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On Estimates of the Cost of Raising Children used in Child Support Tables
Roger F. Gay, Project for the Improvement of Child Support Litigation Technology
http://www.geocities.com/CapitolHill/5910/index.html
November 2, 1999
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While surfing the web today, I ran across a rather disconcerting commentary at the
Alabama Office of the Courts site. The page is entitled:
Child Support Information. Before revealing the details, I should note that
Alabama is presenting the same misinformation as do many other states. The quote you
find below is quite similar to a statement made in, for example, the Indiana statutes.
One would think that the Alabama Office of Courts (AOC) would do its best to provide
the public with accurate information. Yet, I immediately found obvious misinformation
and wrote to AOC to tell them about it.
The State of Alabama uses a child support guideline derived from a proposal developed
by child support collection entrepreneur Robert G. Williams, of Policy Studies, Inc.,
known as the Income Shares model. The model has received continuous criticism since
its adoption as one that is arbitrarily contrived, not based on any valid economic
evidence, and because it does not correspond to any set of rational principles for
making a child support award.
The Schedule of Basic Child Support Obligations, as it is referred to, is a table of
numbers. In making a child support decision, the court is instructed to use the
parents' combined income to look up a number in the table. The corresponding number is
presumed to be the dollar amount that the parents should spend on their children. (It
can then be adjusted for various reasons.) The "basic obligation" for the payer is
part of that amount in proportion to the payer's income. AOC says the following to
describe the table.
The Schedule of Basic Child Support Obligations was developed through research
sponsored by the National Center for State Courts and is based on extensive economic
research on the cost of supporting children at various income levels.
The National Center for State Courts has never sponsored development of a Schedule of
Basic Child Support Obligations based on extensive economic research on the cost of
supporting children at various income levels. As a matter of fact, they have never
sponsored extensive research on any aspect of child support guideline design, with the
exception perhaps of state by state reviews of political decisions. Certainly nothing
however, of a technical or scientific nature.
The information being referred to is a proposal for design of guidelines by child
support collection entrepreneur, Robert Williams. Williams did incorporate results
from a "cost of raising children" study in his proposal. A far cry from "extensive
economic research," Williams relied on a single study that was unrelated to the child
support award question. The study was conducted over a summer by a sociology professor,
Thomas Espenshade, who had no previous experience in making such estimates, and his
work has not since received any positive recognition from the scientific community.
Espenshade has not himself received much criticism for the work. Other than its use by
Williams in recommending values for child support tables, his work on estimating the
cost of raising children has not received much attention at all. A far, far cry from
"extensive economic research," Espenshade seemed to have had it in mind to get his
feet wet in something new over a summer break. In point of fact, Espenshade isn't even
an economist. His specialty isn't families or children either. It's immigration.
Espenshade's study was not about making child support awards. He did not have the data
or methods necessary to calculate what parents at different income levels spend on
children. He presented results that in quantitative detail have no validity, but his
final purpose and point were quite simple. The fact that his study was not about child
support awards, and that he did not push his numbers for such political use is
probably the reason that more criticism has not been focused on him personally by
advocacy groups.
Espenshade wanted to help train parents, and particularly those parents who had little
to no experience dealing with their own financial issues. This would of course include
immigrants from poor countries and even young parents in the United States. His study,
although providing speculative inaccurate numbers, made a simple but important point.
If you have children, it will cost you. He didn't really know how much.
Let's say for example that you get married and the two of you have enough to buy a
sports car. You want the sports car but you are also considering having a child right
away. Espenshade's results say that if you have the child, it may be impractical to
buy the sports car. In concept, the difference between being able to afford the sports
car if you don't have the child, and not if you do, is what Espenshade defines as the
"cost of raising children."
In fact, Espenshade compared expenditure on food in proportion to the number of family
members between couples with and without children. What he chose to view as the
standard of living difference between couples with and without children represented
his cost of raising children. This aspect of the method itself receives criticism even
from those who believe any such comparisons can produce worthwhile results.
