Expenditures on Children by Families, 1997

Expenditures on Children by Families, 1997

Mark Lino

Since 1960, the U.S. Department of Agriculture (USDA) has provided estimates of expenditures on children from birth through age 17. These estimates are used in setting child support guidelines and foster care payments and in developing educational programs on parenthood. This study presents the latest child-rearing expense estimates, which are based on 1990-92 expenditure data updated to 1997 dollars. The study presents these new estimates for husband-wife and single-parent families. It briefly describes the data and methods used in calculating child-rearing expenses(1) and then discusses the estimated expenses.

The estimates are provided for the overall United States. To adjust partially for price differentials and varying patterns of expenditures, the child-rearing expense estimates for husband-wife families are also provided for urban areas in four regions (Northeast, South, Midwest, and West) and rural areas throughout the United States.(2) For single-parent families, estimates are provided only for the overall United States because of sample size limitations. Expenditures on children are estimated for the major budgetary components: Housing, food, transportation, clothing, health care, child care and education, and miscellaneous goods and services. The box describes each expenditure component.

Source of Data

The 1990-92 Consumer Expenditure Survey (CE) is used to estimate expenditures on children. Administered by the Bureau of Labor Statistics (BLS), the CE collects information on sociodemographic characteristics, income, and expenditures of households.

The CE has been conducted annually since 1980 and interviews about 5,000 households each quarter over a 1-year period. Each quarter is deemed an independent sample by BLS; thus, the total number of households in the 1990-92 survey is about 60,000.

From these households, husband-wife and single-parent families were selected for this study if (1) they had at least one child of their own–age 17 or under–in the household,(2) they had six or fewer children,(3) there were no other related or unrelated people present in the household except their own children, and (4) they were complete income reporters. Complete income reporters are households that provide values for major sources of income, such as wages and salaries, self-employment income, and Social Security income. Quarterly expenditures were annualized. The sample consisted of 12,850 husband-wife households and 3,395 single-parent households. BLS weighting methods were used to weight the sample to reflect the U.S. population of interest. Although based on 1990-92 data, the expense estimates were updated to 1997 dollars using the Consumer Price Index (CPI-U). (Expenditure and income data for 1990 and 1991 were first converted to 1992 dollars; then all 3 years of data were updated to 1997 dollars.)

Methods

The CE collects overall household expenditure data for some budgetary components (housing, food, transportation, health care, and miscellaneous goods and services) and child-specific expenditure data for other components (clothing, child care, and education). Multivariate analysis was used to estimate household and child-specific expenditures. Income level, family size, and age of the younger child were controlled so that estimates could be made for families with these varying characteristics. Regional estimates were derived by controlling for region. The three income groups of husband-wife households were determined by dividing the sample for the overall United States into equal thirds. The income groups were before-tax income under $31,000, between $31,000 and $52,160, and over $52,160 in 1992 dollars.

For each income level, the estimates were for husband-wife families with two children. The younger child was in one of six age categories: 0-2, 3-5, 6-8, 9-11, 12-14, and 15-17 years. Households with four members (two children) were selected as the standard because in 1990-92 this was the average household size of two-parent families. The focus was on the younger child in a household because the older child was sometimes over age 17.

The estimates are based on CE interviews of households with and without specific expenses; so for some families, expenditures may be higher or lower than the mean estimates, depending on whether they incur the expense. This particularly applies to child care and education for which about 50 percent of families in the study had no expenditure. Also, the estimates only cover out-of-pocket expenditures on children made by the parents and not by others, such as grandparents or friends. For example, the value of clothing gifts to children from grandparents would not be included in clothing expenses. Likewise, some of the expenditures reported by parents may be gifts for children other than their own.

Regional income categories were based on the national income categories in 1992 dollars, updated to 1997 dollars using regional CPI’ s. The regional income categories were not divided into equal thirds for each region as was done for the overall United States.

After the various overall household and child-specific expenditures were estimated, these total amounts were allocated among the four family members (husband, wife, older child, and younger child).

The estimated expenditures for clothing and child care and education were only for children. It was assumed that these expenses were equally allocated to each child; therefore, the estimated expenditures were divided by two (the number of children in the household).

Because the CE did not collect expenditures on food and health care by family member, data from other Federal studies were used to apportion these budgetary components to children by age. Food budget shares as a percentage of total food expenditures–for the younger child in a husband-wife household with two children–were determined using the 1994 USDA food plans (9). These shares were estimated by age of the child and household income level. The food budget shares were then applied to estimated household food expenditures to determine food expenses on children. Health care shares as a percentage of total health care expenses for the younger child in a husband-wife household with two children were calculated from the 1987 National Medical Expenditure Survey (NMES) (5). These shares were estimated by age of the child and applied to estimated household health care expenditures to determine expenses on children.

No research base exists for allocating estimated household expenditures on housing, transportation, and miscellaneous goods and services among household members. Two of the most common approaches for allocating these expenses are the marginal cost method and the per capita method.

The marginal cost method measures expenditures on children as the difference in expenses between couples with children and equivalent childless couples. This method depends on development of an equivalency measure; however, there is no universally accepted measure. Proposed methods have produced different estimates of expenditures on children.(3) Some of the marginal cost approaches assume that parents or couples do not alter expenditures on themselves after a child is added to a household. Also, couples without children often buy larger-than-needed homes at the time of purchase in anticipation of children. Comparing the expenditures of childless couples to expenditures of similar couples with children could lead to underestimated expenditures on children.

For these reasons, the USDA uses the per capita method to allocate housing, transportation, and miscellaneous goods and services among household members. The per capita method allocates expenses among household members in equal proportions. Although the per capita method has limitations, these limitations were considered less severe than those of the marginal cost approach.

A major limitation of the per capita method is that expenditures for an additional child may be less than average expenditures. Consequently, adjustment formulas were devised to estimate expenditures on one child or three or more children for households of different sizes. These formulas are discussed later in the paper. Transportation expenses resulting from employment activities are not related to expenses on children, so these costs were excluded from the estimated household transportation expenses. Data used to do this were from a 1990 U.S. Department of Transportation study (12).

