How Much Do Kids Cost?

Yesterday I read Bryan Caplan's Selfish Reasons to Have More Kids, and while it was excellent (a full review is forthcoming) I noted one critical lacuna in Dr. Caplan's analysis- the actual financial burden an additional child imposes. He's very good on the emotional and physical toll children take, and how we make that toll so much higher than it needs to be. But if it don't make dollars, it don't make sense, so here at Free Air and Water's West Coast offices I decided to take a stab at figuring out just what another kid would cost me.

Like any scholar would, I immediately consulted the Great Big Book of Everything, also known as Google. Unfortunately, what I find on the internet refers to the Department of Agriculture's annual report on the subject, and the fine folks who discovered that cow burps emit more greenhouse gases than cow farts are apparently almost totally unfamiliar with marginal cost. My biggest concern was housing. Kids don't eat as much as you think (remember, they're small), and we have two kids' worth of hand-me-down clothes and toys already. Putting the numbers into the calculator, I noted something odd- the cost of housing was evenly split between the number of children, no matter how many children I entered.

Let us reason together. Imagine that my wife and I had no kids. We could live in a small, one bedroom house. In Tacoma, WA, that would run me around $120,000. (I am getting these numbers by eyeballing internet listings and choosing the cheapest house my wife would be willing to live in, based on pictures.) But then, we remember that we already have one kid, and decide he probably shouldn't sleep on the couch. Now I am looking at $160,000! Gee willikers! That's a marginal cost for the first kid of $40,000! But then I find our toddler in the sofa cushions, and we realize he's going to want a bedroom too. Now we're looking at $180,000. Huh. Our second kid only added $20,000 to our housing costs- less than the first kid! So is it really fair to saddle Maximilian, our younger son, with the costs imposed by our elder, Trent? Trent doubled the number of bedrooms we'd need, but Max only increased the number by 50%. What would a third child do? We're looking at around $190,000 for a four bedroom house in Tacoma. That's only $10,000. In monthly terms, on a 30-year fixed at 5%, we are talking about around sixty more dollars a month.

If you take what a family of five spends on children and divided it by three, you get a pretty scary number, like the quarter-million the USDA estimates for one kid through high school graduation. But if you look at what a family of four spends, subtract that figure from what a family of five spends, you get a fairly low marginal cost.

Marginal cost saves money on kids elsewhere, too. Let's take video games. I play them, Trent plays them, Max tries to play them. If I divide the cost of the PlayStation by two, each kid costs me a fair bit of cash for videogaming. But I would have bought Trent a PlayStation even if Max didn't exist (in reality, I bought myself a PlayStation and the boys are free riders, but nevermind that now). So Max did not impose any new video gaming costs. Other toys? They're both boys, so while Max does get some new stuff of his own from us, he also gets a lot of toys we would have bought anyway, because Trent wanted them when he was younger. Trent has a backyard skate ramp. I don't have to buy two of them for two kids. Puppies? One puppy can make any number of kids cry by jumping on them and chewing up their toys.


So am I saying we will be adding another child? Well, maybe. But mostly what I am pointing out is that government attempts at making generalized estimates of the cost of anything are generally bullshit. You can't know what something will cost you unless you know what you already have.