Black Babies Cost Less to Adopt

July 6, 2013 permalink

NPR recently broadcast a program Six Words: 'Black Babies Cost Less To Adopt'. You can link to it or listen to our local copy (mp3).

The NPR reporter is clueless about the cause of the price differential. She cites altruistic reasons, suggesting that a lower black price will get more families interested in adoption across racial lines. The fees, she says, cover administrative costs and sometimes costs for the real mother. Prices quoted by the adoptive mother in the program are $35k plus expenses for a white baby, $18k for a black baby and $24k-26k for a mixed race baby. Previous articles on fixcas support a similar black/white price differential [1] [2] [3] [4].

Since reporters remain ignorant of the basics of markets, fixcas provides a primer on pricing in the expand block.

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The supply of a product in the marketplace depends on price. When a low price is offered, suppliers are willing to provide only small quantities. For example, at a low price, coal suppliers will mine only the small amount of coal near the surface that can be produced easily. When a higher price prevails, it makes sense to dig further into the ground where there is more coal to be found. Economists represent this fact with a graph. In the reverse of usual mathematical practice, they put the price on the vertical axis and the quantity provided at that price on the horizontal axis. An example is the blue curve in the chart below.

Source: Wikipedia, Supply and demand

Demand also varies in response to price. A high price for a product will scare off a lot of buyers, so they are willing to buy only a small quantity. But a drop in price will bring out more buyers, so the demand goes up. That is represented by lower red curve, D1, in the diagram.

Where the two curves meet suppliers and consumers are willing to trade the same quantity at the same price. That is the price the market finds, P1 in the diagram.

What happens when the demand increases for some reason? That is shown by the second demand curve, D2. Now the market will find a new price, P2, higher than the old one. A change in the supply curve (not shown) can also alter price. An increase in the supply (shifting the blue supply curve down and to the right) will lower the price point.

Back to the babies. In the USA, white people have higher status than black people, enhancing the demand to adopt white babies. So the demand curve for white babies resembles D2 while black babies are on D1. The white price is higher. The supply is also affected by the higher birth rate among blacks, lowering the black price for that reason as well.

The adoption industry is engaging in a big game of pretend: pretending the money changing hands during adoption is for legal and administrative fees, when the facts show that the racial price differential is the work of market forces.