Although the USDA uses the per capita approach rather than a marginal cost approach in allocating housing, transportation, and miscellaneous expenditures to children in a household, a USDA study (6) examined how these expenses would be allocated using different marginal cost approaches. These approaches produced estimates of expenditures on children for housing and miscellaneous goods and services below those produced by the per capita method. In addition, these approaches produce estimates of transportation expenditures on children above those produced by the per capita method.

Estimated Expenditures on Children by Husband-Wife Households

Estimates of family expenditures on the younger child in husband-wife households with two children for the overall United States, urban regions of the country, and overall rural areas are presented in tables 2 through 7 on pp. 37-43. Household income levels were updated to 1997 dollars using the all-items category of the CPI-U, and expenditures were updated using the CPI for the corresponding item (that is, the CPI’s for housing, food, etc.). Regional estimates were updated to 1997 dollars using the regional CPI’s. The following subsections highlight the child-rearing expense estimates for the younger child in a two-child household for the overall United States by income level, budgetary component, age of the child, and region.

Table 2. Estimated annual expenditures(*) on a child by husband-wife families, overall United States, 1997

Transpor-

Age of child Total Housing Food tation

Before-tax income: Less than $35,500 (Average=$22,100)

0-2 $5,820 $2,220 $830 $730

3-5 5,920 2,190 920 700

6-8 6,070 2,120 1,190 820

9-11 6,090 1,910 1,420 890

12-14 6,880 2,130 1,490 1,000

15-17 6,790 1,720 1,610 1,350

Total $112,710 $36,870 $22,380 $16,470

Before-tax income: $35,500 to $59,700 (Average=$47,200)

0-2 $8,060 $3,000 $990 $1,090

3-5 8,270 2,970 1,140 1,060

6-8 8,350 2,900 1,460 1,180

9-11 8,320 2,700 1,710 1,250

12-14 9,050 2,920 1,730 1,360

15-17 9,170 2,500 1,920 1,720

Total $153,660 $50,970 $26,850 $22,980

Before-tax income: More than $59,700 (Average=$89,300)

0-2 $11,990 $4,770 $1,310 $1,520

3-5 12,230 4,740 1,480 1,490

6-8 12,180 4,670 1,790 1,610

9-11 12,090 4,470 2,080 1,680

12-14 12,930 4,690 2,180 1,790

15-17 13,260 4,270 2,300 2,180

Total $224,040 $82,830 $33,420 $30,810

Child

care Miscel-

Health and laneous

Age of child Clothing care education ([dagger])

Before-tax income: Less than $35,500 (Average=$22,100)

0-2 $370 $400 $690 $580

3-5 360 380 780 590

6-8 410 440 460 630

9-11 450 480 280 660

12-14 760 480 200 820

15-17 670 510 330 600

Total $9,060 $8,070 $8,220 $11,640

Before-tax income: $35,500 to $59,700 (Average=$47,200)

0-2 $440 $520 $1,130 $890

3-5 430 500 1,260 910

6-8 480 570 810 950

9-11 530 620 530 980

12-14 890 620 390 1,140

15-17 790 660 660 920

Total $10,680 $10,470 $14,340 $17,370

Before-tax income: More than $59,700 (Average=$89,300)

0-2 $580 $600 $1,710 $1,500

3-5 570 580 1,860 1,510

6-8 620 660 1,280 1,550

9-11 680 710 890 1,580

12-14 1,120 710 690 1,750

15-17 1,020 750 1,210 1,530

Total $13,770 $12,030 $22,920 $28,260

(*) Estimates are based on 1990-92 Consumer Expenditure Survey data. The Consumer Price Index is used to update income and expenditures to 1997 dollars. The figures represent estimated expenses on the younger child in a two-child family. Estimates are about the same for the older child. Therefore, to calculate expenses for two children, figures should be summed for the appropriate age categories. To estimate expenses for an only child, multiply the total expense for the appropriate age category by 1.24. To estimate expenses for each child in a family with three or more children, multiply the total expense for each appropriate age category by 0.77. For expenses on all children in a family, these totals should be summed.

([dagger]) Miscellaneous expenses consists of personal care items, entertainment, and reading materials.

Table 3. Estimated annual expenditures* on a child by

husband-wife families, urban West,([dagger]) 1997

Transpor-

Age of child Total Housing Food tation

Before-tax income: Less than $35,200 (Average=$22,000)

0-2 $6,420 $2,650 $900 $790

3-5 6,560 2,630 1,000 770

6-8 6,730 2,600 1,290 880

9-11 6,820 2,450 1,540 950

12-14 7,570 2,630 1,610 1,070

15-17 7,520 2,260 1,740 1,410

Total $124,860 $45,660 $24,240 $17,610

Before-tax income: $35,200 to $59,300 (Average=$46,900)

0-2 $8,670 $3,410 $1,060 $1,160

3-5 8,900 3,390 1,220 1,140

6-8 8,990 3,350 1,560 1,250

9-11 9,030 3,210 1,840 1,310

12-14 9,720 3,390 1,840 1,440

15-17 9,900 3,020 2,050 1,790

Total $165,630 $59,310 $28,710 $24,270

Before-tax income: More than $59,300 (Average=$88,700)

0-2 $12,450 $5,040 $1,370 $1,600

3-5 12,740 5,030 1,550 1,580

6-8 12,680 4,990 1,870 1,680

9-11 12,630 4,840 2,180 1,750

12-14 13,430 5,020 2,280 1,870

15-17 13,800 4,650 2,400 2,250

Total $233,190 $88,710 $34,950 $32,190

Child Miscel-

care laneous

Health and ([double

Age of child Clothing care education dagger])

Before-tax income: Less than $35,200 (Average=$22,000)

0-2 $360 $340 $700 $680

3-5 350 320 790 700

6-8 390 370 470 730

9-11 430 400 280 770

12-14 720 410 200 930

15-17 640 430 330 710

Total $8,670 $6,810 $8,310 $13,560

Before-tax income: $35,200 to $59,300 (Average=$46,900)

0-2 $420 $460 $1,160 $1,000

3-5 410 440 1,280 1,020

6-8 460 500 820 1,050

9-11 510 540 530 1,090

12-14 850 550 400 1,250

15-17 750 580 680 1,030

Total $10,200 $9,210 $14,610 $19,320

Before-tax income: More than $59,300 (Average=$88,700)

0-2 $550 $540 $1,760 $1,590

3-5 540 520 1,910 1,610

6-8 590 590 1,320 1,640

9-11 640 630 910 1,680

12-14 1,070 640 710 1,840

15-17 960 670 1,240 1,630

Total $13,050 $10,770 $23,550 $29,970

(*) Estimates are based on 1990-92 Consumer Expenditure Survey data. The regional Consumer Price Index is used to update income and expenditures to 1997 dollars. The figures represent estimated expenses on the younger child in a two-child family. Estimates are about the same for the older child. Therefore, to calculate expenses for two children, figures should be summed for the appropriate age categories. To estimate expenses for an only child, multiply the total expense for the appropriate age category by 1.24. To estimate expenses for each child in a family with three or more children, multiply the total expense for each appropriate age category by 0.77. For expenses on all children in a family, these totals should be summed.

