The ever-insightful Randall Parker has much to say about these issues. First, by 2040 China will have a higher proportion of elderly than will the United States. This will create fiscal problems, but on the bright side such a China is unlikely to be militarily aggressive. Yet there will be other problems:
“In 1993 and 1994, more than 121 boys were born in China for every 100 baby girls. (The normal ratio at birth is around 105; for reasons debated among biologists, humans seem naturally to churn out slightly more boys than girls.) In India during the period 1996 to 1998, the birth ratio was 111 to 100; in Taiwan in 2000, it was 109.5. In 1990 a town near New Delhi reported a sex ratio at birth of 156.
Valerie Hudson argues that the shortage of females is not going to self-correct because the females and their parents can not leverage the scarcity of the females for self-benefit and so there is no market incentive to have more female children. If certain free-market Ph.D. economists of my acquaintance (and the rest of you as well) have read this far do you have any comments to offer on this point?”
Parker suggests that too many unmarried young men end up making trouble. Of course this could happen before 2040. So what is the deal, will families see reason to favor having daughters rather than sons? Will dowries kick in and restore the sex ratio to greater balance? Immigration, of course, only transfers the problem to another country. In any case adjustments will take time and clearly voluntary forces are not creating a balanced sex ratio today. If you are looking for a classic externalities problem to teach your class, I will nominate this as a prime example.
The game theory problem, of course, is tricky. If you think that no one else will prefer daughters, you will prefer to have a daughter to get a high dowry. If you think that everyone will opt for daughters, you prefer sons. One way of getting more daughters is for everyone to think that the others prefer sons. Of course this fails some definitions of rationality. One suspects that a “mixed strategy” obtains, in which case families prefer daughters with some probability.
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