Inflation and the Family

All policy is family policy. As governments search for levers to reverse falling birth rates, it is easy to forget the basic fact that virtually all government activities shape family decisions. Inflation and the Family is a welcome contribution to the growing literature at the intersection of family economics and macroeconomics because it takes seriously the ways monetary policy structures household life—often for the worse, as Jeffery Degner argues. Read in a broader perspective, the book is also a lesson in humility for those who aspire to “centrally plan the family.” Unless the economic foundations of society are sound, efforts to entice more young people toward family formation are likely to prove futile.

The book considers three aspects of monetary policy: 1) legal tender law, 2) monetary expansion, and 3) interest rate suppression. These, Degner argues, correspond to three marks of an “inflation culture”—increased indebtedness, increased inequality, and increased moral hazard—which in turn enter into marriage, fertility, and divorce decisions. The book is guided by the question: “How and to what extent does monetary policy contribute to the institutions of the inflation culture and how do the habits that it produces alter family formation, fertility, and divorce?” (p. 10, emphasis in original). Degner’s thesis is that a line can be traced from ill-conceived monetary policy to familial dysfunction, and while the evidence he presents is more suggestive than conclusive, his project unearths fertile ground for more research to spring up. 

The opening chapter, “Family Dynamics and Economic Change,” provides a useful corrective to common narratives about contemporary family life. As recently as 1970, married couples constituted roughly 70 percent of all U.S. households. Since the 2010s, they have ceased to be the majority, largely due to the growth of households consisting of single men and women—reflecting later marriage ages and higher divorce rates—as well as more modest growth in single‑parent households (see, for instance, Matthias Doepke and Michele Tertilt, “Families in Macroeconomics,” in Handbook of Macroeconomics, vol. 2, edited by John B. Taylor and Harald Uhlig [Elsevier, 2016], 1789–1891). At the same time, fertility rates have been rapidly declining. This trend is not unique to the United States. With a total fertility rate of roughly 1.6 births per woman in 2024, the United States still exceeds most of Europe and East Asia but remains below replacement. 

Crucially, these trends in marriage, divorce, and fertility are not evenly distributed. In the United States, individuals without college degrees have experienced the steepest declines in marriage and fertility rates whereas college‑educated men and women exhibit relatively stable marriage and childbearing patterns, along with lower divorce rates as Melissa Kearney illustrates throughout the Two-Parent Privilege (University of Chicago Press, 2023). Degner is careful to emphasize these distributional facts, which are often obscured in popular discussions of “family decline.”

The second chapter, which surveys theories of marriage from thinkers as diverse as Thomas Malthus, Friedrich Engels, Ludwig von Mises, and Gary Becker, is an especially enjoyable read. Such historical breadth is uncommon in contemporary economics, and we are the worse for it. Degner’s contrast between Engels and Mises is useful to consider. Engels viewed capitalism and contractual marriage as mechanisms of female oppression, whereas Mises argued that monogamy and private property inaugurated an “age of contract” characterized by partnership and legal equality between spouses. Much of modern family economics (implicitly) follows the latter tradition by modeling marriage as a voluntary contract between consenting adults. Degner acknowledges the substantial achievements of this approach while arguing that it remains incomplete without attention to monetary institutions. 

In popular discourse, declining family formation is often attributed to rising wealth: some countries are simply “too rich” for families to thrive. One variant of this argument emphasizes increases in female education and labor force participation, while another highlights declining relative earnings among young men and falling male labor force participation.

The difficulty with these claims is that they receive limited empirical support. Wealthier and more educated women are more likely to marry, remain married, and have experienced smaller fertility declines than their less-educated counterparts. Cross-nationally, fertility is positively correlated with female labor force participation among high-income countries, and the income-fertility relationship is beginning to look positive again within some countries as Matthias Doepke et al., demonstrate (“The Economics of Fertility: A New Era,” in Handbook of the Economics of the Family, vol. 1, edited by Shelly Lundberg and Alessandra Voena [North-Holland, 2023], 151–254). Moreover, decades of empirical research indicate that children are a normal good—not only in “quality” but also in quantity (see, for instance, Melissa Kearney and Riley Wilson, “Male Earnings, Marriageable Men, and Nonmarital Fertility: Evidence from the Fracking Boom,” Review of Economics and Statistics 100 [Winter 2018]: 678–90). Something beyond simple affluence must therefore be at work.