([dagger]) The Western region consists of Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming.

([double dagger]) Miscellaneous expenses consists of personal care items, entertainment, and reading materials.

Table 4. Estimated annual expenditures(*) on a child by husband-wife families, urban Northeast,t 1997

Transpor-

Age of child Total Housing Food tation

Before-tax income: Less than $35,300 (Average=$22,000)

0-2 $6,100 $2,650 $930 $610

3-5 6,210 2,640 1,020 580

6-8 6,420 2,600 1,310 690

9-11 6,570 2,450 1,570 760

12-14 7,390 2,630 1,640 880

15-17 7,300 2,260 1,760 1,220

Total $119,970 $45,690 $24,690 $14,220

Before-tax income: $35,300 to $59,300 (Average=$46,900)

0-2 $8,280 $3,410 $1,080 $980

3-5 8,500 3,390 1,240 960

6-8 8,660 3,360 1,580 1,060

9-11 8,740 3,210 1,850 1,130

12-14 9,520 3,390 1,860 1,260

15-17 9,620 3,020 2,060 1,610

Total $159,960 $59,340 $29,010 $21,000

Before-tax income: More than $59,300 (Average=$88,800)

0-2 $12,010 $5,050 $1,380 $1,420

3-5 12,260 5,030 1,560 1,400

6-8 12,300 4,990 1,880 1,510

9-11 12,320 4,840 2,190 1,580

12-14 13,190 5,020 2,280 1,700

15-17 13,430 4,650 2,410 2,070

Total $226,530 $88,740 $35,100 $29,040

Child Miscel-

care laneous

Health and ([double

Age of child Clothing care education dagger])

Before-tax income: Less than $35,300 (Average=$22,000)

0-2 $400 $390 $560 $560

3-5 390 370 630 580

6-8 430 420 360 610

9-11 480 450 210 650

12-14 820 460 150 810

15-17 720 490 250 600

Total $9,720 $7,740 $6,480 $11,430

Before-tax income: $35,300 to $59,300 (Average=$46,900)

0-2 $470 $510 $950 $880

3-5 460 490 1,060 900

6-8 510 560 660 930

9-11 560 600 420 970

12-14 950 610 310 1,140

15-17 850 640 520 920

Total $11,400 $10,230 $11,760 $17,220

Before-tax income: More than $59,300 (Average=$88,800)

0-2 $610 $600 $1,480 $1,470

3-5 590 570 1,620 1,490

6-8 650 650 1,090 1,530

9-11 710 700 740 1,560

12-14 1,180 710 570 1,730

15-17 1,070 740 980 1,510

Total $14,430 $11,910 $19,440 $27,870

(*) Estimates are based on 1990-92 Consumer Expenditure Survey data. The regional Consumer Price Index is used to update income and expenditures to 1997 dollars. The figures represent estimated expenses on the younger child in a two-child family. Estimates are about the same for the older child. Therefore, to calculate expenses for two children, figures should be summed for the appropriate age categories. To estimate expenses for an only child, multiply the total expense for the appropriate age category by 1.24. To estimate expenses for each child in a family with three or more children, multiply the total expense for each appropriate age category by 0.77. For expenses on all children in a family, these totals should be summed.

([dagger]) The Northeast region consists of Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont.

([double dagger]) Miscellaneous expenses consists of personal care items, entertainment, and reading materials.

Table 5. Estimated annual expenditures(*) on a child

by husband-wife families, urban South,([dagger]) 1997

Transpor-

Age of child Total Housing Food tation

Before-tax income: Less than $35,600 (Average=$22,200)

0-2 $5,890 $2,190 $800 $720

3-5 6,030 2,170 900 700

6-8 6,140 2,130 1,160 800

9-11 6,220 1,980 1,410 870

12-14 7,020 2,170 1,470 1,000

15-17 6,970 1,790 1,600 1,330

Total $114,810 $37,290 $22,020 $16,260

Before-tax income: $35,600 to $60,000 (Average=$47,400)

0-2 $8,220 $2,960 $970 $1,090

3-5 8,440 2,940 1,120 1,070

6-8 8,500 2,910 1,430 1,170

9-11 8,500 2,760 1,700 1,240

12-14 9,210 2,940 1,710 1,360

15-17 9,420 2,560 1,910 1,720

Total $156,870 $51,210 $26,520 $22,950

Before-tax income: More than $60,000 (Average=$89,700)

0-2 $12,080 $4,630 $1,270 $1,530

3-5 12,360 4,610 1,450 1,510

6-8 12,280 4,580 1,750 1,610

9-11 12,200 4,420 2,040 1,680

12-14 13,020 4,610 2,140 1,800

15-17 13,440 4,230 2,260 2,170

Total $226,140 $81,240 $32,730 $30,900

Child Miscel-

care laneous

Health and ([double

Age of child Clothing care education dagger])

Before-tax income: Less than $35,600 (Average=$22,200)

0-2 $400 $450 $780 $550

3-5 390 430 870 570

6-8 430 490 530 600

9-11 480 520 320 640

12-14 800 540 230 810

15-17 710 560 390 590

Total $9,630 $8,970 $9,360 $11,280

Before-tax income: $35,600 to $60,000 (Average=$47,400)

0-2 $470 $590 $1,270 $870

3-5 460 560 1,400 890

6-8 510 640 910 930

9-11 560 680 600 960

12-14 930 690 450 1,130

15-17 830 720 770 910

Total $11,280 $11,640 $16,200 $17,070

Before-tax income: More than $60,000 (Average=$89,700)

0-2 $610 $680 $1,890 $1,470

3-5 600 650 2,050 1,490

6-8 650 740 1,430 1,520

9-11 710 780 1,010 1,560

12-14 1,160 800 790 1,720

15-17 1,060 820 1,390 1,510

Total $14,370 $13,410 $25,680 $27,810

(*) Estimates are based on 1990-92 Consumer Expenditure Survey data. The regional Consumer Price Index is used to update income and expenditures to 1997 dollars. The figures represent estimated expenses on the younger child in a two-child family. Estimates are about the same for the older child. Therefore, to calculate expenses for two children, figures should be summed for the appropriate age categories. To estimate expenses for an only child, multiply the total expense for the appropriate age category by 1.24. To estimate expenses for each child in a family with three or more children, multiply the total expense for each appropriate age category by 0.77. For expenses on all children in a family, these totals should be summed.

