The Australian Government wanted to increase the birthrate: "one for mum, one for dad, and one for the country". To do this they introduced the Baby Bonus, a payment of $3,000 per baby. What they didn't expect is how this would lead to the largest single day number of births in Australia's history.
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Today's the 1st of July, and it's an important day for a special group of Australians because it was on this day in 2004 that more babies were born than any other day in Australia's recorded history.
Now this wasn't due to chance or coincidence. It was actually due to a change in law that led to hundreds of people calling today their birthday. Now this goes to the field of behavioural economics. That is, using economic theory to explain the way that people behave and the decisions that they make. Now governments use this type of thinking a lot when they're passing laws and putting taxes on behaviours that they don't wanna see. It's why, for example, there are high taxation on things like cigarettes, on alcohol, and things like the soda tax. Now governments will also financially reward behaviours and things that they do wanna see. And in this case, that thing was babies.
So the policy in question is the Baby Bonus, and here's how it worked. From the 1st of July, 2004, any baby that was born, their parents would receive $3,000 as a cash payment from the government. Now the goal was to support new parents and try to increase Australia's declining birth rate. So this is what's called a natural experiment for the researchers, answering a question that could be solved in the real world.
Now there are all types of these studies that happen, and one of them went to two of the certainties of life, death and taxes. In that study, what the researchers wanted to know is could tax law impact when people died? So it's being shown that people with the end of their life can will themselves to live longer if there's a momentous event coming up. So in the weeks before the new millennium, there was a decline in the death rate. And it's being shown that there are fewer deaths from Jewish people in the week before Passover.
So what the researchers wanted to know is would this apply to avoid paying tax? So what they looked at is when countries got rid of their inheritance tax or their death tax, and actually found that 50 people that would've died in the week before Australia got rid of its inheritance tax actually held on to the following week. Now the researchers did say that they're not entirely sure whether information was inducted or, who knows, maybe families didn't call the doctor to come in for a couple of extra days to go in and check on grandpa.
So that's deaths, but let's go back to births. So the Baby Bonus kicked in on the 1st of July. Now the reason that date was picked is it's the start of the Australian financial year. But the government announced the policy on the 11th of May, about seven weeks earlier. And as you know, that's not long enough to make a baby. So you might ask yourself, how could this possibly have made a difference? Well, it turns out that people do have some sway when they give birth. It's been shown, for example, there are far fewer births on weekends.
Now that's because things like caesarean sections can be scheduled. And when you're picking a date in the calendar with the doctor, you'll avoid the weekend. So in this case, did the timing of this policy make an impact for births? And the answer to that was a resounding yes. The 1st of July, 2004 saw just over 1,000 babies born, the highest amount than any other day in Australia's recorded history. And the day after that, the 2nd of July, was the fifth highest day in the 30-year period that the researchers looked at. And there was a corresponding decline before the policy came into effect. The 30th of June was in the bottom 1% of weekday births in that same 30-year period.
So yes, government policy can impact when we live and when we die. So to all of the 1st of July birthday babies out there, I just wanted to say Happy Birthday.
I'm Julian O'Shea. Thanks for watching. I'd love to give a shout-out to the researchers that did this study, Joshua Gans and Andrew Leigh. And if you enjoyed this video, I'd urge you to subscribe for more. Take care. It's good. It's good.