Home | Business News | Browse by Publication | F | Family Economics and Nutrition Review

Expenditures on children by families.

Article Excerpt
Child rearing is a costly endeavor. Since 1960 the U.S. Department of Agriculture (USDA) has provided annual estimates of family expenditures on children from their birth through age 17. USDA's annual child-rearing expense estimates are used in four major ways:

* To determine State child support guidelines. Under the Family Support Act of 1988, States are required to have numeric child support guidelines and to consider the economic costs of raising a child in these guidelines. The economic well-being of millions of children is affected by child support.

* To determine State foster care payments. In 1999 about 581,000 children were in foster care (U.S. Department of Health and Human Services, 2001).

* To appraise damages arising from personal injury or wrongful death cases. For example, if a person with children is hurt on a job such that he or she cannot work, the courts use the expense figures to determine compensation for the family.

* To educate anyone considering when or whether to have children. These expense estimates also may encourage teens to wait until they are adults and more prepared financially to have children.

This article presents the 2001 expenditure estimates associated with rearing children. Data and methods used in calculating the child-rearing expenses are described; then, the estimated expenses are discussed.

USDA Method for Estimating Expenditures on Children by Families

USDA provides annual estimates of expenditures on children, by husband-wife and single-parent families, from their birth through age 17. Expenditures on children are estimated for the major budgetary components: housing, food, transportation, clothing, health care, child care/education, and miscellaneous goods and services (see Categories of Household Expenditures).

The most recently calculated childrearing expenses are based on 1990-92 Consumer Expenditure Survey (CE) data, which are updated to 2001 dollars by using the Consumer Price Index (CPI). The CE, administered by the Bureau of Labor Statistics, U.S. Department of Labor, is the only Federal survey of household expenditures collected nationwide. It contains information on sociodemographic characteristics, income, and expenditures of a nationally representative sample of households. The sample consisted of 12,850 husband-wife and 3,395 single-parent households, weighted to reflect the U.S. population of interest.

In determining child-rearing expenses, USDA examines the intrahousehold distribution of expenditures by using data for each budgetary component. The CE contains child-specific expenditure data for some budgetary components (clothing, child care, and education) and household-level data for the other budgetary components (housing, food, transportation, health care, and miscellaneous goods and services). Multivariate analysis was used to estimate household and child-specific expenditures, controlling for income level, family size, age of the child, and region of residence (when appropriate) so expenses could be determined for families with these varying characteristics. Estimates of child-rearing expenses are provided for three income levels of husband-wife families. These income groups were determined by dividing the sample for the overall United States into equal thirds.

For each income level, the estimates are for the younger child in families with two children. These younger children were grouped in one of six age categories: 0-2, 3-5, 6-8, 9-11, 12-14, or 15-17. Households with two children were selected as the standard because this was the average household size in 1990-92. The focus is on the younger child because the older child may be over age 17.

USDA's estimates are based on CE interviews of households with and without specific expenses. For some families, expenditures may be higher or lower...

View this article FREE - Now for a Limited Time, try Goliath Business News
Free for 3 Days!