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The Costs of Children—A Comparison of Standard Budget and Income Approach

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Abstract

In social policy there are many assumptions about the cost of children, but these are often made with lack of evidence about what it actually costs to bring up a child. In this article we draw a principal division between measures designed for comparative analysis and monitoring the development in inequality in the one hand, and measures to inform policy on the other. Income poverty is used as an example of the former, while the standard budget is a policy oriented measure. When it comes to measure children's needs the income poverty measure becomes too abstract, and almost useless as input in legitimate political actions supporting families with children. An action oriented measure has to be filled with content; that is to make an explicit connection between basic needs and the items and activities that are necessary to satisfy these needs. We launch some principal arguments that the Standard Budget approach is best suited for this task.

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Notes

  1. The so called modified OECD equivalence scale defines the cost of children under 14 years as 30 percent of the first adult.

  2. Orshansky used the term “relatively absolute” in her description of the US measure (Fisher 1992:5)

  3. See Bradshaw (2001a, b) and Saunders (1999) for the criticism against standard budget methodology, see also Saunders (2006, p. 160) for the reactions against budget standards in Australia.

  4. See also the historical development of budget standards in Australia in Saunders (2006), for UK Bradshaw (1993) and the development of poverty thresholds in USA (Fisher 1992)

  5. For different budget levels in Norway, see Borgeraas and Øybø (2003) and Borgeraas (2006).

  6. There exist standard budgets in several countries; see Fisher (2007) for an overview. For minimum income standards for different types of households, see Parker (1998, 2000).

  7. For an exemplary comparative analysis of child poverty using income, see Bradshaw (2007).

  8. For the arbitrariness and normative aspects of choice of income thresholds, see Bradshaw (2007).

  9. This is one of several ways to formulate the question related to the cost of children. For a different way of asking this question see Browning (1982).

  10. The argument is that it is difficult to identify consumption items exclusively used by children and hence one chooses to use adult goods, like alcohol, cigarettes and other goods typically consumed by adults (see Nelson 1993).

  11. NOK is Norwegian Kroner.

  12. See Cooter and Rappoport (1984) p. 507.

  13. It is important to notice that housing costs, tobacco and alcohol, education, health care, expensive and outfit extensive leisure activities, gift giving and major celebrations (e.g. weddings) are not included in the budget.

  14. NOK is the Norwegian currency (kroner).

  15. In purchasing parities poverty (PPP) $: 244 (2005)

  16. PPP $: 411 (2005)

  17. The arithmetic mean for the three age groups in Fig. 2 is 0,32.

  18. PPP $: 258 (2005)

  19. PPP $: 71 (2005)

  20. PPP $: 95 (2005)

  21. PPP $: 852 (2005)

  22. PPP $: 1145 (2005)

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Authors and Affiliations

  1. National Institute for Consumer Research, Sandakerveien 24C, P.O. Box 4682, Nydalen, 0405, Oslo, Norway

    Elling Borgeraas & Ragnhild Brusdal

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  1. Elling Borgeraas
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  2. Ragnhild Brusdal
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Correspondence to Elling Borgeraas.

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Borgeraas, E., Brusdal, R. The Costs of Children—A Comparison of Standard Budget and Income Approach. Child Ind Res 1, 372–386 (2008). https://doi.org/10.1007/s12187-008-9017-3

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