The Economics of Babies - 2

Babies cost money! But does anyone care?

It appears that the world (wide web) is devoid of real economics on the economic impact of a baby entering the world. I may have to do some if I ever go back to Uni. In the mean time, I’ve done some ‘back of the envelope’ calculations on the impacts of a baby in the first year, and have been quite surprised by the outcomes.

I’ve found various websites stating the costs of having a baby. These costs ranged from $125,000 to around $400,000 for the first 18 years. With the first year anywhere up to $20,000.

I was astounded when I used the Babycentre cost calculator. I estimate that our baby will cost in the order of $8,000 over the first 12 months (inclusive of birthing and prenatal care). And that’s assuming zero food costs (breast feeding), no day care (saving thousands) and using re-useable nappies (saving around $1,000).

By applying the ABS methodology for Industry Value Added (IVA), I estimate the Baby Value Added impacts for our baby at some -60,000 to our family in the first year. The majority of these are due to loss of income.

The impacts on the economy as a whole are very different. Using the ABS IVA methodology again, I estimate the net impacts at $33,000. The difference is driven by the transfer of my the wife’s income to another employee and the boosts received in the retail, health and service sectors.

Not rigorous, but interesting all the same.

I was surprised by the outcomes of the calculations. I wonder at what financial cost I would stop having kids? What about you?

The Economics of Babies - 1

One little baby can have such a big impact on the economy. When I look around at the amount of things Anna and I have amassed so far, I am blown away by the impact one baby could have.

When I first started the baby making process I had a discussion with my Anna about how I think lots of people go over the top with babies, and that we should try to source as much second hand stuff as possible. The decision wasn't a fiscal one; as TINKs without a mortgage, cash was not an issue. Rather, it was about trying to rectify some of the wastage that comes from babies - taking some second hand stuff off people's hands. cheaper for us and saving them the trouble of storage or getting rid of the items.

I think it is fair to say I falied.

The whole baby miracle has been taken up by a consumerist nature. Having a baby, for many people, is no longer the deeply spritual and special gift that it once may have been. Rather, in the same way that weddings have gone before, it's now about showing off your prosperity. And I'm sad to say, it appears as though I have been caught up in it too.

The best pram, the timber cot, the whitest white bassinette, the rocking chair for mum, the rocker for baby, the baby backpack for dad, the baby bjorn, the baby bjorn rip-off, the sling, eco friendly nappies, eco unfriendly nappies, bottles, clothes, rugs, hooded towels, video cameras, swiss balls.... the list goes on.

Laying in bed this morning, I started to think, what is the economic impact of one baby? Is this an area of economic study that my insular mind has never entered?

In the absence of any real research on my behalf, here is some political hokeypokey on the impacts of the baby boom. I'll get to some baby economics over the next few posts.