Not so easy to adopt from China anymore

Adoption of Chinese orphans by Americans has skyrocketed in popularity over the last two decades. I’m part of that trend, with two daughters adopted from China.

Although by most calculations there is no shortage of baby girls in orphanages in China, in the last few years the Chinese government agency that is responsible for matching American applicants to Chinese babies has been unable to meet the rising demand. I’ve often wondered why they don’t just increase the size of the agency in charge of foreign adoptions, but that is another story. The result has been a dramatic increase in wait times. When I adopted a few years ago, the lag between submitting one’s application to China and being assigned a baby was about 9 months. I thought the length of that lag was intentional — meant to represent the wait one would have for a biological child. In recent months, however, the wait times have increased to 15 months.

Making people wait in queues is one way to deal with excess demand. As the wait gets longer, some people decide it is not worth it, and eventually supply and demand equilibrate. It is an inefficient mechanism, though, because the wait imposes real costs on the eager parents (many of whom are not that young to begin with). The usual mechanism we use when demand exceeds supply is to raise prices. Right now adopting a child from China costs about $20,000 in total (relatively little of which goes directly to the Chinese government). If the Chinese government imposed an extra charge of $20,000 to double the price, that would probably solve the problem of excess demand pretty quickly. If that extra money was earmarked for the children who remain behind in the orphanage, there wouldn’t be much in the way of complaints. People might grumble some, but compared to the lifetime cost of raising a child, this still is not much money.

The Chinese government (and for that matter governments more generally) doesn’t naturally gravitate to prices as the way of solving market failures. Instead, earlier this week the Chinese government instituted a new set of rules dictating who will and will not be allowed to adopt from China in the future. Excluded are single parents, the obese, those older than 50. They also made it harder for people who were divorced in the past to adopt. The theory behind the changes is that people in the excluded categories make worse parents. That is a subject open to debate, although in Freakonomics we mostly come down on the side that what matters more than anything is that the parents simply love the children. However you slice it, these new policies are going to create a lot of ill-will. Maybe we should do more to restrict who becomes parents in the U.S., but we don’t, which gives this policy a very un-American feel.

The Chinese government can, of course, impose whatever rules they want. This is one case, though, where simply raising price would have been an easier, more politically savvy answer.