More Kids Equals Cheaper Kids

Guest submission by EconomicsDadda, husband to ScienceMomma

*disclaimer: while ScienceMomma holds a PhD, EconomicsDadda holds a Bachelor’s degree in his field and claims much less expertise

If the title seems familiar, it is a play on the economics column and book More Sex Is Safer Sex (this book is similar to other popular economics books like Freakanomics or Hidden Order).  Where the reasoning in that book is a bit more unorthodox by arguing that counterintuitive ideas may actually be rational, I assure you my little article here is quite straightforward.

The yearly study done by the US Dept. of Agriculture estimates the average child born this year will cost parents $221,800 to raise until age 17 (in current US Dollars, which means future inflation is accounted for).  The article by USA Today almost suggests people should have larger families because every subsequent child costs less to raise.  The article is rather ambiguous with some of their numbers, and the usda.gov article it references adds no additional information, so some of the following figures are just guesses to what they mean.  All ratios should be correct, but absolute figures may be off.  I will identify any values that may be incorrect with an asterisk (*).  In the reports, most comparisons are made to families with two children, so I am assuming an “average child” is one in a two-child household.

The average child in this report will cost $221,800.  This value can change depending on the income of the parents, going up to $377,040 and down to $163,440 based on the income brackets.  With a little arithmetic, I came up with how much each child costs:

1st child – $245,889* (what I will call 100% cost)

2nd child – $166,975* (60% cost)

If you add together the 1st and 2nd child costs, the total cost is $443,600 and gives the $221,800 average.

3rd child – $56,772* (21% cost**) ($500,372 total cost**)

When you go from 2 children to 3 children, each child costs 22% less, which, as you can see, is actually a much larger drop in cost than it sounds like.

**This number may be corrupted because I don’t know how normalized their data is for income and family size.  As I mentioned, higher income families spend more on raising children and they also tend to have smaller families.  This may be a reason why this number begins to drop so significantly.

Most of the reason costs are lower for each additional child is that the biggest cost is housing.  Children can share rooms.  Cribs, toys, clothes and other things can be handed down from sibling to sibling.  This makes figuring out the cost of twins or triplets off by a bit, since you will need multiple items of most things, but the spending on housing is the biggest saving.  So don’t think all these savings are not yours by having kids all at once.

I would imagine beyond the 3rd child, the additional costs will vary slightly, but the figure will not be much lower than the 3rd child.  While dollar value costs decrease with each child, a limiting factor seems to be time.  Additional children do enjoy similar economies of scale with time because they can entertain each other and taking one kid to an amusement park, pool, other fun place…takes nearly as much time as multiple children.  However, parents feel a time constraint on two ends – one is they don’t get to spend as much time with each child individually in a larger family and the other is these extra costs do mean a larger income might be needed to support the family and one way to boost income is to work more.

For more exact figures, the USDA has a calculator to estimate child raising costs here.

Does this encourage you to consider planning a larger family?

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