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									   Economics of Abortion

Economics of Leisure Recreation, and Sports

               Econ 291:20

        Roberto Martinez-Espiñeira
               Winter 2007
   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
   – abortion‟s effect on incidence of
     „shotgun marriages‟
• We examine how economists have
  analysed abortion in a number of ways
  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 - < 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 - >13 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)
      3             Abortion usage - number of abortions and abortion rate (1995)
                                   Abortions (millions )    Abortion Rate (per 1000 women aged 15-44)
World                                45.5                     35
Developed Regions                    10.0                     39
Developing Regions                   35.5                     34

Africa                                 5.0                      33
East Africa                            1.9                      41
Middle Africa                          0.6                      35
North Africa                           0.6                      17
Southern Africa                        0.2                      19
West Africa                            1.6                      37

Asia                                  26.8                      33
East Asia                             12.5                      36
South Central Asia                    8.4                       28
Southest Asia                         4.7                       40
West Asia                             1.2                       32

Europe                                 7.7                      48
Eastern Europe                         6.2                      90
Northern Europe                        0.4                      18
Southern Europe                        0.8                      24
Western Europe                         0.4                      11

Lantin America & Caribbean             4.2                      37
Caribbean                              0.4                      50
Central America                        0.9                      30
South America                          3.0                      39

United States & Canada                 1.5                      22

Oceania                                0.1                      21


Source: The Alan Guttmacher Institiute (1999, Appendix Table 3, p.53)
                     4    Abortion Rate in England &
                         Wales and US (1969-2000)

                30

                25                                                 United States

                20
Abortion Rate




                                                                   England & Wales

                15                                                 Quadratic trend
                                                                   (United States)
                10                                                 Quadratic trend
                                                                   (England & Wales)
                5

                0
                 1969    1974   1979   1984   1989   1994   1999
                                       Year
   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
• 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.
          Canada
• In Canada

• http://www40.statcan.ca/l01/cst01/hea
  lth43.htm
   5     Availability of abortion services
• About 61% of world‟s 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
 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
  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 > 100 miles.
  16% travel between 50 and 100 miles.
  - travel distance a barrier to service as it adds
  to overall cost of abortion
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
  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
  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)
  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
 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
  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.)
  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
      14          Abortion as an outcome: demand
Summary of Estimated Price and Income Elasticities of Abortion Demand for
Selected Research

Article                         Price Elasticity   Income Elasticity

Garbacz (1990)                      -0.68               0.84

Gohmann &                           -0.91**             0.76**
 Ohsfeld (1993)

Kahane (2000)                       -0.75               1.96

Medoff (1988)                       -0.81               0.79

Medoff (2000)                       -0.62               1.25
 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%
            16            Abortion as an outcome: anti-abortion
                                            activities
Estimated Effects of Anti-Abortion Activities on the Supply & Demand for Abortion


           900

           800
                                                                                         S'

           700

           600

           500
   Price




                                                                                         S
           400
                                                                               e
           300                                                                            D
                         e'

           200
                                                                                         D'

           100

             0
                 20   20.4 20.8 21.2 21.6   22   22.4 22.8 23.2 23.6   24   24.4 24.8 25.2 25.6
                                                 Abortion Rate




The S‟ and D‟ are the location of the curves when the effects of anti-abortion
activities are included in the regression. The label e‟ is the new equilibrium after the
shifts, with e being the equilibrium before the shifts.
Part III: Abortion as a cause
    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
   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
   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
     Abortion as a cause: endogenous pregnancy
Sequential Decision-Making of Pregnancy and Pregnancy Resolution




                                      Sex?




                                   Pregnancy?




                       Abortion?                   Birth?
    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
       21         Abortion as a cause: shotgun
                        weddings
Out-Of-Wedlock Births and Shotgun Weddings, by Race (1965-69 to 1980-84)



80.0


70.0


60.0


50.0

                                                        % Out-of Wedlock (white)
40.0                                                    % Out-of Wedlock (black)
                                                        % Shotgun (white)
30.0                                                    % Shotgun (black)


20.0


10.0


 0.0
        1965-69    1970-74       1975-79   1980-84
                             Years
  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 woman‟s 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
        23            Abortion as a cause: shotgun
                                    weddings
                          Situation of women in AYK pre-marital sex model
Group                     Pregnancy Cost            Willing to have an        Preferences (in rank
                                                    abortion?                 order)
Women – Type I            High                      Yes                       (1) premarital sex with
                                                                                  marriage promise
                                                                              (2) no premarital sex
                                                                              (3) premarital sex
                                                                                  without marriage
                                                                                  promise
Women – Type II           Low or negative           No                        (1) premarital sex with
                                                                                  marriage promise
                                                                              (2) premarital sex
                                                                                  without marriage
                                                                                  promise
                                                                              (3) no premarital sex
Men                       N/A                       N/A                       (1) premarital sex
                                                                                  without marriage
                                                                                  promise
                                                                              (2) premarital sex with
                                                                                  marriage promise
                                                                              (3) no premarital sex


Note the preference orderings – both groups of women prefer a marriage promise to the other two
outcomes, but they differ in their ranking of the other two alternatives. Men prefer no marriage
promise, but prefer a marriage promise to no premarital sex
 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
   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
       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
   – D&L argue that a significant proportion of the
     decrease may be due to the legalisation of abortion
     in US
    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
           29     Abortion as a cause: crime
                      Volume effect
                 Fewer              Fewer
                 births           criminals


Abortion                                 Less Crime
 legal

                Lower %
                                   Lower %
                unwanted
                                   criminals
                  births
                      Quality effect
        30     Abortion as a cause: crime
• This hypothesis met with considerable controversy
   – In support, D&L 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
        31      Abortion as a cause: crime

• D&L 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
      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
   – D&L 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
      33     Abortion as a cause: crime

• The results of D&L 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%
       34     Abortion as a cause: crime

• D&L 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
35   Legalization of Abortion and a Reduction in Crime?
36 Legalization of Abortion and a Reduction in Crime?

 Changes in Violent Crime and Abortion rates, 1985-1997
37 Legalization of Abortion and a Reduction in Crime?

Changes in Property Crime and Abortion rates,1985-1997
38 Legalization of Abortion and a Reduction in Crime?
   Changes in Murder and Abortion rates,1985-1997
39 Legalization of Abortion and a Reduction in Crime?
  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
  D&L regression. Some equations mis-
  specified. Standard errors wrong
D&L (2004, 2006): responds to criticisms
 & uses better abortion data. Results for
 property crime (but not violence) still
 hold
   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 D&L‟s use of aggregated data along
  with their „effective abortion rate‟ inadequately
  links abortion and crime to specific cohorts of
  individuals across time
– D&L assume that no abortions were performed in
  states other than early legalizers in pre-Roe vs.
  Wade period
    • L&W provide evidence to the contrary
      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 estimated…only 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%.
      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

								
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