Abstract

Policymakers use financial incentives to achieve a wide variety of public objectives, from pollution reduction to the employment of welfare recipients. Combining insights from economic theory with lessons learned from actual implementation, this article analyzes the implications of two such policies: first, subsidizing contraception, and second, offering financial incentives to individuals for sterilization or for using a long-term, semipermanent method of contraception such as the Intra-Uterine Device, Depo-Provera or Norplant. These subsidy and incentive policies achieve their goals through a myriad of individuals who make their reproductive choices in response to particular costs and benefits. Such programs are ethically and politically controversial. In this paper, I address the question of whether they can be justified either economically or ethically.The first section of this article presents an economic theory to assess whether a subsidy, tax, or incentive is economically efficient, both generally and in the context of contraception.