Tuesday, July 16, 2019

Who benefits (again)

In the news reports I skimmed yesterday, some of the usual suspects explained why having children is a bad idea and that they'll never do it (for the sake of future generations--parse that...). What X thinks is X's affair, but the publicity is managed by money. And my first question these days is "who benefits? in this case from people having fewer kids?" I wish I didn't have to be so cynical.

Short term--anybody who sells toys for adults instead of children. Double income, no kids ==> lots of money to spend on consumables, entertainments, travel--and having two cogs in the machine instead of one helps keeps down the wage you have to pay a cog. And it is easier to sell stuff to someone who is vaguely disatisfied with life. (Yes, I know poverty is really hard when there are lots of little mouths to feed--but we're talking upper and middle class here.)

Longer term--you won't have as many customers, but lots of firms don't look that far ahead.

I looked up one of those cost of raising a child stories to see if I could figure out the relative expenses of a child and an adult. I already knew the expenses were elastic--the nominal $233,000 for a total of 17 years times 5 kids was quite a bit more than I was pulling down. But this bit was interesting: "The actual cost of raising a baby in its first year is around $21,000 (for a household earning $40,000) and $52,000 (for one bringing home $200,000)." True, they include the cost of housing in that, but I guess more money burns holes in your pockets faster.

In case you were curious, the USDA report has a $13K annual estimate per kid for a 2-child family with income between $59K and $107K. At the low end of that, it comes to 13K per kid and $15K per adult (OK, with taxes maybe more like $10K/adult), and if I assume a linear relationship from the previous paragraph's numbers, $21K per kid and $33K per adult at the upper end. (with taxes maybe less).

So it looks as though adults are about as costly as kids, maybe more so. Don't trust these hacked numbers--the devil is in the details/taxes/elasticity.

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