"The cost of children" - overview and summary
"Children don't cost that much! My ex is spending it all on foreign holidays".
"Doesn't my ex realise how much children really cost? If he did, he wouldn't complain so much".
Probably neither parent actually knows how much children cost. Neither does anyone else for sure.
What does "cost of children" actually mean?
If child support really is about supporting children, then it is about paying for goods and services needed by the child, or desirably spent on the child, while it is growing up. There is dispute about what is "necessary" and what is "desirable", and how these should be catered for in any formula. But it is useful to have a baseline to start with, in the form of a checklist about what goods and services are involved.
Often these can easily be reduced to money - £X to buy the child's food for a week, etc. There are other costs, not covered in this article, which involve the child sharing the wealth of the parents without a simple identification of the money involved. Then there is childcare, which is a controversial topic, partly because of the cost of it, and partly because sometimes it is the parent with care who acts as child minder, and so needs to be support while doing so. (This then looks like spousal maintenance. But money can act both as child support money & spousal maintenance money simultaneously! Why not? They are not exclusive categories).
(Separated mothers and fathers probably won't agree about how they should re-distribute their income in order to pay for the children. They probably don't understand one-another's position. There is no consistency in what the government is prepared to spend on a child. Academics dispute it among themselves. Every new research report or survey yields different numbers. Live with this - it isn't an exact science. Even if there were a consistent amount, that wouldn't determine how much each parent and taxpayers should contribute to that cost, or how they should do it).
Some researched costs of children
These are some UK results worth knowing about.
Small Fortunes: Spending on children, childhood poverty and parental sacrifice
Sue Middleton, Karl Ashworth and Ian Braithwaite
Published by the Joseph Rowntree Foundation.
ISBN 1 85935 032 1
This is probably the single most important research for current purposes. Two articles here discuss it, one concerned with identifying the amounts that parents regularly spend on their children, and the other discussing the apparent limitations of this research when considering how children share in the wealth of their parents.
In spite of the impossibility of giving a reliable single answer to the question "what does it cost to support a child?", here are typical values from this research, which will be used on this web site:
in 2001, the typical regular spend on a first child is about £52 per week plus Child Benefit
in 2001, the typical regular spend on a subsequent child is about £46 per week plus Child Benefit
There will typically be other expenditure as well, but that is less easy to handle via a child support system.
THE LIVING COSTS OF CHILDREN AT THE POVERTY LINE
Memorandum submitted by the Family Budget Unit (ICC 16)
This was submitted a major appendix to the Social Security Select Committee for the latter's Report on the Integrated Child Credit - APPENDIX 7 - Memorandum submitted by the Family Budget Unit.
It is based on the "basket of goods" method, and covers a girl aged 4 years, a boy aged 10 years and a boy aged 16 years.
The Costs of Children and the Welfare State: An Empirical Analysis based on Consumer Behaviour
Richard Dickens, Vanessa Fry, Panos Pashardes
Discussion paper series no 466
Department of Economics
University of Essex
An article here summarises some key findings from this paper.
This paper appears to justify percentages such as 10% / 18% / 23% or alternatively 15% / 23% / 29% (depending on the ages of the children). However, these are not based on the net income of a non-resident parent, but on expenditures in an intact family. The link to the income of a nonresident parent is tenuous.
Also, the analysis is based on general purpose surveys of 1970-1986, and so may not be current. Accordingly, this research is seen here to be less relevant than the Small Fortunes research above.
The cost of having a baby in 2001
Pregnancy & birth magazine
Jo Waters, Valery McConnell, Dani Corbett, Elisabeth Attwood
(Sponsored by First Direct Bank, various sources).
An article here summarises some headlines and key findings from this booklet.
The booklet covers the years 0 to 5 in detail. A later section summarises "Beyond 5 years". The headlines (remember the dangers of over-generalisation!) are:
- parents spend at least £20,315 in their child's first five years (some before birth)
- parents spend £53,413 between the ages of six and 16
Some parents simply don't have that much available to spend on their children yet still bring them up successfully, so the figures probably reflect "desired spend", or "spend on theoretical requirements", not always "actual spend".