([dagger]) The Southern region consists of Alabama, Arkansas, Delaware, District of Columbia, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, and West Virginia.

([double dagger]) Miscellaneous expenses consists of personal care items, entertainment, and reading materials.

Table 6. Estimated annual expenditures(*) on a child by

husband-wife families, urban Midwest,([dagger]) 1997

Transpor-

Age of child Total Housing Food tation

Before-tax income: Less than $35,700 (Average=$22,300)

0-2 $5,270 $1,970 $760 $640

3-5 5,400 1,960 850 620

6-8 5,540 1,920 1,100 720

9-11 5,640 1,770 1,340 790

12-14 6,400 1,950 1,400 920

15-17 6,330 1,570 1,530 1,260

Total $103,740 $33,420 $20,940 $14,850

Before-tax income: $35,700 to $60,100 (Average=$47,500)

0-2 $7,540 $2,740 $920 $1,010

3-5 7,760 2,730 1,070 990

6-8 7,830 2,690 1,370 1,100

9-11 7,870 2,540 1,640 1,170

12-14 8,560 2,720 1,640 1,290

15-17 8,720 2,340 1,840 1,650

Total $144,840 $47,280 $25,440 $21,630

Before-tax income: More than $60,100 (Average=$89,900)

0-2 $11,350 $4,410 $1,230 $1,460

3-5 11,620 4,390 1,400 1,440

6-8 11,550 4,350 1,690 1,540

9-11 11,500 4,200 1,980 1,610

12-14 12,330 4,390 2,070 1,740

15-17 12,650 4,010 2,190 2,110

Total $213,000 $77,250 $31,680 $29,700

Child Miscel-

care laneous

Health and ([double

Age of child Clothing care education dagger])

Before-tax income: Less than $35,700 (Average=$22,300)

0-2 $350 $360 $670 $520

3-5 340 340 750 540

6-8 380 390 450 580

9-11 430 430 270 610

12-14 720 440 190 780

15-17 630 460 320 560

Total $8,550 $7,260 $7,950 $10,770

Before-tax income: $35,700 to $60,100 (Average=%47,500)

0-2 $420 $490 $1,110 $850

3-5 410 460 1,230 870

6-8 450 530 790 900

9-11 500 570 510 940

12-14 850 580 380 1,100

15-17 750 600 650 890

Total $10,140 $9,690 $14,010 $16,650

Before-tax income: More than $60,100 (Average=$89,900)

0-2 $550 $570 $1,690 $1,440

3-5 540 550 1,840 1,460

6-8 590 620 1,260 1,500

9-11 640 660 870 1,540

12-14 1,070 680 680 1,700

15-17 970 700 1,190 1,480

Total $13,080 11,340 22,590 $27,360

(*) Estimates are based on 1990-92 Consumer Expenditure Survey data. The regional Consumer Price Index is used to update income and expenditures to 1997 dollars. The figures represent estimated expenses on the younger child in a two-child family. Estimates are about the same for the older child. Therefore, to calculate expenses for two children, figures should be summed for the appropriate age categories. To estimate expenses for an only child, multiply the total expense for the appropriate age category by 1.24. To estimate expenses for each child in a family with three or more children, multiply the total expense for each appropriate age category by 0.77. For expenses on all children in a family, these totals should be summed.

([dagger]) The Midwest region consists of Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin.

([double dagger]) Miscellaneous expenses consists of personal care items, entertainment, and reading materials.

Table 7. Estimated annual expenditures(*) on a child

by husband-wife families, Rural areas,([dagger]) 1997

Transpor-

Age of child Total Housing Food ration

Before-tax income: Less than $35,900 (Average=$22,400)

0-2 $5,310 $1,660 $770 $830

3-5 5,460 1,650 870 810

6-8 5,600 1,61 0 1,130 920

9-11 5,690 1,450 1,370 990

12-14 6,460 1,640 1,430 1,110

15-17 6,410 1,260 1,560 1,460

Total $104,790 $27,810 $21,390 $18,360

Before-tax income: $35,900 to $60,400 (Average=$47,800)

0-2 $7,640 $2,450 $940 $1,210

3-5 7,850 2,430 1,090 1,180

6-8 7,900 2,390 1,390 1,290

9-11 7,950 2,240 1,660 1,360

12-14 8,630 2,420 1,660 1,480

15-17 8,820 2,040 1,860 1,840

Total $146,370 $41,910 $25,800 $25,080

Before-tax income: More than $60,400 (Average=$90,500)

0-2 $11,470 $4,130 $1,240 $1,650

3-5 11,750 4,120 1,410 1,630

6-8 11,680 4,080 1,710 1,730

9-11 11,630 3,930 2,000 1,800

12-14 12,450 4,110 2,100 1,930

15-17 12,800 3,730 2,220 2,310

Total $215,340 $72,300 $32,040 $33,150

Child Miscel-

care laneous

Health and ([double

Age of child Clothing care education dagger])

Before-tax income: Less than $35,900 (Average=$22,400)

0-2 $360 $440 $700 $550

3-5 350 420 790 570

6-8 390 480 470 600

9-11 440 520 280 640

12-14 750 530 200 800

15-17 660 550 330 590

Total $8,850 $8,820 $8,310 $11,250

Before-tax income: $35,900 to $60,400 (Average=$47,800)

