What Would Hayek Think About Pro-Family Policy?

Applying Hayek's Fatal Conceit to attempts to boost fertility and marriage

As birth rates fall across the globe, governments are scrambling for solutions. Policymakers, rightfully worried about the negative consequences of declining fertility, are deploying everything from cash incentives for childbirth to state-sponsored dating programs in hopes of reversing the trend.

But can governments really convince people to have more children?

In his book The Fatal Conceit, F.A. Hayek argued that central planners overestimate their ability to shape complex human behaviors. Hayek asserts that socialism suffers from the fatal conceit because it assumes that planners have knowledge that they could never possess.

The paper I presented at Public Choice this past weekend, applies Hayek’s fatal conceit to family policy. Politicians assume they can engineer marriage and childbearing through top-down intervention. Yet history shows that these efforts are more likely to fail than succeed.

Family policy is not a technical problem – it’s deeply cultural, economic, and personal. Attempts to coerce or incentivize marriage and childbirth often misunderstand the constraints families face and, in some cases, may even backfire.

The Push for Pro-Family Policies

Across the world, governments are rolling out pro-natalist policies to counteract falling birth rates. These initiatives tend to fall into three broad categories:

1. Direct financial incentives – Cash transfers, baby bonuses, child tax credits, and marriage subsidies.

2. Nudges – Public campaigns promoting marriage and family formation, often created by religious institutions or businesses who want to support families

3. Structural reforms – Policies aimed at making family life more affordable, such as tax breaks, housing reforms, or flexible work policies​

The majority of “pro-family policies” fit into the first category and are explicit attempts by governments to influence behavior – like paying couples to have children. These cash incentives do little to help families because they don’t address the real reasons people are delaying marriage and childbirth.

How Cash Incentives Commit the Fatal Conceit

One of the most common government interventions is cash transfers for families who have children. These policies assume that financial constraints are the biggest barrier to family formation, but in many cases, money isn’t the issue.

Governments are unable to ascertain why families are choosing to not have kids. This is a key reason why family policies are victim to the fatal conceit. In the paper I presented, I highlight this and other analogues between socialism and family policy:

• The Knowledge Problem is Ubiquitous

• Informal Institutions and Culture Cannot be Mechanized

• Using Technical Solutions to Solve Non-Technical Problem

• Individual Wants and Needs are Superseded by the Collective

The Knowledge Problem

One of Hayek’s seminal contributions to economics is his formulation of the knowledge problem – or the idea that the knowledge needed for central planning is dispersed among millions of economic actors so it cannot exist within or be discovered by one central authority.

Pro-family policies fall victim to the knowledge problem because the costs that may be keeping families from having children are tacit and subjective. One family may be facing medical concerns that are preventing them from having children while another may be concerned about the social consequences that they may face from having children. Absent prices and market signals, there is no way for governments to learn what the cost structures facing families actually are.

Unfortunately, this means that governments must use other mechanisms to determine who should get assistance when it comes to raising children, usually political influence and social connection. This means that families who engage in “desirable” behavior like getting married or having children now receive a grant of special privilege for doing exactly what they would have done absent the intervention.

Informal Institutions and Culture

The reasons families are forgoing or delaying childbirth are a complex mix of values, beliefs, and norms that governments can’t mechanize. As Hayek says “our values and institutions are determined not simply by preceding causes but as part of a process of unconscious self-organisation of a structure or pattern.”¹

Pro-family policy requires centralized plans about what family life looks like, and because experts are constrained by knowledge, they must make decisions that are divorced from the reality of individual-specific knowledge. In the end, pro-family policies are one-size-fits all solutions that rarely help families make the choice to get married or have children.

Take South Korea, which has the lowest birth rate in the world (0.72). Over the past two decades, the South Korean government has poured over $270 billion into pro-family programs – including fully paid maternity leave, baby bonuses, monthly child allowances​, and even state-sponsored dating programs. But birth rates have continued to fall.

What the South Korean government doesn't understand is that South Korea’s fertility crisis isn’t about money, it’s about culture.

