Family Matters: Why Our Choices Determine Our Economic Prosperity
“Family policy may hold the keys to unlocking the growth and dynamism which Western policymakers have been searching for… If we want prosperity, we could start by rebuilding the family.”
In this paper, Philip Pilkington outlines the case for why “strong, stable families” not only underpin a healthy social fabric, but are vital to ensuring long-run prosperity. The paper looks at the role that restoring the family may have to play in reigniting economic growth, as well as analysing the relationship between spiralling public spending and family breakdown.
Summary of Research Paper
“Strong, stable families” are vital to a healthy society. In purely economic terms, family policy may hold the keys to unlocking long-term growth and prosperity.
Models for measuring economic growth have long neglected the significance of growth in the employed population. For too long the focus has been on productivity, instead of labour force participation and demographic trends.
Original modelling conducted for this paper shows how demographic and labour force trajectories impact economic growth. The United Kingdom, for example, has averaged 1.5% lower growth than the United States historically, because of demographic and labour force trends, not a productivity growth gap.
This situation looks likely to worsen. The factors influencing these trends—low fertility rates, mental health issues, drug abuse, or criminality—are all deeply tied to family breakdown. That is why restoring stable family formation is a hidden key to unlocking long-run economic growth.
Our national deficits are a symptom of social malaise. Family breakdown is driving spiralling public debt. Evidence reviewed in this paper provides an overview of a variety of costs to the state, from social care to mental health to crime—and shows that the family touches every area of policy.
Across the West, health and social care spending is escalating. A large contributing factor is the increasing spending on institutional care, for both the elderly and children. In Australia, the Government spent $7 billion more on social care for the elderly in 2022-2023 than it did in 2018-2019. Meanwhile, the total number of children in the state care system in the United Kingdom has grown by 28% since 2011.
Data on welfare spending (excluding family transfer payments) in the United Kingdom indicates that if single parents were instead married, this would lead to a reduction in welfare spending of around 19.3%, translating to savings of 0.9% of GDP, or £23 billion, annually. In other words, half the United Kingdom’s defence budget. In the last five years in the United Kingdom, welfare claims for those “not searching for work” rose by 550%—a 3.3 times larger increase than claimants “searching for work”—reflecting a remarkable rise in labour nonparticipation. Playing this scenario forwards, the data becomes increasingly stark: the British welfare budget under Universal Credit is set to grow by 80% between now and 2030.
Crime also costs the taxpayer money. A recent study shows that 24% of adult prisoners have been in care in the United Kingdom, while only around 0.6% of children will have been in care.
The wealth of a nation is in the health of its families and communities.
While government can provide a sticking plaster for society’s challenges, it will only do so at the point of crisis. A strong social fabric creates long-term resilience. Family and friends are those who provide the best care for a loved one. It is no longer sustainable to pass responsibility for all our problems to the state.
The family touches everything from birthrates through to the basics of social flourishing which, in turn, have profound ramifications for the health of our economies and the burden of government spending. Stabilising family formation will have a profound impact on health and social care, welfare and crime rates, with positive knock-on consequences for the sustainability of government budgets and public safety expenditure.
Restore the family and you restore prosperity. It is time to reframe how we think about economic growth and realise that there is more to it than productivity. It is time to recognise the importance of a productively employed population and how it is driven by labour force participation and population growth. If we are to see an uptick in our demographic trends and a reversal of the downward trajectory in labour force participation, we must restore the family.