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The Cost of Raising a Child: Equivalence Scales in the United States

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  • Hou, Peibin
  • Sun, Falin
  • Sawadgo, Wendiam
  • Huseynov, Samir
  • Li, Wenying

Abstract

As fertility rates drop to another historical low, understanding the economic burden of childrearing on household income, a main economic reason for falling birth rate, has become more crucial than ever. This study calculates a subjective equivalence scale explaining how much the income of a two-adult, one-child household should increase to maintain the same level of life satisfaction as a two-adult household, using a nationally representative U.S. sample. The results suggest that the equivalence scale for a two-adult, one-child household is 1.18, indicating that raising a child costs 18% of a two-adult household’s income. Our analysis indicates that programs like the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) and the National School Lunch Program (NSLP) may be overly generous for households with one child, while the tax deduction policy does not cover child-rearing costs sufficiently.

Suggested Citation

  • Hou, Peibin & Sun, Falin & Sawadgo, Wendiam & Huseynov, Samir & Li, Wenying, 2025. "The Cost of Raising a Child: Equivalence Scales in the United States," 2025 AAEA & WAEA Joint Annual Meeting, July 27-29, 2025, Denver, CO 360939, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea25:360939
    DOI: 10.22004/ag.econ.360939
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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