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The Price, Cost, Consumption and Value of Children

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  • Bruce Bradbury

    (Social Policy Research Centre, UNSW)

Abstract

Though they are related, the price, cost, consumption and value of children are not the same. This paper explores two aspects of the relationship between these concepts. Even if we restrict attention to the domain of commodity consumption, the cost of children is not the same as children's consumption. In this context, the cost of children to their parents is often described with a consumer equivalence scale. It is shown here that, under reasonable assumptions, children's consumption of market goods is less than the‚ 'equivalent income' of the household, but more than the‚ 'cost of children. Expenditure costs, however, are only part of the cost of children. This paper uses a variant of the 'adult goods' method to estimate the full costs of children, including both expenditure and time costs. Adult personal time (comprising pure leisure, sleep and other personal care) is used as the adult good. Preliminary estimates using Australian data suggest a very large cost of children. The paper discusses the limitations of the estimation approach and considers the broader welfare implications of these costs.

Suggested Citation

  • Bruce Bradbury, 2004. "The Price, Cost, Consumption and Value of Children," Labor and Demography 0411001, EconWPA.
  • Handle: RePEc:wpa:wuwpla:0411001
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    References listed on IDEAS

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    1. Timothy Smeeding & Gunther Schmaus & Brigitte Buhmann & Lee Rainwater, 1988. "Equivalence Scales, Well-Being, Inequality and Poverty: Sensitivity Estimates Across Ten Countries Using the LIS Database," LIS Working papers 17, LIS Cross-National Data Center in Luxembourg.
    2. Blundell, Richard & Macurdy, Thomas, 1999. "Labor supply: A review of alternative approaches," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 27, pages 1559-1695 Elsevier.
    3. Paul A. Samuelson, 1956. "Social Indifference Curves," The Quarterly Journal of Economics, Oxford University Press, vol. 70(1), pages 1-22.
    4. Killingsworth, Mark R. & Heckman, James J., 1987. "Female labor supply: A survey," Handbook of Labor Economics,in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 2, pages 103-204 Elsevier.
    5. Nelson, Julie A, 1992. "Methods of Estimating Household Equivalence Scales: An Empirical Investigation," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 38(3), pages 295-310, September.
    6. Deaton, Angus S & Muellbauer, John, 1986. "On Measuring Child Costs: With Applications to Poor Countries," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 720-744, August.
    7. Pencavel, John, 1987. "Labor supply of men: A survey," Handbook of Labor Economics,in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 1, pages 3-102 Elsevier.
    8. Bradbury, Bruce, 1994. "Measuring the Cost of Children," Australian Economic Papers, Wiley Blackwell, vol. 33(62), pages 120-138, June.
    9. Nelson, Julie A, 1988. "Household Economies of Scale in Consumption: Theory and Evidence," Econometrica, Econometric Society, vol. 56(6), pages 1301-1314, November.
    10. Buhmann, Brigitte, et al, 1988. "Equivalence Scales, Well-Being, Inequality, and Poverty: Sensitivity Estimates across Ten Countries Using the Luxembourg Income Study (LIS) Database," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 34(2), pages 115-142, June.
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    Cited by:

    1. François Gardes & Imen Sayadi & Christophe Starzec, 2015. "Les échelles d’équivalence complètes : une estimation intégrant les dimensions monétaire et temporelle des dépenses des ménages," Revue d'économie politique, Dalloz, vol. 125(3), pages 393-414.
    2. Garcia-Diaz Rocio, 2012. "Demand-Based Cost-of-Children Estimates and Child Poverty," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 12(1), pages 1-32, January.
    3. Holly Sutherland & Christine Lietz & Horacio Levy, 2005. "Alternative Tax-benefit Strategies to Support Children in the European Union. Recent Reforms in Austria, Spain and the United Kingdom," Papers inwopa05/33, Innocenti Working Papers.
    4. An-Chi Tung, 2011. "Consumption over the lifecycle: an international comparison," Chapters,in: Population Aging and the Generational Economy, chapter 6 Edward Elgar Publishing.

    More about this item

    Keywords

    consumer equivalence scales; cost of children; intra-household allocation;

    JEL classification:

    • J - Labor and Demographic Economics

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