Measuring the Cost of Children: Estimates for Britain
Department of Economics, Birkbeck College, London
Centre for Longitudinal Studies, Institute of Education, University of London
An article here summarises some key findings from this paper.
An interesting comment in it is "the results provide further indication of a growing polarisation in Britain between the incomes of families with highly educated women and others". This actually means mothers who have the skills & resources (eg. access to childcare and the means to pay for it) to get to work soon after birth and so continue earning and reducing "lost opportunity costs".
This identifies various costs of children for various circumstances (low skill parents, high skill parents returning to work using childcare, etc). The corresponding costs of children per week range from about £61 to about £187.
Davies & Joshi (& Land) are noted for other work on "lost opportunity costs".
Family Spending: A report on the 1999-2000 Family Expenditure Survey
A National Statistics publication
Editor: Denis Down
An article here summarises some extracts from this survey.
It is extremely hard to separate out what is spent on the children and what is spent on the adults. Methods of doing so give results that cannot easily be verified. (The Costs of Children and the Welfare State is based on using such methods).
This is of interest to anyone wanting to see how much even poor households spend per person (£53.80), and how expenditure on certain items (housing & motoring, for example) rises far faster than on other items as income increases. But it doesn't answer the question "how much do children cost?"
|Government benefits & tax credits
A quick look at what the government is prepared to pay in benefits or tax credits does not give a single answer.
It can range from about £15 to about £167 per week. It certainly isn't simply the Income Support child allowance of about £32 per week!
Types of cost at different income levels
The above studies do not agree with one another, and no clear numbers come out of them. But a qualitative pattern can be seen, as shown in the diagram below. People at different income levels do spend different amounts of money directly on their children, although certainly not in proportion to their income. They also spend money on different things, and their children benefit from their parents' income in very different ways.
|Poverty or close
||Very comfortable or wealthy
Small fortunes: "parents are more likely to go without than children; one half of parents who are defines as 'poor' have children who are found to be 'not poor'".
This is particularly likely where the household is on Income Support. Small Fortunes: "average spending by parents is much higher than Income Support allowances for children".
As household income decreases to poverty levels, parents try to protect their children from the full effects, and so the spend on children becomes a higher proportion of the available budget.
| These cases are likely to be such families as a lone parents getting back to work and claiming Working Families Tax Credit.
Neither child nor parents are in poverty by any useful definition, but parents do not have significant money for spending on luxuries.
Childcare costs start to become important, because typically the parent is working.
Some spend on luxuries is seen. Although whether a car counts as a luxury at this stage, where the parent may have to deliver the child to childcare and get to work, is another question.
Sue Middleton, co-researcher of Small Fortunes: "We also found, at first sight strangely, that average spending did not vary greatly with income of a family; about 20 per cent from the bottom quartile to the top income quartile."
1999-2000 Family Expenditure Survey: families in the highest quintile do spend more on food (about twice as much) and clothes (about 3 times as much) as those in the lowest quintile, but other spends increase far faster - housing especially, also motoring and leisure goods & services.
There is a switch from the most obvious things that can simply be bought for the children with money to things that involve the children sharing in the better experience of the parents.
The best guesses here are the £52 / £46 (+ Child Benefit) basic amounts from the Small Fortunes research, and the fact that the slope is small - the amount of direct spend on children doesn't increase proportional to available income.
 Australian CSA Annual Report 1996-97:
CSA has completed a number of surveys on the attitudes of its clients. As examples of the results of the surveys, it states:
"Payees focus on the Agency's power to collect support and they feel CSA is too soft on payers. Their perceptions are that we do not chase arrears, or payers who hide income or play the system. Payees feel that payers have little understanding of how much it costs to raise children. They have great uncertainty about the future."
"Payers focus on issues of equity and sympathy. They perceive they are discriminated against as well as having many things, for example, how they look after their children taken out of their control. This in turn causes them to feel powerless and angry. They are often struggling financially and have to live in much reduced circumstances. Payers do not understand how payees spend money on their children."