Investing in Children: Changes in Parental Spending on Children, 1972–2007

Abstract

Parental spending on children is often presumed to be one of the main ways that parents invest in children and a main reason why children from wealthier households are advantaged. Yet, although research has tracked changes in the other main form of parental investment—namely, time—there is little research on spending. We use data from the Consumer Expenditure Survey to examine how spending changed from the early 1970s to the late 2000s, focusing particularly on inequality in parental investment in children. Parental spending increased, as did inequality of investment. We also investigate shifts in the composition of spending and linkages to children’s characteristics. Investment in male and female children changed substantially: households with only female children spent significantly less than parents in households with only male children in the early 1970s; but by the 1990s, spending had equalized; and by the late 2000s, girls appeared to enjoy an advantage. Finally, the shape of parental investment over the course of children’s lives changed. Prior to the 1990s, parents spent most on children in their teen years. After the 1990s, however, spending was greatest when children were under the age of 6 and in their mid-20s.

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Notes

  1. 1.

    Becker (1975:9) defined investment in human capital as any “activities that influence future monetary and psychic income by increasing the resources in people,” whereas Bourdieu (1984) referred to cultural capital as dispositions and cultural competences, particularly in areas of legitimate taste, which may play a role in career and school advancement. For this article, we are agnostic about the differences but note that parents likely are interested in some combination of these.

  2. 2.

    An alternative explanation is that parental commitment to investment has driven up the price of college, as demand has risen and supply has not kept pace. Whether this is the case or instead costs have gone up independently and parents feel compelled to pay, we argue that payment reflects a commitment by parents to invest in their college-age children.

  3. 3.

    Additional analysis suggests that the choice of intermediate years does not substantially affect results.

  4. 4.

    A small portion of households reported the presence of children in some quarters but not others. In these cases, we use data only when children are reported in the home.

  5. 5.

    One important question about educational expenses is the extent to which children go to college versus the extent to which parents are willing to pay college expenses. Our data show only whether expenditure occurred, so we have no practical way of determining whether spending changes because of attendance or because of parental support given attendance. We suspect that both play a role in changing expenditures, but we are unable to differentiate the influence of each in this analysis.

  6. 6.

    The CPI-U-RS is a new series incorporating methodological improvements, such as the use of rental equivalence for homeowner costs and quality adjustments for prices (Stewart and Reed 1999).

  7. 7.

    For figures using household equivalized income, decile cut points also use equivalized income.

  8. 8.

    For the lowest income decile, some of the decline in income is due to the BLS practice of bottom-coding income in the CES data in 1972–1973, which was abandoned at later time points. Roughly 5 % of cases had their income recoded to protect confidentiality, inflating incomes slightly.

  9. 9.

    Average household income declined in these data after 1972–1973 and did not rebound even by the early 1990s. Although we are concerned that differences in coding and reporting of income lead to this result, children experienced increases in poverty over the course of the 1980s and 1990s (Levy 1998), consistent with declining incomes among households with children.

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Acknowledgments

The authors would like to thank Sheldon Danziger, Greg Duncan, Paula England, Anne Gauthier, Luz Marina Arias, two anonymous reviewers, and participants in a seminar at the Juan March Institute for their helpful comments and suggestions.

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Correspondence to Sabino Kornrich.

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Kornrich, S., Furstenberg, F. Investing in Children: Changes in Parental Spending on Children, 1972–2007. Demography 50, 1–23 (2013). https://doi.org/10.1007/s13524-012-0146-4

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Keywords

  • Children
  • Human capital
  • Inequality
  • Consumption