So why do families in poor underdeveloped countries have lots and lots of kids? Well, the customary answer is that kids provide for you in the future, and you need lots and lots of them because not many of them are going to live.

My friend suggested that utility was increasing in the number of kids you had. I counterproposed that children were a form of contractual enforcement; that the more kids you had, the greater the costs of either party ditching the other. However, if you think about this enough, it doesn't really make sense.

Someone suggested that utility was actually decreasing in kids over time. So, new kids equals higher utility. Maybe.

We had the brilliant idea that there was a increasing return to scale or some type of skilled labor complementarity at work here... it just gets easier to make 'em, darn it!

The discussion turned from production of kids to naturally... trading children... I'll give you little Tommy here for your Timmy plus three marbles and a cupcake...Why don't we see this? (Bsides all the ethical and moral dilemmas that brings up) The fact that we don't observe this happening says that there is some type of inefficiency screwing up the market mechanism.

After thinking awhile we finally think we got it. It's similar to another problem involving cars and dealerships and why cars depreciate instantly once they're off the lot. Drumroll please... the Lemon Problem. The kid might be a lemon, and you'd be stuck.