Risk, uncertainty and family formation: The social context of poverty groups

Abstract Despite the assumptions of many demographers that the net returns from children for non-elite groups in underdeveloped areas are likely to be negative, high fertility persists in most of these societies. Both cultural and institutional explanations have been proposed to account for this. We attempt to provide some mediation between these competing models, by introducing the elements of risk and uncertainty as factors likely to induce poverty and lead works to opt for the 'high fertility, low quality' pattern of investment of time and money in family formation. Drawing upon the work of Wharton in subsistence agriculture practices, several alternative decision-making models are proposed to account for both the persistence of high fertility, and the declines that have been registered in selected areas, such as Taiwan and perhaps China. The empirical work of Mueller on Taiwanese expectations of returns on children and the concomitant variation in family-size preferences is consistent with the models proposed. Some implications for uncertainty and risk-reduction strategies in family planning and other social welfare programmes are drawn.