0-2 $430 $580 $1,160 $870

3-5 420 550 1,290 890

6-8 460 630 820 920

9-11 520 670 540 960

12-14 870 680 400 1,120

15-17 780 710 680 910

Total $10,440 $11,460 $14,670 $17,010

Before-tax income: More than $60,400 (Average=$90,500)

0-2 $560 $670 $1,760 $1,460

3-5 550 640 1,920 1,480

6-8 600 730 1,320 1,510

9-11 660 770 920 1,550

12-14 1,100 790 710 1,710

15-17 990 810 1,240 1,500

Total $13,380 $13,230 $23,610 $27,630

Estimates are based on 1990-92 Consumer Expenditure Survey data. The population size Consumer Price Index is used to update income and expenditures to 1997 dollars. The figures represent estimated expenses on the younger child in a two-child family. Estimates are about the same for the older child. Therefore, to calculate expenses for two children, figures should be summed for the appropriate age categories. To estimate expenses for an only child, multiply the total expense for the appropriate age category by 1.24. To estimate expenses for each child in a family with three or more children, multiply the total expense for each appropriate age category by 0.77. For expenses on all children in a family, these totals should be summed.

([dagger]) Rural areas are places of fewer than 2,500 people outside a Metropolitan Statistical Area.

([double dagger]) Miscellaneous expenses consists of personal care items, entertainment, and reading materials.

Income Level

Estimated expenses on children vary considerably by household income level (fig. 1). Depending on age of the child, the annual expenses range from $5,820 to $6,880 for families in the lowest income group (1997 before-tax income less than $35,500), from $8,060 to $9,170 for families in the middle-income group (1997 before-tax income between $35,500 and $59,700), and from $11,990 to $13,260 for families in the highest income group (1997 before-tax income more than $59,700). On average, households in the lowest group spend 28 percent of their before-tax income per year on a child, those in the middle-income group, 18 percent, and those in the highest income group, 14 percent. The range in these percentages would be narrower if after-tax income were considered, because a greater proportion of income in higher income households goes toward taxes.

[Figure 1 ILLUSTRATION OMITTED]

Although families in the highest income group spend slightly less than twice the amount that families in the lowest income group spend on a child, on average, the amount varies by budgetary component. In general, expenses on a child for goods and services considered to be necessities (such as food and clothing) do not vary as much as those considered to be discretionary (such as miscellaneous expenses) among households in the three income groups. For example, clothing expenses on a child age 15-17 average $670 in the lowest income group and $1,020 in the highest income group, a 52-percent difference. Miscellaneous expenses on the same age child average $600 in the lowest income group and $1,530 in the highest income group, a 155-percent difference.

Budgetary Component

Housing accounts for the largest share of total child-rearing expenses; figure 2 shows this for families in the middle-income group. Based on an average for the six age groups, housing accounts for 33 percent of child-rearing expenses for a child in the lowest and middle-income groups and 37 percent in the highest income group. Food is the second largest average expense on a child for families regardless of income level. It accounts for 20 percent of child-rearing expenses for a child in the lowest income group, 18 percent in the middle-income group, and 15 percent in the highest income group. Transportation is the third largest child-rearing expense, making up 14 to 15 percent of child-rearing expenses across income levels.

[Figure 2 ILLUSTRATION OMITTED]

Across the three income groups, miscellaneous goods and services (personal care items, entertainment, and reading materials) is the fourth largest expense on a child for families (10 to 13 percent). Clothing (except that received as gifts or hand-me-downs) accounts for 6 to 8 percent of expenses on a child for families, child care and education accounts for 7 to 10 percent, and health care, 5 to 7 percent of child-rearing expenses across income groups. Estimated expenditures for health care include only out-of-pocket expenses (including insurance premiums not paid by an employer or other organization) and not that portion covered by health insurance.

Age of Child

Expenditures on a child are lower in the younger age categories and higher in the older age categories. Figure 3 depicts this for families in the middle-income group. This held across income groups even though housing expenses, the highest child-rearing expenditure, generally decline as the child grows older. The decline in housing expenses reflects diminishing interest paid by homeowners over the life of a mortgage. Payments on principal are not considered part of housing costs in the CE; they are deemed to be part of savings.

[Figure 3 ILLUSTRATION OMITTED]

Child-rearing food, transportation, clothing, and health care expenses generally increase over the age of a child for all three income groups. Transportation expenses are highest for a child age 15-17, when he or she would start driving. Child care and education expenses are highest for a child under age 6. Most of this expense may be attributable to child care at this age. The estimated expense for child care and education may seem low for those with the expense. The estimates reflect the average of households with and without the expense.

Region

Child-rearing expenses in the various regions of the country reflect patterns observed in the overall United States: in each region, expenses on a child increase with household income level, and generally, with age of the child. Overall child-rearing expenses are highest in the urban West, followed by the urban Northeast, and urban South. Figure 4 shows total child-rearing expenses by region and age of a child for middle-income families. Child-rearing expenses are lowest in the urban Midwest and rural areas. Much of the difference in expenses on a child among regions is related to housing costs. Total housing expenses on a child are highest in the urban West and urban Northeast and lowest in rural areas. However, childrearing transportation expenses are highest for families in rural areas. This likely reflects the longer traveling distances and the lack of public transportation in these areas.

Adjustments for Older Children and Household Size

The expense estimates on a child represent expenditures on the younger child at various ages in a husband-wife household with two children. It cannot be assumed that expenses on the older child are the same at these various ages.

Expenses may vary by birth order. To determine whether a difference exists, the extent of this difference, and how the expenditures may be adjusted to estimate expenses on an older child, the method described on pp. 26-28 was repeated. The focus was on the older child in each of the same age categories as those used with the younger child. A two-child family was again used as the standard. Household income and region of residence were not held constant, so findings are applicable to all families.

On average, for husband-wife households with two children, expenditures do not vary by birth order. So, the expenditures in tables 2 through 7 reflect those on either child in a two-child family. Thus, annual expenditures on children in a husband-wife, two-child family may be estimated by summing the expenses for the two appropriate age categories. For example, annual expenditures on children ages 9-11 and 15-17 in a husband-wife family in the middle-income group for the overall United States would be $17,490 ($8,320 + $9,170). For specific budgetary components, annual expenses on an older child vary, compared with those on a younger child: families spend more on clothing and education for an older child but less on transportation.

