Object Lesson

The other day, a good friend of mine (who is also a former student from several years ago) posted a comment on his blog lamenting the high fees associated with adoption. He felt that this was not fair, and even morally wrong. He also thought that it was counter-productive because it provided a disincentive for families to adopt children. I decided that my response might make a good object lesson for applying economic rationale to the analysis of policy instruments, so, although I hated for my first comment on his blog to be one that disagrees with him, I present my response in part below. Bear in mind that some of this is normative, but the application of concepts is what is important.

...this is really just an issue of economics (economics, just to be clear, is a very broad study of human behavior, not just making and buying stuff). Basically, it's like this: People potentially have a lot of different motivations for adopting a child. It's fairly common, for example, for people to have children or to take in foster children for purposes of getting more money from the government; attaching a large fee to adoption creates a disincentive for adopting children for that purpose. Some people could have other, even less virtuous purposes, God forbid. Of course there is a screening process that potential adoptive parents go through that should weed some of these out, but the financial barrier just adds one more layer of protection there.
Even in terms of those with pure motives, having a large financial investment up front makes them think a little more seriously about the decision. Without that cost, some people might be somewhat more inclined to adopt out of impulse rather than after longer, more careful consideration.

Now, on a purely human level, the involvement of money in the process does leave a bad taste in our mouths -- we look at it almost as making children into a commodity. But that's not what it's doing. It's simply a matter of people behaving rationally. When the cost of doing something is higher ("cost" need not always be in the form of money, btw, but money is generally the most effective way to make it more tangible to people, since folks often don't give the same weight to costs that are less visible), people put more thought into going through with it than they would if the costs were lower.

I do agree with you in the sense that I think there should probably be some sort of means testing in setting the adoption fees. People who are wealthy will be impacted very differently by a, say, $10,000 fee than people of more average income, and poorer people will be excluded entirely, which is hardly equitable, and does nothing to help with the rational purposes of the fee that I described above. So, I do think the fee should be adjusted to income somehow.