The data available for his study did not contain the information needed to determine
what parents spend on children. In the end, Espenshade put a fudge factor into his
equation to produce his result. The numeric result is not a statistical result based
on the data. The result is not how much parents spend on children. The result is not
accurately described as the cost of raising children. The result is primarily a result
of his method and his fudge factor, not the data, and is not a reflection of anything
special.
Again however, Espenshade's results have not received much criticism. His study has
not really received much attention at all, except in the political context created by
Robert Williams. Espenshade never claimed to have produced a set of numbers appropriate
for use in child support guidelines.
The AOC also claims that the "extensive economic research" on which their table is
based, is on the cost of supporting children at various income levels. Espenshade was
not able to refine his results to differences in spending at different income levels.
He did not select a different fudge factor for various income levels. He produced a
table of percentages of the amount of total spending by families, which he attributed
to the "cost of raising children."
The effect of the data on his results was so small that the difference in the
percentage between low-income families and high-income families was insignificant. In
other words, his detailed numeric results were saying that a wealthy family will
suffer the same percentage standard of living loss to raise two children as a poor
family. This in no way reflects reality, but only the fact that the same method and
fudge factor were applied regardless of the income level. The result illustrates that
the family spending data used had very little effect on the result.
The use of Espenshade's results in child support guidelines is apparently more the
fault of Robert Williams than of Espenshade himself. However, both Espenshade and his
publisher do deserve some measure of blame.
In his book on the study, Investing in Children, Dr. Espenshade goes to great lengths
explaining what he would like to achieve in his study. It is clear that he wants to
provide accurate information on what children cost parents. He discusses his
methodology in somewhat philosophical ways, expressing the logic of what he is trying
to do.
He does not however, explain that he has failed to do it. He does not mention the
inclusion of a fudge factor in obtaining his final results. As unsatisfactory as his
attempt was, he does not tell the reader. He does in fact mention the possibility of
applying results of studies such as his to the problem of making appropriate child
support awards.
We should also wonder why his publisher, The Urban Institute Press, published his
study in the form of a book with a snappy title, and why it was promoted as though he
had succeeded in obtaining the results he was looking for. A publisher caused similar
confusion in the past by promoting a book called The Divorce Revolution with false
information. The Urban Institute however, is a research organization. That being the
impression they project to the public, shouldn't we expect a serious in-depth peer
review of their publications?
As I have said though, the choice to recommend child support tables related to
Espenshade's results was made by Robert Williams. It is clear that the results were
not realistic enough for use in anything but casual conversation; to make more of a
non-quantitative point. Or as University of Chicago economist Edward Lazear put it
(less delicately);
. . . the presumption that underlies the focus of much of the empirical research and
policy debate on income distribution [spending within families] seems born of
ignorance and is supported by neither theory nor fact.
(Source: Edward P. Lazear and Robert T. Michael, Allocation of Income Within the
Household, University of Chicago Press, 1988, page 25)
But let's pretend that Espenshade's results were exactly what Espenshade was looking
for. Would they then be appropriate to use them as the basis for child support
awards?
Let's continue with the conceptual explanation given above. The "cost of raising
children" is that a particular family cannot afford to buy the sports car they wanted
because they are providing for a child's needs instead. The result of having a child
in that situation is that the parents, living together in an intact family, cannot
afford the sports car.
But in application in child support guidelines, what Williams is saying is that the
mother only needs to divorce. Her ex-husband will then owe her enough to take care of
the child and his share of the cost of buying the sports car to boot -- to bring them
to the standard of living they would have had together if they had not had children.
That, in the application of Espenshade's conceptual theory is what it would take for
one parent to reimburse the other for "the cost of raising children."
The Alabama Office of Courts as well as other government sources in other states
misrepresent the numbers used in their child support tables. They are not is based on
extensive economic research on the cost of supporting children at various income
levels. Even if the statement were true, the goal it represents does not correspond to
any rational view on calculating an appropriate child support award.
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