This is where Inflation and the Family makes its most distinctive contribution. Degner does not argue that wealth itself undermines family life. Rather, he focuses on illusory wealth generated by monetary instability. Just as introductory economics distinguishes between profits that enhance consumer welfare and rents that do not, Degner leverages the distinction between genuine wealth creation and monetary distortions that mimic it. The latter, he argues, systematically discourages marriage and childbearing. 

A sustained examination of money’s role in shaping family life is long overdue. In Chapters 4 and 5, Degner develops his thesis in detail. Inflationary monetary policy, he argues, privileges debt and present consumption over long‑term planning. This may delay marriage as individuals seek to manage student loans or housing costs or encourage cohabitation over marriage by reducing the perceived benefits of long‑term commitment. Within marriage, financial stress associated with debt and inflation may exacerbate conflict and increase divorce risk, especially for lower-income households. Finally, by making present consumption more attractive than long‑run investments, inflation may reduce incentives to have children. 

Chapter 6 offers descriptive evidence consistent with these claims, linking inflationary policy to rising housing prices, increased private debt, and escalating educational costs. Each is highly sensitive to credit conditions and directly enters the cost–benefit calculations of prospective parents. A growing empirical literature connects housing costs to delayed marriage and lower fertility (such as Daniël van Wijk shows in “House Prices and Fertility: Can the Dutch Housing Crisis Explain the Post‐2010 Fertility Decline?” Population, Space and Place 30, no.7 [2024]), while student debt may be delaying family formation among young adults, as Robert Bozick and Angela Estacion argue (“Do Student Loans Delay Marriage? Debt Repayment and Family Formation in Young Adulthood,” Demographic Research 30 [2014]: 1865–91). In this chapter, however, Degner may undersell his own case. The law and economics literature has also catalogued connections between home ownership and marriage, as Jeanne Lafortune and Corrine Low argue that homes can act as collateral to make marriage more binding than would otherwise be the case under current divorce and child support laws (“Collateralized Marriage,” American Economic Journal: Applied Economics 15, no. 4 [2023]: 252–91). Although true natural experiments are practically impossible in a market setting, the convergence of theoretical arguments and empirical findings lends Degner’s thesis considerable plausibility.

Concerns about inflation’s regressive effects, especially on low‑income households, are not new. Early modern thinkers in sixteenth‑century Spain already recognized inflation as a political phenomenon with distributive consequences (see, for instance, Marjorie Grice-Hutchinson’s book The School of Salamanca [Clarendon Press, 1952]). What is new is that policymakers today possess far greater knowledge of monetary dynamics—and thus bear greater responsibility. While governments cannot single‑handedly reverse family decline, they can remove distortions that make family formation more costly. At a minimum, Inflation and the Family makes a compelling case for taking monetary stability seriously as a component of family policy. 

The coming decades will bring unprecedented experiments with family policy, as governments confront aging populations, fiscal pressure, and lackluster growth. Many assume that effective pro-family policy means that governments spend large amounts on children and parents. While devoting more resources toward the production of one thing will inevitably produce more of that thing, spending money that one doesn’t have—even on something good—is always a mistake. Moreover, as Degner is correct to point out, overspending itself can act as a disincentive for family life through higher interest rates, higher inflation, and, to top it off, regime uncertainty.   

Many years ago, the French economist Frederic Bastiat wrote of the “one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen” (Selected Essays on Political Economy [Foundation for Economic Education, 1995]). Inflation and the Family takes seriously the task of the good economist.