Many young Koreans, especially women, are rejecting traditional gender roles and the expectation that they must sacrifice their careers for childrearing. In response, the 4B movement – a feminist movement that rejects sex, dating, marriage, and motherhood – has gained traction. Rather than boosting birth rates, pro-natalist policies may actually be accelerating anti-natalist sentiment​ in South Korea by further entrenching the gender roles that started the 4B movement in the first place.

Technical Solutions, Non-Technical Problem

Similar to how socialism thought that the allocation of resources could be mechanized by a central planning authority, pro-family policy believes that the problem of fertility, despite being an interwoven cultural, economic, and political issue, can be easily overcome by interventionism and central planning.

Hungary is an example of a country that has tried to mechanize fertility through generous baby grants, housing incentives, and parental leave allowances. Hungarian Prime Minister Viktor Orbán said that these policies were designed to “shape” demographic processes instead of falling victim to them. He also claimed that it “doesn’t require a lot of brains” to hand out money to families.

To Orbán, fertility is merely a technical problem that can be solved by giving families baby bonuses and tax breaks. But critics argue that these policies are just a grant for the wealthy, nuclear families in Hungary instead of a policy aimed at improving the outcomes for all.

For their credit, there has been a marginal improvement in the birth rate in Hungary. However, some experts believe that these births were families who would have otherwise had kids later on capitalizing on the generous policies. While it may lead to a temporary boost in the birth rate, it won’t be sustained.

Goals of the Collective Supersede the Individual

A final analogue between socialism and pro-family policy is the emphasis on collectivism over individualism. Pro-natalists tend to bemoan the rise of women working as the cause of the decline in fertility – ignoring the fact that educated, career women have had a stable fertility rate – and believe that something must be done to push women back in the home and back to babymaking.

The goals of the individual and the family unit are considered less important than the goal of closing the birth dearth. This isn’t to say that governments shouldn’t be doing what they can to make family life easier, but that encouraging women to work less or take time off for the betterment of their country is unfair and paternalistic.

Could There Be Any Successful Pro-Family Policies?

The central argument of my paper is that Hayek’s fatal conceit lives on through policy intervention. However, what I am careful to explain is that there are successful pro-natalist policies! Just not ones created by the government. What governments can do are structural reforms that make family life more affordable. I outline a few options to do just that here.

My favorite example of a successful pro-natal intervention is from Georgia, where a religious initiative led by the Georgian Orthodox Church led to a sizable increase in the birth rate. The Archbishop of the Georgian Orthodox Church promised to personally baptize any third-or higher order children… 9 months later there was an Orthodox baby boom!

This intervention worked because it focused on a treatment group that was already inclined to have more children and created more favorable conditions for Orthodox families to have three or more children. In this case, already established cultural norms around childbirth were reinforced and it led to more babies!

Georgia holds an important lesson for pro-family policy: demand for children cannot be manufactured where it doesn’t exist. Creating policies that support helping those who already want children achieve their fertility goals will be far more effective than trying to engineer demographic outcomes.

As Hayek said: “it appeals to men to redesign what they never could have designed at all.” Pro-natalist policies are largely attempts by the government to redesign family life from the top-down. But the best pro-family policies don’t dictate – they remove barriers, reinforce cultural norms, and let families make choices on their own terms.

Time Users

• What I’m Reading: Flowers of Fire by Hawon Jung. The author is a former Seoul correspondent and draws on her experience to describe the South Korean feminist movement.

• Something I found interesting: This article about raising children, and especially boys, in a “cyborg sexual” world

• What I’m Listening To: I’m anxiously awaiting the new album by The Head and The Heart, but listening to their single After the Setting Sun is helping me through

• What I’m Making: I have my eye on these vegan matcha sugar cookies. I’m thinking I might try to make them this week with either strawberry or lavender frosting – seems like the perfect cookie for the first week with above 70° temps!

1. All of the quotes from Hayek I cite are taken from The Fatal Conceit: The Errors of Socialism University of Chicago Press 1988