Family Economics Review is written and published each quarter by the Family Economics Research Group, Beltsville Human Nutrition Research Center, Agricultural Research Service, United Income and Expenditure Patterns of Consumer Units With Suggestions or comments concerning this publication should be addressed to: Joan C. Courtless, Editor, Family Economics Review, Family Economics Research Group, USDA/ARS, Federal Expenditures on a Child by By Mark Lino Consumer Economist Family Economics Research Group A previous ARS study examined expenditures on a child by husband-wife families using the 1987 Consumer Expenditure Survey updated to current prices. This study examines these expenditures by single-parent families using the same data. Estimates are provided for major components of the budget by age of child and family income level for a child in a singleparent household with two children. Child-rearing expenses increased with the age of the child and family income. Housing comprised the largest share of total expenditures on a child, regardless of the child's age or household income. Expenses on a child were slightly higher for single-parent households as opposed to husband-wife households in the same income group. This likely reflects expenses being shared by fewer members in single-parent households. Although single-parent households spent slightly more on a child than married-couple households in the same income group, a much larger percentage of single-parent households than married-couple households were in the lower income group. The Family Economics Research Group of the U.S. Department of Agriculture (USDA) has provided estimates of child-rearing expenses for the past two decades. The estimates reflect expenditures by husband-wife families1 on a child from birth through age 17 (4). The most recent estimates are based on the 1987 Consumer Expenditure Survey, updated to 1990 dollars using the Consumer Price Index for all Urban Consumers (CPI-U) (6). For this study the terms "families" and "households" are used to refer to consumer units. These estimates do not apply to Child-rearing estimates are Methodology Source of Data Data used to estimate expenditures One-parent families headed by a Housing expenses include shelter (mortgage interest, property taxes, or rent; maintenance and repairs; and insurance), utilities (gas, electricity, fuel, telephone, and water), and housefurnishings and equipment (furniture, floor coverings, major appliances, and small appliances). Food expenses include food and nonalcoholic beverages purchased at grocery stores, convenience stores, and specialty stores; dining out at restaurants; and school meals. Transportation expenses include the net outlay on purchase of new and used vehicles, vehicle finance charges, gasoline and motor oil, maintenance and repairs, insurance, and public transportation. Clothing expenses include children's apparel items such as shirts, pants, dresses, and suits; footwear; and clothing services such as dry cleaning, alteration and repair, and storage. Health care expenses include medical and dental services not covered by insurance, prescription drugs and medical supplies not covered by insurance, and health insurance premiums not paid by employer or other organization. Education, child care, and other miscellaneous expenses include elementary and high school tuition, books and supplies; day care tuition and supplies; baby-sitting; and personal care items, entertainment, and reading. headed by a female. The sample was weighted using BLS methods to reflect the population of interest. Quarterly expenditures were multiplied by four to provide annual estimates. Estimating Expenditures To estimate expenditures on a child by single-parent households, this study followed the methodology used by the Family Economics Research Group in determining child-rearing expenses for husbandwife families. This approach estimates child-related expenditures (clothing, education, and child care) and overall household expenditures (housing, food, transportation, health care, and other miscellaneous goods and services). These expenditures are then assigned to a child for childspecific expenditures or, for overall household expenditures, allocated to a child based on previous research or on a per capita basis. Multivariate analysis was used to estimate household and child-related expenditures, controlling for income level, family size, and age of the younger child. The two income groups of single-parent households (1987 before-tax income under $26,000 and $26,000 and over) were selected to correspond with the income groups used in estimating child-rearing expenditures in husbandwife households (1987 before-tax income under $26,000, between $26,000 and $42,000, and over $42,000). These income groups for husband-wife households were determined by dividing the sample into equal thirds. For single-parent household estimates, the two higher income groups of the husband-wife households were combined because of the small number of single-parent households who fell in these income ranges. Of the single-parent households, 85 percent had a before-tax income under $26,000, and 15 percent had a before-tax income of $26,000 and over. When controlling for income, sex of the single parent did not significantly affect total expenditures. Hence, separate estimates were not determined for households headed by male and female single parents. For each income level the estimates were for single-parent Using dummy independent variables, the specific function was: families with two children, with the younger child in one of six age categories (0-2, 3-5, 6-8, 9-11, 12-14, and 15-17). Households with three members (two children) were selected as the base since this was the average size of one-parent families in 1987. The focus was on the younger child in a household since the older child was sometimes over age 17. If the older child had been selected as the household member of interest, expenditures for some items would be higher or lower. In addition, if a household with other than two children was selected as the base, expenditures would be different because of diseconomies or economies of scale. How these expenditures differ for an older child or for households with other than two children is addressed later in this paper. Each expense was estimated separately, thereby assuming that each expenditure was made independently of the others. The specific function describing how each budgetary expenditure was estimated in dollars is set forth in the box below. Ei = a + b1Y2 + c1HS1 + c2HS3 + d1CA2 + d2CA3 + d3CA4 + d4CA5 + d5CA6 where: Ei Y2 = household expenditures on a particular budgetary component (housing, food, transportation, health care, children's clothing, children's education and child care, or other miscellaneous goods and services) = 1 if household had a before-tax income $26,000 or over, 0 otherwise (the omitted category being household had a before-tax income under $26,000) HS1= 1 if single-parent household with one child, 0 otherwise HS3 1 if single-parent household with three or more children, 0 otherwise (the omitted category being a single- CA2 = CA6 = 1 if age of the younger child was 15-17, 0 otherwise (the omitted category being age of the younger child Family expenditures on each budgetary component (Ei) were calculated by summing the coefficients for the appropriate income level, household size, and age of the younger child. For example, expenditures for a family with a before-tax income under $26,000, two children, and the younger child age 3-5 were calculated as Ei = a + d1CA2, whereas expenditures for a household with a before-tax income $26,000 or over, two children, and the younger child age 15-17 were calculated as Ei = a + b1Y2 + d5CA6. |