06.21
A friend of mine recently reminded me of a stat that I’ve seen floating around. I’ve been meaning to address this in a post but had forgotten about it until now. The stat being thrown around is from a USDA report that claims that for a couple making between $56k and $98k per year, the cost to raise a child from birth to age 17 is $291,570. Here’s the pertinent table from the report:
And to get a glimpse of how this number is being used in the media, let’s look at a quote from the grist.org article that I posted on a few weeks ago:
A childfree life also means a lot more financial freedom. How expensive are kids? Try $291,570 for a child born in 2008 to parents bringing home between $57,000 and $98,000 a year, according to figures from the USDA. That’s for the first 18 years, so it doesn’t include college. If you make more, you’re likely to spend more. Couples bringing in upwards of $98,000 a year can expect to spend an average of $483,750 on a child’s first 18 years. (Dig into the numbers yourself [PDF] for all the caveats and conditions.)
These numbers are so ridiculous that I hardly know where to start. One thing is for sure, though. This report smacks of the same egg-headed naivety that many academic economists fall victim to. They’ve anyalyzed an issue that can really only be understood by an investigation of human behaviour. But they’ve tried to look at it as a simple math problem instead. The end result is that they have come up with numbers that are demonstrably absurd, yet they stand by them as if they are, in some way, useful. Economists do this same thing. They develop mathematical models of the economy and come up with results that are obviously non-real. This doesn’t seem to stop them from touting their useless findings though.
Any father that looks at that figure of $291,570 will know instantly that it’s a load of horse crap, but let’s dig in a bit deeper. For instance, the report says that for the first year of life a child will cost you approximately $11,000. The reason this number is so big is because of the inclusion of stuff like housing in the number. They’ve tried to devise a way to extract how much of the cost of a home is being incurred because of each child. As if couples without children live in single bedroom apartments and only buy houses when they have kids. That’s obviously not the case. Housing has less to do with how many kids you have than it does with your age and income level. For instance, a single guy that used to live across the street from my parents lived in a 3 bedroom, 2 bath. He moved out of that house after a couple of years and moved into a giant house in a wealthy neighborhood near by. Most couples don’t buy large houses when they first get married because they can’t afford it, not because they don’t have kids.
We just had our third child back in March. My wife is breast-feeding, and with this child we started using cloth diapers. We also got lots of clothes from the baby shower. My best guess is that we will end up having spent less than a thousand dollars on her first year of life. And that includes the $200 deductible we had to pay for our hospital stay to give birth. I’m not sure what people are buying that costs $11,000. I’d have to see that to believe it.
Now, if you take our other two kids(ages 8 and 6), I figure they are costing us about an extra $100 a month on groceries. They cost about $200-$300 per year on homeschool supplies. And they cost about $50 a month for clothes since they grow so fast. My wife shops sales and consignment a lot to keep the costs down on that. If you add in about $300 per child for birthday and christmas then I figure we’re spending about $2000 per year on our children’s expenses combined. That cost will probably stay consistent until they get to driving age. I anticipate that we’ll end up spending more for groceries since they will eat more in their teenage years, but other than that, those numbers should stay pretty consistent until they get to driving and marriage age.
So we can roughly sum up that it will cost us about $50,000 to raise three kids to 16. What happens in those age 17-20 years are going to be different for each child. One might decide to work and go to school. Another might decide to get married or start a business, so it’s difficult to say how much that will cost for them and us. But it’s safe to say that $50,000 to raise three kids is a lot different than $291,570. But, then again, the people that come out with reports such as this are working for the government and are making well above what you and I do. So their idea of what constitutes a decent upbringing for a child is probably a lot different than mine. I, for one, don’t think a 4G iPhone is a necessity for my 11 year old.
There’s another aspect to this whole thing that bothers me too. It’s the same problem I have with the overpopulation argument. The core flaw in both is that the person making the argument doesn’t factor in the utility of the person. Humans are not fixed costs. They have production capacity. In fact they have higher production capacity than anything else on the planet. Persons don’t just exist. They cultivate, create, build, innovate, appropriate resources, bring pieces together, etc. People care for themselves and each other. Just one example is our family. We have gone from being completely dependent on store bought food to growing maybe 5% of our food ourselves. We hope to steadily increase that number each year with a target of about 50%. It’s that type of creation capacity that puts the lie to the persons as fixed costs argument.
And a final thing to note is that inflation is highly distortive in a study such as this. It’s the resources that you consume that matter, not how much they cost. In 15 years, that $291,570 number might be $500,000. But, have you used up any more or less resources in the upbringing of a child in 2025 than you did in 2010? No. As I’ve said a thousand times before, money is a medium of exchange. Measuring resource usage against a fiat medium of exchange is like measuring how tall you are using a bungie cord. When the measuring instrument isn’t fixed, the numbers it gives you are meaningless.