The estimates should also be adjusted if a household has only one child or more than two children. Families will spend more or less on a child depending on the number of other children in the household and economies of scale. Multivariate analysis was used to estimate expenditures for each budgetary component to derive these estimates. Household size and age of the younger child were controlled for; household income level and region of the country were not. The results, therefore, are applicable to all families. These expenditures were then assigned to a child using the method described earlier. Compared with expenditures for each child in a husband-wife, two-child family, expenditures for the child in a one-child family average 24 percent more and for those with three or more children, 23 percent less on each child.

[Figure 4 ILLUSTRATION OMITTED]

Therefore, to adjust the figures in tables 2 through 7 to estimate annual overall expenditures on an only child, users of this report should add 24 percent to the total expense for the child’s age category. To estimate expenditures on three or more children, users should subtract 23 percent from the total expense for each child’s age category, and sum the totals. As an example of adjustments needed for different numbers of children, the total expenses for a middle-income family in the overall United States on a child age 15-17 with no siblings would be $11,370 ($9,170 x 1.24) and the total expenses on three children ages 3-5, 12-14, and 15-17 would be $20,400 (($8,270 + $9,050 + $9,170) x .77). For a particular budgetary component, the percentages may be more or less. As family size increases, food costs per child decrease less than housing and transportation costs per child decrease.

Expenditures by Single-Parent Families

The estimates of expenditures on children by husband-wife families do not apply to single-parent families, a group that accounts for an increasing percentage of families with children. Therefore, separate estimates of child-rearing expenses in single-parent households were made using the CE data. Most single-parent families in the survey were headed by a woman: 90 percent.

The method used in determining child-rearing expenses for two-parent households was followed. Multivariate analysis was used to estimate expenditures for each budgetary component. Control variables were income level, household size, and age of the younger child (the same age categories as used with children in two-parent families). A single parent with two children was used as the standard for household size.

Income groups of single-parent households (before-tax income under $31,000 and $31,000 and over in 1992 dollars, inflated to 1997 dollars) were selected to correspond with the income groups used in estimating child-rearing expenditures in husband-wife households. This income includes child support payments. The two higher income groups of two-parent families (income between $31,000 and $52,160 and over $52,160 in 1992 dollars) were combined because only 17 percent of single-parent households had a before-tax income of $31,000 and over. The sample was weighted to reflect the U.S. population of interest.

Children’s clothing and child care and education expenditures were divided between the two children in the one-parent household. For food and health care, household member shares were calculated for a three-member household (single parent and two children, with the younger child in one of the six age categories). The USDA food plans and the 1987 National Medical Expenditure Survey findings were used. These shares for the younger child in a single-parent family were then applied to estimated food and health care expenditures to determine expenses on the younger child in each age category.

Housing, transportation, and miscellaneous expenditures were allocated among household members on a per capita basis. Transportation expenses were adjusted to account for nonemployment-related activities in single-parent families. Income and expenses were updated to 1997 dollars.

Child-rearing expense estimates for single-parent families are in table 8, p. 43. For the lower income group (1997 before-tax income less than $35,500), a comparison of estimated expenditures on the younger child in a single-parent family with two children with those of the younger child in a husband-wife family with two children is presented in table 1. As discussed earlier, 83 percent of single-parent families and 33 percent of husband-wife families were in this lower income group. More single-parent than husband-wife families were in the bottom range of this lower income group. Average income for single-parent families in the lower income group is $14,800; for husband-wife families it is $22,100. However, total expenditures on a child through age 17 are, on average, only 5 percent lower in single-parent households than in two-parent households.

Table 1. Characteristics of respondents, CSFII 1989-91 versus 1994-95, 1-day data set(1)

Characteristics 1989-91(2) 1994-95(3)

Average age 9 9

Percent

Household

Before-tax household income

Less than $10,000 12 11

$10,000 – $19,999 17 15

$20,000 – $29,999 15 13

$30,000 – $39,999 15 13

$40,000 – $49,999 15 11

$50,000 and over 26 37

Household income as a percent of

poverty thresholds

0 – 130 25 27

131 – 350 47 44

Over 350 28 29

Households receiving food stamps 13 19

Respondent

Age of children (years)

2 – 5 27 27

6 – 11 40 37

12 – 17 33 36

Gender

Male 51 51

Female 49 49

Race

White 78 72

Non-White 22 28

Region of residence

Northeast 19 19

Midwest 25 24

South 35 34

West 21 23

Urbanization

Central city 29 31

Suburban 47 48

Nonmetropolitan 24 21

(1) Weighted data.

(2) n = 3,834, unweighted data.

(3) n = 3,318, unweighted data.

Table 8. Estimated annual expenditures* on a child by single-parent families, overall United States, 1997

Transpor-

Age of child Total Housing Food tation

Before-tax income: Less than $35,500 (Average=S14,800)

0-2 $4,900 $1,990 $920 $680

3-5 5,510 2,260 960 600

6-8 6,230 2,410 1,220 690

9-11 5,820 2,310 1,410 500

12-14 6,270 2,310 1,410 580

15-17 6,970 2,450 1,540 900

Total $107,100 $41,190 $22,380 $11,850

Before-tax income: $35,500 or more (Average=S53,900)

0-2 $11,210 $4,290 $1,410 $2,080

3-5 12,030 4,560 1,500 2,000

6-8 12,800 4,700 1,800 2,090

9-11 12,380 4,610 2,160 1,900

12-14 13,120 4,610 2,120 1,970

15-17 13,580 4,750 2,240 2,140

Total $225,360 $82,560 $33,690 $36,540

Child care

Health and Miscellaneous

Age of child Clothing care education ([dagger])

Before-tax income: Less than $35,500 (Average=S14,800)

0-2 $340 $190 $430 $350

3-5 360 280 590 460

6-8 420 330 540 620

9-11 430 420 260 490

12-14 720 450 320 480

15-17 840 440 250 550

Total $9,330 $6,330 $7,170 $8,850

Before-tax income: $35,500 or more (Average=S53,900)

0-2 $480 $440 $1,060 $1,450

3-5 500 590 1,330 1,550

6-8 580 680 1,240 1,710

9-11 580 810 730 1,590

12-14 960 860 1,030 1,570

15-17 1,110 850 840 1,650

Total $12,630 $12,690 $18,690 $28,560

(*) Estimates are based on 1990-92 Consumer Expenditure Survey data. The Consumer Price Index is used to update income and expenditures to 1997 dollars. The figures represent estimated expenses on the younger child in a single-parent, two-child family. For estimated expenses on the older child, multiply the total expense for the appropriate age category by 0.93. To estimate expenses for two children, the expenses on the younger child and older child–after adjusting the expense on the older child downward–should be summed for the appropriate age categories. To estimate expenses for an only child, multiply the total expense for the appropriate age category by 1.35. To estimate expenses for each child in a family with three or more children, multiply the total expense for each appropriate age category by 0.72–after adjusting the expenses on the older children downward. For expenses on all children in a family, these totals should be summed.

