The Economics of Infertility: Evidence from Reproductive Medicine

WHO estimates that as many as 1 in 6 individuals of reproductive age worldwide are affected by infertility. This paper uses rich administrative population-wide data from Sweden to construct and characterize the universe of infertility treatments, and to then quantify the private costs of infertility, the willingness to pay for infertility treatments, as well as the role of insurance coverage in alleviating infertility. Persistent infertility causes a long-run deterioration of mental health and couple stability, with no long-run “protective” effects (of having no child) on earnings. Despite the high private non-pecuniary cost of infertility, we estimate a relatively low revealed private willingness to pay for infertility treatment. The rate of IVF initiations drops by half when treatment is not covered by health insurance. The response to insurance is substantially more pronounced at lower income levels. At the median of the disposable income distribution, our estimates imply a willingness to pay of at most 22% of annual income for initiating an IVF treatment (or about a 30% chance of having a child). At least 40% of the response to insurance coverage can be explained by a liquidity effect rather than traditional moral hazard, implying that insurance provides an important consumption smoothing benefit in this context. We show that insurance coverage of infertility treatments determines both the total number of additional children and their allocation across the socioeconomic spectrum.