The PulseTue Aug 19, 2014 - 8:11 pm EST
Does it really take almost $250,000 to raise kids to age 18?
The headline appears to say it all, over at The Washington Post's Wonk Blog: 5 charts that show why it costs nearly a quarter-million dollars to raise a kid today.
As outlined in the post, the Department of Agriculture did its annual examination of the estimated cost to raise a child to age 18. The estimate, taken from 2006 and applied in 2013 dollars, found that the average cost per child from birth to age 18 was $245,340.
This number seems devastating, and the Wonk Blog author, Niraj Chokshi, does an excellent job of pretending that it is. However, he ignored a couple of important caveats and considerations.
First, from Katrina Trinko at The Daily Signal. Trinko quoted the report, which notes that a larger family will have less cost per child. "To estimate expenses on three or more children in husband-wife families, 22 percent should be subtracted from the total expense for each child’s age category,” according to the report. Additionally, “as family size increases, costs per child for food decrease less than for housing and transportation. Much housing space is used in common, and car trips can serve more than one child.”
Basically, the study says that families with fewer kids spend more per child because certain expected costs -- such as a car with four or five seats -- are the same no matter what the family size is.
Related, the study highlights that "expenditures by husband-wife households with one child average 25 percent more on the single child and expenditures by households with three or more children average 22 percent less on each child." Which means, as Americans have fewer children, of course their costs per child is increasing.
Second, while both blog posts note that wealthier people spend more per child, it is Trinko who highlights the important elephant in the room:
That’s...the average number, not the minimum number. It’s an average from a span that includes those who are struggling to stay afloat, and those who are buying $1,250 strollers for their children.
Taking into account the income level of parents, Trinko says "that there are plenty of kids raised without parents spending nearly a quarter of a million on them."
In addition to ignoring these key factors, though, any headline that highlights "$245,000" or "nearly a quarter of a million" -- and a Google search brings up many -- is misleading because today's parents spend a lot of money that their predecessors did not.
For example, housing costs account for 30 percent of the price of raising a child. As NPR noted in 2006, however, "the average American house size has more than doubled since the 1950s; it now stands at 2,349 square feet."
In other words, as family size has shrunk, and energy prices have increased, the average American child lives in a bigger home. Furthermore, how many computers, phones, TVs, sound systems, and other technologies that are excessive or unnecessary flood the average home -- costs that were hardly thought of 50 years ago?
Likewise, child care and education make up 18 percent of what is spent per child. I have to think a stay-at-home parent would drastically shrink this cost -- but that's not what people do today.
Interestingly, the price of food has gone down by 18 percent for middle-income families since the 1960s. This bears repeating: One of the few necessities in life -- eating -- has gone down in price, yet it appears keeping up with the Joneses has taken the extra cash and spent it on a bigger home, computers, and extravagant vacations.
A final note: The report examines three income brackets. The lowest level of income is $61,530. I wonder what the report would have found had it looked at those families who make less than $45,000 per year -- I doubt some of the expenses that are considered normal at $60K and up would have been the same, or even existed, at lower incomes.
All in all, the authors of the report appear to have done a fine job of outlining the expense per child in America, and included the standard caveats appropriate to such an analysis. But even a cursory examination of the situation shows that report does not look at the cost of raising a child, but rather the expense of raising a child.
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