Description: This article is about child support login, which shows us a breakthrough study coming out of the university of California that reveals some shocking facts related to our child support system. The author hopes that we can help reduce the conflicts inherent in our family court system.
I’m Joe Sorge and I’d like to tell you about a breakthrough study coming out of the university of California that reveals some shocking facts related to our child support system. We all know that divorce is contentious but why the long drawn-out battles are over custody?
These battles pit one parent against the other and put the children in the middle, in most cases both parents want to see their children and accept under rare circumstances that the children do not want to see both parents, why don’t the parents simply share the children?
It is money, if child support levels are set too low, the children may not get proper housing or food or clothing, but if child support levels are set too high, the payer may not be able to afford the payments, under a current system if a payer falls behind on payments, the warrant may be issued for their arrest.
If they’re arrested, their driver’s licenses are taken away and they’re put in jail where they can’t work and make money to catch up on their payments, it’s a vicious cycle and nobody wins, we believe that this University of California study reveals for the first time the true costs of raising children and uncovers damning evidence that our current child support calculations unnecessarily fuel custody battles.
We sat down with a brilliant economist Dr. William Comanor, the main author of this study, he’s professor of economics at the University of California and once served as the chief economist of the Federal Trade Commission in Washington DC.
Thanks for giving us the opportunity to do this, I’m delighted, if it costs $500 a month to raise a child in the state of Alabama, does every parent pay $500 a month? No, the state can set different amounts for wealthier parents, then poorer parents can set different amounts if there’s two children or three children as opposed to one child in the household.
The states have lots of flexibility, but however they do it, they must pay attention to available data on the economic cost of raising children, can an economist determine what it costs to raise a child? Yes, suppose you have two households with the same income levels and the same general standards of living.
One of these households might have one child and another household might be childless, one can compare the household with a child with the household without the child and try to examine with available data, did the household with the child spend more on housing, more on food, more on clothing, more on child care and education, more on other different elements of expenditures?
Suppose it’s true that a household is composed of husband and a wife and no children, they live in a two-bedroom apartment, they use the second bedroom as a den, now suppose a child arrives and the den is transformed to a nursery.
Let’s compare the two circumstances, given my hypothetical example, notice there is no change in housing costs, they spent the same amount on rent with the child arriving as they spent originally, they stay in the same unit, for the most part your child lives in your household and consumes the same collection of goods that you consume.
Do people that have their first child spend more on food? Generally no, they spend the same amount on food despite the presence of the first child as they spend earlier, if you have another mouth eating, how can you possibly not spend more on food?
You probably throw away less, suppose it is true, before the presence of children you would eat out a lot and we all know that food out in restaurants is expensive, when the child arrives, you eat at home more, so there may be some redistribution within the categories, I don’t doubt that, but your total outlays don’t appear to be that much different in the presence of a child than before.
Dr. Comanor’s approach measures what is typically called marginal cost increases? For example an automobile does not burn much more gasoline with two people sitting in it than it does with one person sitting in it, the cost of the extra fuel consumed would be called the marginal cost of adding a second passenger.
If we dig into the details of Dr. Comanor’s publication, we find that the increase in food expense is in fact very low when children are young, but as the children age, food costs go up significantly, this might lead one to believe that child support amount should be increased as the children age.
However Dr. Comanor’s data also reveal a counterbalancing trend, parents spend less on child care services as the children age, while these two factors do not offset each other exactly, the result is vary somewhat in different economic brackets. Total marginal expenses do not change substantially as children get older.
How many households did you study? We looked at over 16,000 households to do these comparisons, your control group had no children, that is correct, the group that you were measuring the increase in expenditures had one, two, three or more child.
We did it in three different circumstances with one child, with two children and with three children. I asked Dr. Comanor if others had published on this topic before he and his co-authors did. He said that there are two other published methods but neither looks at out-of-pocket marginal costs,.
The US Department of Agriculture annually publishes a report on the cost of raising children, what’s striking is that they use the same data that I use, we all use the same data, but Dr. Comanor said that the USDA method is flawed because it simply takes certain expenditure categories and divides those costs by the number of individuals in the family including the children, this is called the average costs method as opposed to the out-of-pocket marginal costs method.
I asked him to give us an example of why his method comes up with a more realistic measure of transportation costs than the USDA method. The household had two cars before the arrival of children and now has two cars still, for the most part they spend the same amount of money on cars and gasoline.
The car has had a backseat before which wasn’t generally used and now it’s used with the child, there’s essentially no additional transportation cost, the real transportation cost is the cost of the car seat, he went on to explain that the USDA method is also flawed with respect to housing costs.
