Priceonomics

Pricing a product can be a thorny issue. Will customers interpret a low price as a bargain, or as a sign of a low quality? Is allowing people to pay what they want for a product a profitable strategy? 

Despite Econ 101’s promise of finding the perfect price at the intersection of a supply and a demand curve, pricing advice accounts for countless books, management consulting projects, and Harvard case studies. 

But the most fascinating case study about pricing does not have to do with iPhones, cable TV packages, or Uber rides. It concerns the price of a very special commodity: a human child.  

Typically individuals only talk about a person’s “worth” in abstract terms. Yet there are situations that demand an exact financial figure. In wrongful death lawsuits, parents of a child who died in an accident will demand compensation from the negligent party. This puts a judge in the unenviable position of having to put a price on the parent’s loss. 

Looking back at wrongful death cases in the United States reveals a startling fact: the financial value of a child has changed dramatically. 

In 1896, for example, the parents of a two-year-old killed due to the negligence of the Southern Railroad Company of Georgia asked a judge for compensation. They argued that their child performed errands worth two dollars per month, but they received nothing beyond the cost of a burial. The judge concluded “that the child was ‘of such tender years as to be unable to have any earning capacity, and hence the defendant could not be held liable in damages.’”

Today, however, parents do not need to prove the economic value of a lost child to receive compensation. Instead they refer to their emotional pain. On this basis, a judge in a 1979 case awarded the parents of a three-year-old who died from fluoride poisoning at the dentist $750,000.

So why did the value of a child change from worthless to nearly priceless?

The Changing Meaning of Childhood

Both of the above cases are described in Pricing the Priceless Child by Viviana Zelizer. In the book, Zelizer, a sociologist, traces the evolution in Americans’ and Europeans’ treatment of young children.

Her descriptions of the ambivalence with which parents once treated young children can make for shocking reading. Zelizer writes that in 18th century Europe, “The death of an infant or a young child was a minor event, met with a mixture of indifference and resignation.” A French philosopher of the time wrote, “I have lost two or three children in infancy, not without regret, but without great sorrow.” 

Historians, Zelizer notes, found no evidence that the English wore or displayed symbols of mourning when young children died during this period. The French commonly buried young children in the backyard like Americans bury pets today. Colonial Americans called newborns “it” or “little stranger.” While the death of a child was greeted with sorrow, the next born child often took the name of its departed sibling. 

For Zelizer, the difference between this ambivalence and our reverence for young life is exactly the point. She argues that children became “sacralized” in the late 1800s and early 1900s—a process that transformed children from un-sentimentalized but economically useful little people to economically useless yet emotionally priceless treasures. 

This process is evident in a variety of domains. Middle class reformers led a movement against child labor, successfully passing legislation despite the objections of working class parents who relied on their children’s contributions to the family finances. Reducing infant mortality became a primary public health concern. Car accidents that killed children incited previously incomprehensible expressions of sorrow and outrage that manifested in public memorials. 

As childhood became “sacralized,” economic reality adjusted. Children stopped working at factories and instead took paper routes or received allowances. Whereas foster parents once preferred to adopt adolescents (whose labor they could benefit from), legal adoption became more common, and foster parents overwhelmingly chose useless but adorable babies over teenagers. In wrongful death and insurance cases involving children, courts no longer compensated parents on the basis of a child’s ability to earn money, but on the basis of their sentimental value and the suffering caused by their death. 

Colonial Americans buried infants without fuss, but in the 20th century, parents read books that advised them on how to cope with the unbearable loss of a child.

Pricing the Priceless Child was first published in 1985, and it has become a signature work for its record of how the meaning of childhood changed over time, similar to descriptions of how the idea of “teen-age” boys and girls was born in the 1940s. 

But Zelizer also saw herself as critiquing writers “from Karl Marx to Gary Becker, whose explanatory models assume the primacy of economic motivation." Just as economics can influence culture (paying for sex changes its meaning, and the level of inequality in a country can shape its values), Zelizer wanted people to appreciate that culture can influence economics (making children sacred removes them from the labor pool, among other changes). 

As Zelizer acknowledges, economic factors played a role in the changing conceptualization of childhood. Some workers supported child labor laws to reduce wage competition, and the need for a long period of education before entering the workforce changed the economic life of middle class children. According to Zelizer, however, economics alone cannot account for why childhood so quickly became seen as a precious, protected period—especially among working class parents who had benefitted from their children’s wages. 

In other words, culture rather than economics was in the driver’s seat. 

The dramatic changes in how we conceive of childhood remind us that ascribing outcomes to “the market” can easily obscure how the inputs of supply and demand are coloured by changing social and cultural factors. A cost-benefit analysis of national parks will yield very different answers to a nation of couch potatoes compared to a nation of John Muir outdoorsmen. Space tourism will be viable if people value the experience—and untenable if risk-aversion wins out. 

Children are our future, but it’s only recently that they’ve been valued as such.

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An earlier version of this article was published on August 29, 2013.

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Published Jun 30, 2016 by Alex Mayyasi


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