Background

The latest update was published as part of conference proceedings in “Child Cost Economics and Litigation Issues: An Introduction to Applying Cost Shares Child Support Guidelines,” by R. Mark Rogers and Donald J. Bieniewicz, Southern Economic Association Annual Meeting, Section for National Association of Forensic Economics, Alexandria, Virginia, November 12, 2000.

In the methodology, expenditures on children are based on actual costs as measured by surveys. The Percent-of-obligor and Income Shares models base child costs on estimates are derived by comparing changes in consumption of adult goods (tobacco, adult clothing, and alcohol) before and after having a child or additional children. Additionally, the data are based on estimates based on comparing income and costs across a wide income range. Percent-of-obligor models are based on only cost estimates from low-income families. Presumptive awards for moderate and high-income obligors are inappropriately extrapolated from low-income percentages and do not reflect actually on costs at other income levels.

The model focuses on sharing the marginal costs of children. That is the added costs incurred by a household by having a child. For example, look at how much higher a utility bill is after having a child than before to calculate a child’s share of utility costs.

The primary source of data for the child support model is the Expenditures on Children by Families published by the Family Economics Research Group (FERG), U.S. Department of Agriculture.[1] Data used to estimate expenditures on children are from the Consumer Expenditure Survey — Interview portion. This survey is administered by the Bureau of Labor Statistics, U.S. Department of Labor. It is based on a sample of over 12,000 husband-wife households and 3,400 single-parent households. The Bureau of Labor Statistics weights the survey data to reflect the composition of the overall U.S. population of interest. Econometric analysis was used to estimate household and child-specific expenditures. That is, statistical techniques were used to evaluate the expenditure data to control for family size, income, and other factors to determine expenditures on children by family size.

The model has components for various major child cost categories: housing, food, transportation, clothing, health, child care & education, and “other.” Each category is based on an average of the expenditures by that category from survey data. They are being updated to reflect category changes in the latest annual report for Expenditures on Children by Families from the U.S. Department of Agriculture.

The FERG report provides estimates of family expenditures on children for separate cost categories. The FERG estimates are on a marginal cost basis, except for the housing, transportation, and other miscellaneous cost estimates, which are per capita. (Household costs are allocated equally to all household members, including children.) Per capita estimation is known to yield much higher estimates of child costs than marginal cost estimation and should be viewed as an "upper limit" for child costs for these categories.

To obtain marginal housing costs for children, the housing costs in the tables originally were based on a housing survey by Dr. David Garrod of Purdue University (currently retired) instead of the unrealistically high per capita estimates from the FERG report. Adjustments were made to the data to add furniture and utilities costs.

More recently, the model incorporated housing cost data from the U.S. Department of the Interior's “Regional Quarters Rental Survey Covering Government-Furnished Quarters Located in the Southeast Survey Region,” February, 1997. This is an extensive survey of market values of private housing for determining market values of government-furnished housing to employees.  Data are used for owner-occupied types of houses, not for apartments.

The tables from the Bieniewicz 1994 publication were updated by using data from the FERG report, 1999 Expenditures on Children by Families. Child expenditure levels were interpolated at $50 increments using a regression based methodology, correlating updated published data between income and expenditures.

For future updates of these tables, it may be appropriate to base the transportation component on cost per mile for the family trips that are solely attributable to the child's activities. If refined and incorporated, this approach would lead to substantially lower transportation costs.

The underlying data for is gaining professional acceptance and has been corroborated by additional studies. The paper that was presented to the National Association of Forensic Economics section of the Southern Economic Association annual meeting in November 2000 was favorably received by peer review.

These published estimates have been corroborated by a legislative research panel appointed by the Legislature of the State of Virginia. In “Technical Report: The Costs of Raising Children,” the Joint Legislative Audit and Review Commission (JLARC) — a standing commission with a professional staff — the expenditure levels on children for low-income households were very close to the numbers. However, the JLARC cost estimates were notably lower than the expenditure figures for middle to high income households. The lower JLARC numbers are likely attributable to the use of data from a more recent Consumer Expenditure Survey than is used by the Department of Agriculture in its child cost estimates. Additionally, the econometric technique used by JLARC focuses more on marginal child costs than the Department of Agriculture's technique. Hence, the model incorporates conservatively high estimates of child costs. It likely will be appropriate to incorporate the JLARC data after additional professional review of these child cost estimates.

[1] More detail on the source data can be found in Donald J. Bieniewicz, “Child Support Guideline Developed by Children's Rights Council,” Chapter 11, Child Support Guidelines: the Next Generation, U.S. Department of Health and Human Services, April 1994, pp. 104-125.  [RETURN]