They said that the housing cost of the child is the cost of an additional bedroom, if originally you had a two bedroom apartment, one used with the den, then the housing cost would be the hypothetical rental cost of a three-bedroom apartment where you could keep your den even if that was never used, that was a fiction.
We then talked about a second competing method for studying the costs of raising children called the income equivalence or IE method, the IE method is used by a private consulting firm that advises many of the states regarding child support levels.
They measure the welfare of the household in terms of the proportions spent on alternatively food or adult clothing, it tries to ask whether or not in the presence of the child you spent less on adult clothing or food than you did otherwise.
It sound complicated, let us try to explain the convoluted approach taken by the IE method, the IE method assumes that fewer dollars are spent on adult food and adult clothing, so that money could be made available for the needs of the children.
The method assumes that a similar shifting of expenses will occur in other cost categories as well such as for transportation and housing costs, but the IE method does not measure those shifting expenses directly, instead it makes the questionable assumption that parents will give up the same proportion or percentage of their income in other expense categories as they did for adult food and clothing.
It multiplies that same percentage times the families other expenses to compute a synthetic amount, it assumes that a custodial parent would need the synthetic amount in order to raise children under a lifestyle that also affords that custodial parent all the things they enjoyed prior to having children.
They’re trying to assign a value to keeping the old lifestyle even though you’re living with a child and you don’t follow the old lifestyle, that’s exactly right, you may not even want the old lifestyle but that’s not taken into account in these other methods, it’s a bizarre approach.
I asked Dr. Comanor for some examples of what types of hypothetical reductions in the standard of living might be computed in the IE methods synthetic amount. Food costs are largely restaurant meals out, some people want to have very high fashion clothing and some do not.
We all know that once you have a child your whole life changes, you have focused on your children in a way that you never did before, but the methodology used in this IE method ignores that reality. Does the IE method measure the value to parents of having a child? No, it doesn’t.
I’ve read that some of these IE methods measure the amount of tobacco and alcohol consumed by the adults? That approach is the dominant approach used today by which child support guidelines amounts are determined, the reason is that when the states got into this business back in the 1980s, there was no data on the child expenditures, there were data on household expenditures. They needed to find a way to go from available data for the household to that which applies to the child.
Did the IE method look at single parents with children? No, they did not. They only looked at married households. What about the USDA method? Did they look at single parents? Yes, they did. They looked at single parents as well as married parents.
Did you look at single parents? Yes, I did. Because one could argue that the single parent with a child is the more relevant economic situation than the married or the couple with or without children. The cost of raising a child or children in a single headed household is slightly greater than the own average than those in a married household.
You’re saying that people spend less on children than these other methods estimate they spend on children, it is substantially less, the reason is that our method is limited to out-of-pocket expenditures, it is real money, what the other methods do is to attribute expenditures to children which are not made out of pocket, it’s a fiction.
Let’s take a look at the costs estimated by the IE and USDA methods and compare them to the costs measured by Dr. Comanor’s method. For married households, the IE method overestimated the cost of raising a child by about two hundred percent and the USDA method overestimated the cost by roughly three hundred percent.
The over estimates were even more extreme for single-parent households, while the IE method did not even look at single-parent households, the USDA method overestimated expenses by over three hundred percent for low-income households and over four hundred percent for mid to high income households.
These over estimates have been misleading the states in a setting child support awards that are too high by somewhere between 400 and 800 dollars per month per child, over the course of a child’s dependency that could amount to nearly $100,000 per child of unsupported costs for low-income families and nearly $200,000 per child of unsupported costs for middle-income families.
This begs the question of whether the 120 billion dollars of unpaid child support in the United States today is due to parents unwillingness to make child support payments or are the amounts so high that they cannot afford to make them.
Essentially there is a profit in being a custodial parent, that’s what the current child support system does, do you think that this profit factor that exists in the guidelines now can cause non optimal behavior? For the child support system to work effectively it must have the agreement of both parents, not only the recipient but the payer.
The payers recognize that the amount of money that they’re obligated to pay exceeds the actual expenditures on the child, they know that, they live it, what the payers are funding is not merely the cost of raising their children but also a financial asset which benefits the recipient and that breeds discord between the parents.
The payor objects and the recipients feel entitled to it which would not be true if the child support award amounts truly reflected the out-of-pocket costs of raising children. Is there a venue where this discord gets played out? In the courts, in divorce courts.
This is one of the most contentious areas of family law, the unfortunate truth is that children are paying the price for a flawed system, if you would like to see your state and review its child support guidelines, please contact your state legislators and let them know that children should not be used as pawns in an economic battle involving their parents and their lawyers.
I hope that with your help we can work toward reducing the conflicts inherent in our family court system. I’m Joe Sorge. Thank you for reading.