27 September 2011

Costs of Procreation

Hey, It's Noah | Noah Brier

Compare this chart on the rising cost of raising a child to the chart about stagnant incomes over the last 30 years - http://pco.lt/oy9mot - and you don’t get a pretty picture.

(via Cost of raising middle-income child in USA increases by 40% in ten years – Boing Boing)
I'd be interested to see what is driving this. Obviously tuition costs have gone up, and I believe food prices have as well. But I suspect a big cause of this trend is simply the wealth effect. As people felt richer from 2000 to 2007, did they decide to spend more on their children? How much of this trend is a result of rising prices, and how much is a result of parents buying more things or a different selection of things for their children?  That is, how much of this is unavoidable for new parents, and how much is essentially voluntary?

NB: The vertical axis starts at $150,000.  That makes a 37% increase look more like a 300% increase.

PS The income chart Brier links is also deceptive in its way, because the median earner in 1967 is not the same person as the median earner in 2010. Because of lifetime earning effects, population growth, and immigration it is possible (likely, even) for the median income to remain the same but the majority of people to experience rising incomes.

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