these pregnancies would have resulted in
  births, so model implies that increase in cost of
  abortion results in decline of wanted births
• more conventional effect - increased cost of
  abortion discourages some women from aborting
  unwanted pregnancies
• net effect of restriction of abortion access on
  birth rates is ambiguous

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Abortion as a cause endogenous pregnancy
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20 Abortion as a cause shotgun weddings

• Akerlof, Yellen, and Katz (1996)
• focus on way in which spread of effective
  contraception and legalization of abortion
  altered norms about reaction of single male to
  unplanned and unwanted pregnancy of his unmarried
  girlfriend
• motivation behind paper - between 1965-69 and
  1980-84, of out-of-wedlock births increased by
  154 of whites and by 64 for blacks
• over same periods, shotgun weddings (marriage
  after pregnancy begins, but before 1st birthday
  of child) decreased by 25 for white women and by
  48 for blacks
• AYK argue that availability of abortion may be
  (at least partly) responsible. During same
  periods, number of abortions among unmarried
  women aged 15-44 increased from 88 000 in 1965-69
  to 1.27 million in 1980-84

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21 Abortion as a cause shotgun weddings
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22 Abortion as a cause shotgun weddings

• AYK model - suppose two kinds of single women
• Type I (high pregnancy costs) - would terminate a
  pregnancy via abortion if it were available at
  reasonable cost. Willing to engage in premarital
  sexual activity but only with a marriage promise
• Type II (low or negative pregnancy costs) - they
  want to have a baby. Would not terminate a
  pregnancy via abortion even if it were available
  at reasonable cost. Willing to engage in sexual
  activity even without a marriage promise.
  Preferred choice - marriage promise before
  engaging in premarital sex, but would prefer a
  baby without a husband to nothing at all.
• Man - can either agree to womans request (make
  implicit promise to have shotgun marriage in
  event of pregnancy) or decide to end
  relationship. Man would prefer not to make
  marriage promise, but will do so if it is only
  way to maintain relationship

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23 Abortion as a cause shotgun weddings
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24 Abortion as a cause shotgun weddings

• Situation without legal abortion in AYK model
  (no abortion equilibrium)
• Type I women demand marriage promises because
  they are unwilling to proceed without them
• Type II women also demand marriage promises, even
  though they would be willing to have premarital
  sex without them, because they know the men will
  accept them and they (Type II women) prefer
  marriage and birth to just a birth
• Men provide marriage promises even though they
  prefer not to, because they have no better
  alternative
• Shotgun marriages will occur with some frequency
  since premarital sex is occurring and abortion is
  unavailable

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25 Abortion as a cause shotgun weddings

• How does availability of abortion change
  equilibrium?
• AYK assume that cost of abortion is less than
  cost of pregnancy and birth
• Type I women no longer need to insist on promise
  of marriage, since they can have abortion rather
  than give birth (men no longer need to offer
  marriage promise since there is no birth to
  legitimize in first place)
• Type II women can no longer insist on marriage
  promise, since a man can now find a Type I woman
  who will no longer insist on such a promise (and
  who would not have a birth in any case)
• But some Type II women will continue to have
  unplanned pregnancies, but now in absence of
  marriage promise, will have non-marital births
  instead of shotgun marriages. They do not take
  advantage of legal abortions because for them
  costs of pregnancy are negative. So, non-marital
  birth ratio will increase

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27 Abortion as a cause crime

• US witnessed big fall in crime during the 1990s
• Donohue and Levitt (2001) between 1973 and 1991
  violent crime increased by 80, property crime
  increased by 40 with the murder rate being
  essentially unchanged
• Following 1991, these rates dramatically reduced
  by about 30 in the first two categories, and by
  approximately 40 for murder
• DL argue that a significant proportion of the
  decrease may be due to the legalisation of
  abortion in US

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28 Abortion as a cause crime

• What are the mechanisms through which abortion
  may reduce crime?
• Volume effect - increased abortion may reduce
  the size of future cohorts of teenagers (who are
  more likely to commit such crimes) - a volume
  effect
• Quality effect - it may reduce the birth-rate of
  children who may be born into an environment that
  produces teenagers who have a greater propensity
  to commit crime

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29 Abortion as a cause crime
Volume effect
Fewer births
Fewer criminals
Abortion legal
Less Crime
Lower unwanted births
Lower criminals
Quality effect
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30 Abortion as a cause crime

