a) Parents spend a greater proportion of the Child Benefit on their children than they do with other sources of income
b) Parents spend the same proportion of the Child Benefit on their children as they do with other sources of income
c) Parents spend a lower proportion of the Child Benefit on their children than they do with other sources of income
(This data is accurate for the years previous to the recent change: all parents got the whole Child Benefit regardless of income)
The answer is c!
Blow, Walker and Zhu (2012) found that parents spent less of the Child Benefit on their kids than they do with other sources of income. Does this mean that British parents are uncaring?
Well, it gets worse... Parents typically spend nearly half of the Child Benefit on alcohol!
Oh dear. That's what children drive you to.
- My Dad
But, in fairness, upon delving into the data Blow et al. discovered that parents have already insured their children's consumption out of primary sources of income. So an alternative explanation of the data is that parents don't count the Child Benefit when doing their budgeting and then treat it as an extra to be spent frivolously, safe in the knowledge that their children are cared for.
This is non-fungibility, but just not in the expected direction. The label 'Child Benefit' has a rather perverse effect.
So, what do you think, does this prove Child Benefit should be axed?
The question is whether the CB alters the spending patter of the parents. Of we were able to compare this with spending patterns of the couple pre-kids (as a control) we would be able to tell what the impact of CB is. If it merely covers the added children's things, then it is benefiting the children. If it is going to other things, then the question must be - is it benefiting the children? or the parents? and it this the purpose of CB?
ReplyDeleteI suspect the answer is that it doesn't cover the children costs completely, but may also go to some new expenses (since the parents' life is turned upside down), and this may include a beer/wine in the evening to relax.
So the question is: who is child benefit there to support? The children or the parents?
Very interesting point... And the answer is??
DeleteBeer is more fun than nappies
DeleteMind you - kids without nappies is not fun
DeleteIt probably depends on which side of the political divide you are. On the left (where child benefits really comes from) people would probably say they're for the kids. On the right, they would probably say for the parents. But that's a generalisation - we're talking emphases and percentages, not clear-cut distinctions. I'd say parents, but then I'm conservative...
DeleteTrue.
DeleteProbably true.
I'd say children, but then I would.
Interestingly, my mum always said that she saw Child Benefit as being for 'the important extras for your child' - new shoes, Christmas presents, trips out etc.
ReplyDeletePresumably from an individual point of view, meeting your children's basic needs is an extension of your own - I'd be hard pushed to divide my weekly shop into "mine" and "my child's", likewise the mortgage, energy bill or maintenance costs (repainting excepted).
Yeah you're right lots of goods are used on both children and adults. Blow et al. investigated 'assignable goods', that is, goods that are clearly for one or the other such as children's clothing. But there is a grey area when it comes to things like the heating bill...
Delete