([dagger]) Miscellaneous expenses consists of personal care items, entertainment, and reading materials.

Single-parent families in this lower income group, therefore, spend a larger proportion of their income on children than do two-parent families. On average, housing expenses are higher; whereas, transportation, health care, child care and education, and miscellaneous expenditures on a child are lower in single-parent than in husband-wife households. Child-related food and clothing expenditures are similar, on average, in single- and two-parent families.

For the higher income group of single-parent families (1997 before-tax income of $35,500 and over), child-rearing expense estimates are about the same as those for two-parent households in the before-tax income group of $59,700 and over. Total expenses, in 1997 dollars, for the younger child through age 17 are $225,360 for single-parent families versus $224,040 for husband-wife families. Child-rearing expenses for the higher income group of single-parent families, therefore, also are a larger proportion of income than they are in husband-wife families. Thus, expenditures on children do not differ much between single-parent and husband-wife households. What differs is household income levels. Because single-parent families have one less potential earner than do husband-wife families, on average, their total household income is lower and childrearing expenses are a greater percentage of this income.

Estimates cover only out-of-pocket child-rearing expenditures made by the parent with primary care of the child and do not include child-related expenditures made by the parent without primary care or made by others, such as grandparents. Such expenditures could not be estimated from the data. Overall expenses by both parents on a child in a single-parent household are likely greater than this study’s estimates.

The procedure detailed earlier was repeated to determine the extent of the difference in expenditures on an older child in single-parent households. The focus was on the older child, and a family with two children was used as the standard. On average, single-parent households with two children spend 7 percent less on the older than on the younger child (in addition to age-related differences). This contrasts with husband-wife households whose expenditures are unaffected by birth order.

As with husband-wife households, single-parent households spend more or less if there is only one child or three or more children. Multivariate analysis was used to estimate expenditures for each budgetary component in order to determine these differences. Household size and age of the younger child were control variables. Expenditures were then assigned to a child using the method described earlier. Compared with expenditures for the younger child in a single-parent, two-child family, expenditures for one child in a single-parent household average 35 percent more on the single child, and those with three or more children average 28 percent less on each child.

Other Expenditures on Children

Expenditures on a child estimated in this study are composed of direct parental expenses made on a child through age 17 for seven major budgetary components. These direct expenditures exclude costs related to childbirth and prenatal health care. In 1995, these particular health care costs averaged $6,378 for a normal delivery and $10,638 for a cesarean delivery (3). These costs may be reduced by health insurance.

One of the largest expenses made on children after age 17 is the cost of a college education. The College Board (2) estimates that in 1997-98, average annual tuition and fees are $3,027 at 4-year public colleges and $11,721 at 4-year private colleges. Annual room and board is $4,152 at 4-year public colleges and $4,883 at 4-year private colleges. For 2-year colleges in 1997-98, average annual tuition and fees are $1,538 at public colleges and $7,100 at private colleges. Annual room and board is $4,240 at 2-year private colleges. No estimates are given for 2-year public colleges. Other parental expenses on children after age 17 include those associated with children living at home or, if children do not live at home, gifts and other contributions to them.

The estimates do not include all government expenditures on children. Examples of excluded expenses would be public education, Medicaid, and school meals. The actual expenditures on children (by parents and the government) would be higher than reported in this study, especially for the lowest income group.

Indirect child-rearing costs are also not included in the estimates. Although these costs are typically more difficult to measure than are direct expenditures, they can be substantial. The time involved in rearing children is considerable. In addition, one or both parents may need to cut back on hours spent in the labor force to care for children, thus reducing current earnings and future career opportunities. The indirect costs of child rearing may exceed the direct costs. For more on these indirect costs, see Bryant et al. (1), Ireland and Ward (4), Longman (7), and Spalter-Roth and Hartmann (8).

References

(1.) Bryant, W.K., Zick, C.D., and Kim, H. 1992. The Dollar Value of Household Work. College of Human Ecology, Cornell University, Ithaca, NY.

(2.) The College Board. 1997. News from the College Board. September 24 issue.

(3.) Health Insurance Association of America. 1996. Source Book of Health Insurance Data. [1996 ed.] Washington, DC.

(4.) Ireland, T.R. and Ward, J.O. 1995. Valuing Children in Litigation: Family and Individual Loss Assessment. Lawyers and Judges Publishing Company, Inc., Tucson, AZ.

(5.) Lefkowitz, D. and Monheit, A. 1991. Health Insurance, Use of Health Services, and Health Care Expenditures. National Medical Expenditure Survey Research Findings 12. U.S. Department of Health and Human Services, Public Health Service, Agency for Health Care Policy and Research Publication No. 92-0017.

(6.) Lino, M. and Johnson, D.S. 1995. Housing, transportation, and miscellaneous expenditures on children: A comparison of methodologies. Family Economics Review 8(1):2-12.

(7.) Longman, P.J. 1998 (March 30). The Cost of Children. U.S. News & Worm Report 124(12):50-58.

(8.) Spalter-Roth, R.M. and Hartmann, H.I. 1990. Unnecessary Losses: Costs to Americans of the Lack of Family and Medical Leave. Institute for Women’s Policy Research, Washington, DC.

(9.) U.S. Department of Agriculture, Agricultural Research Service. 1994. Cost of food at home. Family Economics Review 7(4):45.

(10.) U.S. Department of Commerce, Bureau of the Census. 1996. Statistical Abstract of the United States, 1996. [116th ed.]

(11.) U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation. 1990. Estimates of Expenditures on Children and Child Support Guidelines.

(12.) U.S. Department of Transportation, Federal Highway Administration. 1994. 1990 Nationwide Personal Transportation Study.

