Wednesday, August 05, 2009

Cost of Raising a Child

Journalists seem to love the recurring story about how much money it takes to raise a child to age 18 (currently $221,000). Reducing the cost of a child to such a figure, however, misses the fact that expenses are lumpy and that this affects marginal costs. If you live in a small apartment, and having children makes you decide to move to an house that costs 3 times as much, then that's an expense of raising children. But if you already live in a house and having a child merely means using the spare bedroom or putting two kids in a bedroom, then the marginal cost of having a child is much, much lower. Also: if you have one child, and buy new clothes and shoes for every age, that's a lot of expense. But if you have a second child who can wear the same clothes and shoes as hand-me-downs, the marginal cost drops much lower again.

It's not meaningful to talk about the "average" cost of a child . . . it all depends on your family's pre-existing circumstances.


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