• This hypothesis met with considerable controversy
  
• In support, DL appeal to research of Gruber,
  Levine, and Staiger (1999)
• marginal child not born because of abortion would
  have grown up in an adverse environment in
  comparison to average child
• marginal child 60 more likely to be brought up
  in single-parent household, 50 more likely to be
  born in poverty, 45 more likely to live in
  household receiving welfare, 40 greater chance
  of dying before the age of one
• Bitler and Zavodny (2002) - find negative
  relationship between legalization of abortion and
  incidence of child abuse

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31 Abortion as a cause crime

• DL test hypothesis empirically by regressing
  state-level crime on the effective legalized
  abortion rate and a variety of other control
  variables using data for 1985 to 1997
• Period chosen to allow children born after
  legalization of abortion to have time to become
  teenagers, an age where start of criminal
  activity is most common
• under their theory, children born in 1985 or
  later would have faced the possibility of
  abortion when they were conceived
• because these pregnancies were not aborted,
  however, means that these children were more
  likely to be wanted and were likely raised in a
  better home environment with end result being
  lower criminal behavior

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32 Abortion as a cause crime

• The effective legalized abortion rate
• computed as a weighted average of the abortion
  rate across previous years with the weights being
  computed as the proportion of total arrests in a
  given year (for a given crime category)
  attributed to the age group of the cohort in
  question
• DL argue that this measure is appropriate since
  effects of abortion rate on criminal activity (if
  any) would be gradually felt as the cohort ages
  and enters into age where criminal activity
  typically begins

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33 Abortion as a cause crime

• The results of DL study
• in states where abortion rate was higher in 1970s
  and 1980s, drop in crime was greater than in
  states where abortion rate was lower
• in five states (Alaska, California, Hawaii, New
  York, and Washington) that made abortion legal in
  advance of Roe Vs. Wade 1973 decision, drop in
  crime commenced earlier
• An increase in the effective abortion rate by
  approximately one standard deviation reduces
  violent crime by 13, property crime by 9 and
  murder rate by 12

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34 Abortion as a cause crime

• DL further note
• Extrapolating our results out of sample to a
  counterfactual in which abortion remained illegal
  and the number of illegal abortions performed
  remained steady at the 1960s level, we estimate
  that crime was almost 15-25 lower in 1997 than
  it would have been absent legalized abortion.
• An impressive result that seemingly provides an
  answer to the question of why crime rates fell
  dramatically in the early 1990s

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35 Legalization of Abortion and a Reduction in
Crime?
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36 Legalization of Abortion and a Reduction in
Crime?
Changes in Violent Crime and Abortion rates,
1985-1997
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37 Legalization of Abortion and a Reduction in
Crime?
Changes in Property Crime and Abortion
rates,1985-1997
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38 Legalization of Abortion and a Reduction in
Crime?
Changes in Murder and Abortion
rates,1985-1997
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39 Legalization of Abortion and a Reduction in
Crime?
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40 Legalization of Abortion and a Reduction in
Crime

• Joyce (2004, 2006) timing of crime reductions
  does not work once you break down crime by age
• Foote Goetz (2006) coding error in key DL
  regression. Some equations mis-specified.
  Standard errors wrong
• DL (2004, 2006) responds to criticisms uses
  better abortion data. Results for property crime
  (but not violence) still hold

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41 Legalization of Abortion and a Reduction in
Crime?

• Lott and Whitley (2001) find that legalizing
  abortion has no significant effect on crime with
  exception of murder which they estimate may have
  increased following legalization of abortion
• argue that DLs use of aggregated data along
  with their effective abortion rate inadequately
  links abortion and crime to specific cohorts of
  individuals across time
• DL assume that no abortions were performed in
  states other than early legalizers in pre-Roe vs.
  Wade period
• LW provide evidence to the contrary

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42 Legalization of Abortion and a Reduction in
Crime?

• Lott and Whitley study includes abortion rates of
  states other than five early legalizers. Reach
  the following conclusion
• There are many factors that reduce murder rates,
  but the legalization of abortion is not one of
  them. Of the over six thousand regressions that
  we estimatedonly one regression implied even a
  small reduction in murder rates. All the other
  estimates implied significant if very small to
  modest increases in murder rates legalizing
  abortion would increase murder rates by around
  0.5 to 7.

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43 Legalization of Abortion and a Reduction in
Crime?

• Research from other countries
• Canada (Sen, 2002) mixed evidence, questions
  over data, no age-related regressions.
• Romania (Pop-Eleches, 2006) abortion
  legalisation associated with improved outcomes (
  lower crime), but contamination with regime
  change
• Australia (Leigh Wolfers, 2000 Foote Goetz,
  2006) mixed evidence, no formal tests