Birth rates have dropped recently, but I don’t think that represents a long term trend. It is possible that birth rates correspond with income. The birth rate in the US has remained pretty flat since 1972 (See second page). The recent decline is well within the range of variation since 1972.
I think a theory that combines both genetic and environmental components in explaining birth rate is probably going to have the best success. I think we have an underlying desire to procreate because if we didn’t, we wouldn’t continue to exist. I think we are programmed to assume that resources are finite and that over a lifetime, it is better to spend ones resources effectively. Thus, one should wait until relative times of prosperity to bring children into the world.
Secondly, the number of children one brings into the world should be related to ones ability to care for those children. So, the better you can care for children, the fewer you need to be sure to pass your genes along. If you are poor, then it makes more sense to have a lot of children. You can’t give any of them much help, so they all have an equal chance of surviving. Even though the chance is relatively smaller, by increasing the number of children, you increase your overall chances of passing your genes along to subsequent generations.
Wealthy people, in contrast, know they have enough resources to care well for their children. In addition, they have an opportunity cost for having more children. It keeps them from earning higher incomes. So for them, the optimal number of children is smaller than for poorer people. Optimal in a balancing equation sense—there is no objectively optimal number of children.
There are other environmental factors in the equation as well. Some have been mentioned by my fellow jellies. I’m sure there are others not mentioned here yet.
But it’s both biology and environment—or more specifically—the interaction between the two that helps folks decide how many children to have.