RELATED ARTICLE: Categories of Household Expenditures

Housing expenses consists of shelter (mortgage interest, property taxes, or rent; maintenance and repairs; and insurance), utilities (gas, electricity, fuel, telephone, and water), and house furnishings and equipment (furniture, floor coverings, major appliances, and small appliances). For homeowners, housing expenses do not include mortgage principal payments; in the Consumer Expenditure Survey, such payments are considered to be part of savings. So, total dollars allocated to housing by homeowners are underestimated in this report.

Food expenses consists of food and nonalcoholic beverages purchased at grocery, convenience, and specialty stores, including purchases with food stamps; dining at restaurants; and household expenditures on school meals.

Transportation expenses consists of the net outlay on purchase of new and used vehicles, vehicle finance charges, gasoline and motor oil, maintenance and repairs, insurance, and public transportation.

Clothing expenses consists of children’s apparel such as diapers, shirts, pants, dresses, and suits; footwear; and clothing services such as dry cleaning, alterations and repair, and storage.

Health care expenses consists of medical and dental services not covered by insurance, prescription drugs and medical supplies not covered by insurance, and health insurance premiums not paid by employer or other organizations.

Child care and education expenses consists of day care tuition and supplies; baby-sitting; and elementary and high school tuition, books, and supplies.

Miscellaneous expenses consists of personal care items, entertainment, and reading materials.

RELATED ARTICLE: Expenditures on Children Over Time

Since 1960, the U.S. Department of Agriculture (USDA) has been providing estimates of expenditures on children from birth through age 17. The original estimates were based on the 1960 Consumer Expenditure Survey. The figure below examines how these expenditure estimates have changed over time at 5-year intervals. Depicted are the average total expenditures on a child from birth through age 17 in a middle-income, husband-wife family. Expenditures are in nominal (not adjusted for inflation) dollars.

Expenses to raise a child to age 18 have increased dramatically, from $25,230 in 1960 to $153,660 in 1997. Even when adjusted for inflation and converted to 1997 dollars, real expenditures on children have risen–from about $136,800 in 1960. New components of child-rearing costs, particularly child care, are among factors causing this increase. In 1960, child care expenses were negligible because many mothers were not in the labor force. In 1997, child care expenses were among the largest expenditures made on preschool children by middle-income families.

The original intent of USDA’s research on expenditures on children was primarily educational: expenditure estimates on child-rearing were to be used in financial planning guides and budgeting programs. Although still used for this purpose, the child-rearing expense estimates have gained new applications, such as in developing State child support guidelines and foster care payments. These new uses of the child-rearing expense estimates reflect the changing structure of families with children in the United States and thus the importance of the ongoing nature of this research area.

[GRAPH OMITTED]

Estimating Future Costs

The estimates presented in this study represent household expenditures on a child of a certain age in 1997. To estimate these expenses for the first 17 years, future price changes need to be incorporated in the figures. To do this, a future cost formula is used such that:

[C.sub.f]= [C.sub.p][(1 + i).sup.n]

where:

[C.sub.f] = projected future annual dollar expenditure on a child of a particular age

[C.sub.p] = present (1997) annual dollar expenditure on a child of a particular age

i = projected annual inflation (or deflation)

n = number of years from present until child will reach a particular age

An example of estimated future expenditures on the younger child in a husband-wife family with two children for each of the three income groups for the overall United States is presented. The example assumes a child is born in 1997 and reaches age 17 in the year 2014. The example also assumes that the average annual inflation rate over this time is 5.0 percent (the average annual inflation rate over the past 20 years) (10). Thus, total family expenses on a child through age 17 would be $178,840, $242,890, and $353,130 for households in the lowest, middle-, and highest income groups, respectively. In 1997 dollars, these figures would be $112,710, $153,660, and $224,040.

Inflation rates other than 5.0 percent could be used in the formula if projections of these rates vary in the future. Also, it is somewhat unrealistic to assume that households remain in one income category as a child ages. For most families, income rises over time. In addition, such projections assume child-rearing expenditures change only with inflation, but parental expenditure patterns also change over time.

Estimated annual expenditures on a child born in 1997, by income group(1)

Income group

Year Age Lowest Middle Highest

1997 < 1 5,820 8,060 11,990

1998 1 6,110 8,460 12,590

1999 2 6,420 8,890 13,220

2000 3 6,850 9,570 14,160

2001 4 7,200 10,050 14,870

2002 5 7,560 10,550 15,610

2003 6 8,130 11,190 16,320

2004 7 8,540 11,750 17,140

2005 8 8,970 12,340 18,000

2006 9 9,450 12,910 18,760

2007 10 9,920 13,550 19,690

2008 11 10,420 14,230 20,680

2009 12 12,360 16,250 23,220

2010 13 12,970 17,070 24,380

2011 14 13,620 17,920 25,600

2012 15 14,120 19,060 27,570

2013 16 14,820 20,020 28,940

2014 17 15,560 21,020 30,390

Total $178,840 $242,890 $353,130

(1) Estimates are for the younger child in husband-wife families with two children for the overall United States.

Table 1. A comparison of estimated 1997 expenditures on a child by lower income single-parent and husband-wife families(1)

Single-parent Husband-wife

Age of child households households

0 – 2 4,900 5,820

3 – 5 5,510 5,920

6 – 8 6,230 6,070

9 – 11 5,820 6,090

12 – 14 6,270 6,880

15 – 17 6,970 6,790

Total (0 – 17) $107,100 $112,710

(1) Estimates are for the younger child in two-child families in the overall United States with 1997 before-tax income less than $35,500.

(1) The report “Expenditures on Children by Families: 1997 Annual Report” provides a more detailed description of the data and methods. To obtain a copy, contact USDA, Center for Nutrition Policy and Promotion, 1120 20th Street NW, Suite 200 North Lobby, Washington, DC 20036 (telephone: 202-418-2312).

(2) Urban areas are defined as Metropolitan Statistical Areas (MSA’s) and other places of 2,500 or more people outside and MSA; rural areas are places of less than 2,500 people outside an MSA.

(3) For a review of equivalency measures and estimates of expenditures on children resulting from them, see U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, 1990, Estimates of Expenditures on Children and Child Support Guidelines (11).

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