A family invests in land, labor and capital to "produce" children.

The Cost of Raising Children

by Elaine Schwartz    •    Aug 19, 2014    •    1228 Views

The family is a factory.

First explained by Nobel Laureate Gary Becker, the family combines land, labor and capital for the shelter, clothing, food, education and all else it needs to “produce” children. Household members engage in a division of labor whereby some individuals participate in workplace market activities while others remain at home. The numbers even indicate that families can benefit from economies of scale because each additional child requires less of an investment.

Where are we going? To the land, labor and capital investments that produce children.

The Cost of “Producing” a Child

In 2013, an average American middle income family spent $245,340 on raising a child until age 18.

Average spending on a child

From: USDA


With the urban Northeast most expensive and rural areas the cheapest, the cost of raising a child depends on where you live.

Land, Labor and Capital to raise children in U.S.

From: Washington Post


Looking at how families allocate land, labor and capital to “produce” children, you can see below that housing receives the most resources and child care/education is #2.

Factor resource allocation items

From: USDA


Also, though, the investment in land, labor and capital changes with a child’s age.

Resource allocation by age for producing children


And, depending household income, the investment varies.

Land, Labor and Capital resource allocation by income


Finally, as with all economies of scale, the more children you have, the cheaper per child it gets. Single child families spend 25% more on their offspring than the average amount spent in 2-child homes. And, it gets better still. Households with 3 or more children spend 22% less on each child.

The Bottom Line: Family as a Factory

Our bottom line: If you think factory rather than family, a new image of your household emerges. That crib you just purchased is capital, a dad and mom are labor and the backyard is land. Together, your land, labor and capital compose the factor resources you use to “produce” children.


Sources and more...With considerable detail, the 2014 USDA report and through more of a summary, this Washington Post article  convey the cost of raising children during 2013.  

2 Responses to The Cost of Raising Children

  1. slebau says:

    excellent – presented in very interesting manner, I will share with my products

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