On abortion and the cost of adoption

This post comes from a *spirited* discussion at a party I attended over the weekend. For reasons you wouldn’t normally expect at such spirited discussions, the topic of conversation moved to abortion, and whether it should be permitted at all.

One person at the party made the point that it should be illegal beyond a certain point in the pregnancy, unless there were strong medical reasons for doing so. It was met with a counterpoint of abortion being the mother’s choice. Which was met with the moral argument about why the costs of killing a born child and an unborn child should be different. The discussion was veering towards one on the question of when life begins.

In my opinion, abortion is a simple case of transaction costs. If you have a baby that is born that you don’t want for whatever reason (maybe you’re going bankrupt, or breaking up, or getting into difficulty), there exists a simple solution for you to get rid of the baby while preserving its life – you can simply give it away for adoption (the liquidity of the adoption market is another topic in itself, and we will not go into it here).

If you don’t want the baby when it is not yet born, though, things aren’t that simple. You need to carry the baby through the rest of the pregnancy and wait for it to be born before you can give it away for adoption (see the movie Juno, for example). And considering the difficulty of pregnancy and childbirth, this can introduce significant costs to the mother. And this is a transaction cost – borne by the mother until the baby is born, and something she bears unwillingly.

I know this can again veer into the discussion of what point it is in the pregnancy that the transaction cost borne by the mother to see out the pregnancy is lower than the cost of killing the unborn child. This is a tricky problem, since there is no good solution for it – there is no reason we should move the limit one day forward or back, and that argument continues.

What helps is that there exists one point of discontinuity in terms of the costs faced by the mother – the time of the baby’s birth. Once the baby is born, the cost to the mother of keeping it drops dramatically, so that represents a kind of “obvious point” around which to frame regulation.

Which means that from the transaction cost point of view, abortion should be legal till the point of the child’s birth!

Weekend spiritual guidance (that led to this discussion): Old Monk with Thums Up

Parking and congestion

It is not too rare to see Indian politicians and policymakers talking about imposing congestion charges on Indian roads in order to control traffic.

The basic idea is pricing based on demand and supply – since supply of road space is constraint, and demand is increasing by the day, the use of roads in certain parts of cities (typically central areas) gets priced. This way, not only does this control the flow of traffic, but also nets revenue for the city.

In Indian cities, thanks to the numerous “cross roads” which can provide arbitrage opportunities, congestion pricing is hard to implement. However, there exists a fairly simple way to price road space and dissuade people from using private transport – charging for parking.

It’s such a simple and intuitive concept that it is a wonder that we need this blogpost (and this) at all. And in some ways, we can think of charging for parking as the “dual” of charging for congestion. Instead of charging for road space through the journey, we charge the ends.

This is of course an imperfect solution – it still doesn’t prevent people from driving through an already congested area with high parking charges, but it is at least a start.

The incremental impact of charging for parking can lead to a reasonable dip in traffic. It will also prevent people from moving around slowly in search of a parking spot (anyone who’s seen congestion on Brigade Road in Bangalore will attest to this). And as anyone who has tried to park a two wheeler in Bangalore will tell you, monitored parking spaces result in significantly better utilisation of parking space.

And then there are benefits to the government. The city government makes money (Takshashila had a paper on this a while back, but I’m not able to find it now) which is not small. The ability to regulate and charge for parking lets people know that the city government is capable of regulating traffic.

What’s more – once basic pricing is introduced, more innovative solutions will be found by the market. We might have apps that lead to pre-booking of parking space at your destination. We might have apps that lead parkers to the nearest empty parking space, thus cutting congestion on roads. We might even have a marketplace for parking space! All of this must be compensated for, of course, and unless parking itself is charged for, such businesses cannot function.