Cost Per Child-Quick Estimate

We are often asked to provide a preliminary estimate of the cost of child support in matrimonial cases. These estimates may be used to establish a “rough” ratio of child support-to-earnings capacity. They also serve as a “reasonableness check” on requested child support payments. Final child support amounts are determined by State-designated models and negotiation.

Our estimates are often based on actual current family expenses and government statistics. A widely used source of these statistics, used by other economists, is produced annually by the United States Department of Agriculture (USDA) (1). They have been published continuously for over 30 years. These data have been used in a number of State-designated child support models.

We have also used the  USDA statistics in our analyses of child support costs. We have just discovered that the Department has created its own cost calculator,  available on-line at the USDA website (2). It seems to provide a quick way to estimate average child raising costs for groups of similar families.

The USDA calculator home page notes:

The amount of money you spend depends on how many children you have, the age of the children, your marital status, where you live, and your household income. The results are based on what families similar to your family spend in a year and include a breakdown by major budgetary components...”.

We have experimented with the calculator and it has some good features. It is fast and easy to use. It is straightforward and the results are well displayed. We used the calculator to estimate the effect of family size, from one to four children, on family child care costs. The chart below confirms our prior finding that average annual cost per child does not continue to decline in larger families, partly because older children have higher costs.

The USDA calculator does, however, have some limitations when used in a detailed specific case setting.

• The income brackets are fairly broad. This may be a consideration when attempting to compute the ratio of child support-to-earnings capacity.

• The calculator is appropriate for children up to eighteen. This may be problem when the specific analysis requires college cost. The  USDA calculator home page notes:

“Please note that the calculator applies to children less than 18 years old. So, it does not include expenses on older children, including the cost of a college education.”

• The calculator is appropriate for children in normal health. This may be problem when the specific analysis requires special needs cost analyses.
 
We have found the College Board studies provide reliable higher education cost data (3).

Although the new USDA on-line calculator is a handy tool for non-economist seeking a rough estimate of child costs, we will continue to rely on our own models for specific detailed case analysis. The USDA calculator may aid us as a “reality check” on our work.
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(1) Lino, Mark,  Expenditures on Children by Families (for various years), U.S. Department of Agriculture, Center for Nutrition Policy and Promotion. Miscellaneous Publication No. 1528-20XX (for various years).  

(2) http://www.cnpp.usda.gov/calculatorintro.htm.

(3) College Board, “Trends in College Costs” published annually. Part of the Trends in Higher Education Series. It is available at: www.collegeboard.com/trends.