Cost Of Raising A Child

For some reason as I was driving home yesterday, a thought occurred to me:

If one group of people paid $5.00 for a beer and another group of people paid $2.00 for a beer, would one group of people drink more beer than the other?

Or

If one group of people paid ~$200,000 to have a child and another group of people paid ~$0.00 to have a child, which group of people would have more children?

So, here I am looking at the data:

A middle-income family may spend $234,900 to raise a child born in 2011 to the age of 18, a 3.5 percent increase in a year, according to a government report.

That is a lot of money.  But the costs are not fixed:

The typical two-parent middle-income family spent $12,290 to $14,320 in 2011 on each child, the study found. Households that make less spend less, USDA researchers said. A family earning less than $59,410 a year will probably spend $169,080 in 2011 dollars to rear a child, while parents earning more than $102,870 may pay $389,670, according to the study.

And it can get worse than that.  According to this calculator the cost of raising a child can be as high as $434,180 if you earn more than $100k.

Earn less than $57,800 and you pay $133,710.  That’s $7,300 this year alone.

With government assistance to those poorest among us, that $7,300 can be completely covered reducing the real cost to near zero.

So, given the differences in the cost of raising children, I came to the conclusion that wealthy individuals have fewer children than do those less wealthy.

Was I right?  According to the Census I was:

The births per 1,000 women below 100% of the poverty line in 2008 was 96.3.  Births per 1,000 women above 200% of the poverty line that same year was almost exactly half : 47.7.

If income levels are pulled out, there is a steady climb in births per 1,000 from the wealthiest to the least wealthy.  A notable exception are the very poorest mothers:

Income Births Per 1,000
Less than $10,000. 33.7
$10,000 to $14,999. 103.8
$15,000 to $24,999. 86
$25,000 to $34,999. 80.3
$35,000 to $49,999. 72.3
$50,000 to $74,999. 64.4
$75,000 to $99,999. 57.4
$100,000 to $149,999. 51.8
$150,000 to $199,999. 49.3
$200,000 and over. 49.8

Certainly much more than the cost of raising a child goes into the decision of whether or not to have a baby.  Perhaps something as simple as the cost of contraception goes into the amount of pregnancies among the wealthy and the poor.  But it would be foolish to wave away the fact that the cost of raising a child is much higher for those who have more money and thus acts as a drag on the birthrate among that population.

4 responses to “Cost Of Raising A Child

  1. Hmm, I wonder though….it seems to me that since cost is always relative to income, the proportionate cost is much higher for the poor than for the wealthy. An individual does not look at price in absolute terms, but in terms relative to his or her resources. A family with $250K may spend twice as much raising a child as a family with $50K, but the relative cost is greater for the poorer family. I suspect that wealthier folk more often have two working spouses who don’t want to give up a career, put material values ahead of family, and see children as a burden to their lifestyles. That’s perhaps why the wealthier a society becomes, the lower its birthrate.

    • An individual does not look at price in absolute terms, but in terms relative to his or her resources.

      A single mother of three making minimum wage can receive more in benefits than she pays for raising each child. Her real cost is zero.

      I suspect that wealthier folk more often have two working spouses

      Which may explain their “wealthiness.” Which, by the way, is not something you have been willing to consider in you claim that income inequality is spreading.

      put material values ahead of family, and see children as a burden to their lifestyles.

      Certainly a cynic’s view, but yes, perhaps there are wealthy people who see children as a drag. However, I suspect that a vast majority of wealthy people are wealthy because they are good at things like money, planning ahead and discipline. And they recognize that raising a child is a significant investment AND they wanna retire without having to be one of those people who come into their 60’s with a grand total of $7,000 in savings.

      That’s perhaps why the wealthier a society becomes, the lower its birthrate.

      Perhaps. It may also be because we no longer require kids to help us farm. Or that kids used to die young.

  2. Actually most wealthy people are wealthy because they came from relatively wealthy families. It’s a truism in studying comparative politics that the best way to slow population growth is through prosperity — wealthier people have less kids in almost every context.

    I disagree about the idea that it costs nothing to raise a kid for single parents. First, there are many “hidden” costs to raising children that aren’t material – time, lack of freedom, etc. Second, there are material costs in terms of lost opportunity (a single parent can’t take a job because he or she can’t afford day care, etc.) which may even inhibit a career. Finally, most single parents I know work – often two jobs and are still barely getting by. They may get food stamps and other assistance, but their spending LOTS of their income on their kids with little discretionary income.

    On the other hand my wife and sometimes think gee, if we didn’t have kids think of the travel and adventure we could be having. But having kids and paying a lot as we’re earning good money doesn’t really cramp our lifestyle much. I know single and even married couples who sacrifice a lot to pay for the kids to have money to get sports equipment. So I still think in relative terms almost all poor families pay much more for their children than do the wealthy.

  3. I’ve had numerous students in my classes who are also single parents or young parents, working while taking college courses and raising a family. That to me is the face of the lower middle class and poor – people who work hard and try to succeed but often facing numerous obstacles.

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