Rich children are different

American Demographics, August, 1991 by Thomas Exter

It's no surprise that children in affluent households have more advantages than children from low-income households. But now a new study has measured the financial advantages of affluent children.

Married-couple families whose 1990 incomes exceeded $48,300 spend an average of $8,770 a year on children from birth to two years, according to economist Mark Lino. That's more than twice as much as the $4,330 per baby spent by married couples with incomes below $29,900. On average, couples in the bottom third of the income scale spend about half as much on their children.

Among the top third of couples, 40 percent of spending on babies goes to housing, and 23 percent goes to education/ child care, plus 16 percent to transportation, 12 percent to food, 6 percent to clothing, and 4 percent to health care. Couples in the bottom third may spend less, but they devote a similar share of spending to their child's housing, transportation, clothing, and health care. They devote a lower share to child care, and higher shares to food.

Spending on children increases with the age of the child at all income levels. Higher-income couples spend relatively more on younger children. For example, older children in low-income families cost 27 percent more than the youngest children in those same families. But older children in high-income families cost only 17 percent more than the youngest children in those families. Food and transportation expenditures account for much of the increased cost of older children. Housing costs and day-care expenses diminish as children grow older.

When all is said and done, children in affluent households will cost their parents about $293,400 from birth through age 17. Children from poorer families will cost $151,170, barely half as much (see "Demographic Forecasts" on page 59). The biggest difference between the low-income third and the high-income third of families comes from spending on education and child care. More affluent couples spend 2.7 times as much for child care on infants. They spend 2.8 times as much on the education of children aged 15 through 17.

For more detailed information on the costs of raising a child, see Mark Lino's report "Expenditures on a Child by Husband-Wife Families: 1990," published by the Family Economics Research Group, U.S. Department of Agriculture, Room 439A, 6505 Belcrest Road, Hyattsville, MD 20782; telephone (301) 436-8461.

Princes and Paupers

(estimated annual expenditures on a child by husband-wife families,
by household income and age of child, 1990)

household income                                        transpor-
and age of child            total    housing    food     tation

Less than $29,900 income
0 to 2 years old            $4,330    $1,760     $670       $590
3 to 5                       4,630     1,700      750        650
6 to 8                       4,620     1,700      960        690
9 to 11                      4,480     1,580    1,090        620
12 to 14                     5,150     1,520    1,170        940
15 to 17                     5,490     1,490    1,320      1,190

$29,900 to $48,300 income
0 to 2 years old            $6,140    $2,330     $830       $990
3 to 5                       6,540     2,270      960      1,050
6 to 8                       6,500     2,280    1,220      1,130
9 to 11                      6,330     2,150    1,370      1,060
12 to 14                     7,050     2,090    1,450      1,370
15 to 17                     7,490     2,060    1,620      1,630

$48,300 or more income
0 to 2 years old            $8,770    $3,490   $1,010     $1,360
3 to 5                       9,260     3,430    1,220      1,420
6 to 8                       9,130     3,440    1,460      1,530
9 to 11                      8,950     3,310    1,640      1,460
12 to 14                     9,780     3,250    1,790      1,780
15 to 17                    10,270     3,220    1,890      2,030

                                                education,
household income                       health   child care,
and age of child            clothing    care     and other

Less than $29,900 income
0 to 2 years old                $320     $230       $760
3 to 5                           350      210        970
6 to 8                           380      230        660
9 to 11                          390      230        570
12 to 14                         630      240        650
15 to 17                         590      250        650

$29,900 to $48,300 income
0 to 2 years old                $400     $290     $1,300
3 to 5                           440      280      1,540
6 to 8                           470      290      1,110
9 to 11                          480      300        970
12 to 14                         790      310      1,040
15 to 17                         750      320      1,110

$48,300 or more income
0 to 2 years old                $500     $360     $2,050
3 to 5                           540      340      2,310
6 to 8                           570      360      1,770
9 to 11                          590      380      1,570
12 to 14                         940      380      1,640
15 to 17                         890      400      1,840

Source: "Expenditures on a Child by Husband-Wife Families: 1990,"
Family Economics Research Group, U.S. Department of Agriculture,
Hyattsville, MD