Study Finds Child-Related Prices Have Not Risen Faster Than Adult Prices in Relative Terms
Key Takeaways
- •The paper’s child cost index measures changes in the cost of raising children relative to adult consumption.
- •Childcare and tuition inflation is offset by lower shelter exposure for children and slower price growth in other child-related categories.
- •Households spend more real resources on children than in 1990, but this increase has broadly matched growth in adult consumption.
- •Forgone market work contributes little to relative cost growth because higher women’s time values are largely offset by reduced motherhood penalties.
- •The largest deviation from cost stability comes from valuing leisure time displaced by childcare.
A new paper by Christina Patterson and Heather Sarsons finds that, in relative terms, children may not cost more than before, despite rapid inflation in childcare and tuition prices.
The paper examines a child cost index, or CCI, intended to compare how the cost of raising children has changed relative to adult consumption. That distinction matters because families may spend more on children over time even when the prices of child-related goods and services have not risen faster than the prices adults face.
The paper says the goods-and-services CCI closely tracks adult prices. According to the authors, increases in childcare and tuition prices are offset by children’s lower exposure to shelter costs and by slower price growth in other parts of the child consumption basket.
Households now devote substantially more real resources to children than they did in 1990. However, the paper finds that this increase has moved in parallel with the growth of real adult consumption, rather than reflecting a child-specific rise in prices.
A similar offsetting pattern appears in parental time costs. The rising value of women’s time is largely counterbalanced by declining motherhood penalties in earnings and work hours, the paper says, meaning forgone market work adds little to relative cost growth.
The main departure from this pattern of stability comes from the growing amount of leisure displaced by childcare. Valuing that time raises the CCI, although the size of the increase depends on the shadow value assigned to leisure.
Marginal Revolution described the finding as “a surprising and important result” from the new paper by Christina Patterson and Heather Sarsons.