Virtues, families, and the economy

was the subject of my Trade Tripper column in the recent weekend's issue of BusinessWorld:

Looking at various studies related to the upcoming ASEAN 2015 integration, one would be struck by the amount of data compiled by our policy makers but at the same time disappointed at the seeming non-interest on their part on one particular set of numbers: the rise in teenage pregnancy and the seeming dissolution of the institution of marriage.

Recent figures indicated that teenage pregnancy in this country rose by 70% in the past 10-year period (114,205 in 1999 to 195,662 in 2009). The 2010 figures show 206,574 such pregnancies, with more than half of that number of girls below 14 years of age. Data from the National Youth Commission show that the Philippines has the third highest number of teen pregnancies in Southeast Asia and among the highest in the ASEAN region and the only country where such a number is increasing.

Also disconcertingly, 13-14% of all registered marriages are among those below 20 years old. Meanwhile, there is also a rise in annulment cases. The number of annulled marriages has steadily increased in the past decade or so, with a daily average of 28 couples reportedly filing annulment cases (as per the records of the Office of the Solicitor General). In 2012 alone, it was reported that 10,528 annulment cases were filed, representing a 100% increase in just 10 years.

Why are these numbers important in relation to our economy? Because the basic economic unit and source of productivity are people.

As pointed out by Henry Potrykus and Patrick Fagan (in their study “The Divorce Revolution Perpetually Reduces US Economic Growth: Divorce Removes a Fourth of Head-of-Household Productivity Growth,” March 8, 2012): “It is worth emphasizing that though economic production generally, and growth particularly involve three components, economic enterprise is a human activity. Human beings, by the measure of growth accounting, contribute over half of what is valuable to production. Only one third of growth may be attributed to non-human, physical capital. Domestic production is affected massively by the human component’s contribution.”

Also, because it must be pointed out that despite the ASEAN integration being packaged as turning ASEAN into one big “production base,” the Philippines nevertheless is also hinging its strategy on expanding our services industry. But services require people. And people need to be educated and trained.

Connect that with the recent presentation at National Economic and Development Authority and Philippine Institute for Development Studies (NEDA PIDS) (Jobs, Expansion, and Development; by Paqueo, Orbeta, Lanzona, and Dulay; April 3, 2013) which talked about the “positive correlation of open unemployment with income and education.” More tellingly, they spoke of the fact that “income of households headed by high school graduates is more than double that of households with only elementary education.” In short, “the rate of return to investment in education is relatively high.”

Or put another way: the longer you stay in school, the higher your income and the greater the productivity, which then leads to overall national economic gain. But how can kids stay in school longer if they can’t control their hormones (urged on by a sexed up media) and keep getting pregnant?

Thusly, of the almost 3 million Filipinos currently unemployed, 48.2% are within the 15-24 age group, with 29.9% those 25-34 years old. Most of them are high school graduates.

The government’s solution is to pour condoms on them, which isn’t a solution at all. It’s like throwing band-aids at an accident-prone person but not teaching that person how to avoid accidents.

It’s common sense that is no longer common. As Tara Culp-Ressler writes (“Teen Pregnancy Negatively Impacts The National Economy”, June 8, 2012), albeit in the US setting, “Because teenage pregnancy deters increased education, it leads to significant amounts of lost earnings, which negatively effect the economy as a whole.”

In any event, the foregoing has to be understood within this context: at present, Filipinos 30 years old and below comprise around 70% of the population (with those below 14 years at 35%, with the median age at 22.9 years old). Those 65 years old comprise only about 4.1%.

Where our young go, literally so will our country.

And it takes no stretch of the imagination to connect the rise in teenage marriages to the rise in annulments. In which event, Potrykus and Fagan had this to say (albeit about marriage, divorce, and the economy): “Marriage is a causal agent of economic growth. It constitutes one third to one fourth of the human capital contribution of household heads to macroeconomic growth. The total contribution of human capital to growth of domestic product in turn is large, being of equal proportion to the other two contributing factors: size of the labor pool and physical capital. Divorce removes this agent of economic growth.”

The point of all this is: economics is not just about numbers and graphs. In the end, it’s about people. If we don’t care for our people well, molding their character properly and inculcating in them proper virtues, then all that economic planning is useless.