your short paper assignment write brief 1250 words analysis following economic argument whic

Your short paper assignment is to write a brief (1,250 words) analysis of the following economic argument which employs both descriptive and normative economic analysis of an issue of profound importance.


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In writing this paper, imagine the audience for your paper as composed of other students who know as much economics as you do but who have not thought much, if at all, about this particular issue. Your paper should both explain the argument and, as well, provide an evaluation of its merits. Much has already been written about the issue here at stake (including writing focused on this particular formulation) and you should do as much additional research as will on-balance aid your paper-writing project.


A draft of this paper is due Tuesday, 24 September, and will be returned with comments on Tuesday, 1 October. The final draft is then due Wednesday, 8 October. Please attach your draft with the GSI’s comments to the final draft.



Richard Posner is a Judge on the U.S. Court of Appeals for the Seventh Circuit and a Senior Lecturer at the University of Chicago Law School and the most prominent exponent of the enormously influential “law and economics” lobby. Controversially, he has proposed permitting a (legal) baby market, i.e., allowing (infant) human beings to be bought and sold. In the current seventh edition of his textbook, The Economic Analysis of Law, his proposal is somewhat less vividly formulated than in the third edition of 1986, pp. 139 ff.:



   [The baby] shortage appears to be an artifact of government regulation, in particular the state laws forbidding the sale of babies. That there are many people who are capable of bearing children but who do not want to raise them and many other people who cannot produce their own children but want to raise children, and that the costs of production to natural parents are much lower than the value that many childless people attach to children, suggests the possibility of a market in babies, especially since the costs of production by the natural parents are typically much lower than the value that many childless people attach to the possession of children. And as a matter of fact there is a black market in babies, with prices as high as $25,000 said to be common. Its necessarily clandestine mode of operation imposes heavy information costs on the market participants as well as expected punishment costs on the middlemen (typically lawyers and obstetricians). The result is higher prices and smaller quantities sold than would be likely in a legal market.

There is, it is argued, no assurance that the adoptive parents who are willing to pay the most money for a child will provide it with the best home. But the parents who value a child the most are likely to give it the most care, and at the very least the sacrifice of a substantial sum of money to obtain a child attests to the seriousness of the purchaser’s desire to have the child.

Opponents of the market approach also argue that the rich would end up with all the babies, or at least all the good babies…. Such a result might of course be in the children’s best interest, but it is unlikely to materialize. Because people with high incomes tend to have high opportunity costs of time, the wealthy usually have smaller families than the poor. Permitting babies to be sold would not change this situation. Moreover, the total demand for children on the part of wealthy childless couples must be very small in relation to the supply of children, even high-quality children, that would be generated in a system where there were economic incentives to produce children for purchase by childless couples.



An extended version of this argument was given in “The Economics of the Baby Shortage,” by Elizabeth Landes and Richard Posner, in The Journal of Legal Studies in 1978, available on our CTools coursesite.