Chapter 6 The cost of children and the use of demographic variables in consumer demand

Publisher Summary This chapter describes various methods on the elusive concept of the cost of children. At starvation level, there does not seem to be a specific cost level that can be identified as the costs. Traditional estimates define material needs at a minimum level, which are priced, and add up to cost. The choice of these inputs, especially for nonfood, is arbitrary. The imputation of joint costs and scale effects is an unsolved problem. The more sophisticated method based on food shares tends to overestimate the cost ratios, because it does not account for fixed costs. The “adult goods” method tends to underestimate for similar reasons. The scales based on demand behavior, estimated on complete-demand systems, seem more hopeful, but Pollak and Wales state that demand behavior does not give a valuable result either. Subjective estimators seem to overcome these difficulties. They are not based on any economic modeling, but just on the registration of opinions, where it is postulated that verbal labels have a common meaning for all respondents.