Children As a Luxury Good

Children as a Luxury Good? Joseph Price November 19, 2004

This morning I was looking at a list on Forbes.com of the world’s billionaires. I was really interested to see that most of them were married and had at least two children. The purpose of this paper would be to look at the decision about staying married and having children as your income increases. This would be an extreme case of looking at the richest people in the world. I could then compare these rates to different incomes levels leading up to the billion mark. At what point do you feel as though you could afford more kids? It means that there is a trend in the US towards single child households among high income families. This is probably related to the desire for women to work. However, at some income level the marginal utility of the additional salary approaches zero and the wife feels as though they don’t need to work. This would be an interesting hypothesis to see at what income or wealth level families decide to switch back to one wage earner. It would also be interesting to look at the billionaire families and see how much time they spend working and what type of employment the wife does. What do women really enjoy doing most, when money is not a factor? This would have some implications for the empowerment or job utility issues. Hypothesis: The number of children is positively related the stability of the marriage and the ability of the wife to stay home. The cost of working is high for low income families because daycare exceeds the wage and the benefit of working is low for really high income families because of diminishing returns to wealth. Therefore, we would expect that the number of children people have to have a quadratic shape with respect to income/wealth.

Data: Forbes.com has a section of lists. The list of the world’s richest people includes: 1. Age 2. Schooling 3. Marriage, and children 4. Current occupation, how they got their money 5. Country.