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What price do you put on your children?

17 Mar

No, not on the open market. 🙂

For a while now the figure of over $500, 000 (Australian dollars) has been bandied about as the cost to raise two children to the age of 21. Not so, says Michael Dockery, an associate professor in the school of economics and finance at the Curtin University of Technology (see Sydney Morning Herald article here.) He says the actual figure is more likely to be around $1300 a year, when you factor in things like the net wealth of the parents and compare that to those of people without children.

Dr Dockery disputes the logic of seeing children as a cost. The price people were prepared to pay for fertility treatments showed children were regarded as a “very large net benefit”.
He also takes issue with studies that used the amount of money parents spend on children to determine their cost. “There seems little justification for considering expenditure on children to be a measure of their cost, any more than going to a restaurant can be considered a cost to the patrons.” Restaurant-goers saw their night out as a benefit, not a burden.

As well, when couples chose to have children they understood they would have to switch their expenditure from dining out to nappies and child care.

It seems that a net wealth approach gives a better idea of “cost”. Yes, I know that there are those who will claim loudly that “cost” is negligible or indicates a mercenary attitude. I say that it’s better to walk into parenthood with your eyes opened as much as possible. Accept that there will be a financial cost, but that there may be many wonderful and intangible benefits. Opportunity cost was never so hard to work out!

The whole original article is here at the The Centre for Labour Market Research.

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Posted by on March 17, 2009 in Academia, Article

 

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