In the world of economics, its theory and applications revolve around the

understanding of business and the free market, competition, supply and demand. It
might not seem that economics can be applied to the everyday life of an individual,
but it actually does. Most of my married life has been spent raising children at
home, the opportunity cost of a career. With the help of some statistics in the cost
of raising children, we will examine how economics fits into the decision of being a
stay at home mother.
To begin with, one first must examine the utility of the decision to stay home
and its marginal benefits and costs. There has been a lot of research done on such a
topic. From a psychological and physical standpoint, the benefits for the children are
that they have the consistent presence of a parent. There is dependability, sense of
security, consistency in discipline and leadership from the parent, opportunity to
experience all the milestones with the parent and build a more intimate
relationship. From a parental standpoint the self- interest is met as they get to
experience all the milestones of the child, guide them through their triumphs and
struggles, assist with school/activities and avoid the downs of daycare. Tax credits
which are a type of subsidy from the government are helpful and the assistance of
children in maintaining and running a home are also a benefit. To clarify, the
downside of daycare would be things such as cost which can average $500 per child
a month, contagious and spreading sickness and the emotional effects and risks of
child being cared for by another who is not as invested or share in all the same
values and expectations. We have mentioned the benefits of an individual and
family, but we must also include the effects on society when there is stable family
units vs. those that arent and a recent example is the epidemic we see in inner
cities and the violence, drugs, uneducated children as usually a single parent
struggles to provide all the needs with scarce resources, but with a price and their
absence. This could be a type of supply market failure. There is huge costs in trying
to control or eliminate these negative externalities. In the end, despite its taxing 24
hour work, there is utility in staying at home with your children. The benefits
outweigh the costs.
So what are the costs? First and most obvious is foregone employment and
income to be had. The type of income to be had depends on the experience and
education of the mother. In my case well use a conservative number of $30,000
year based on jobs that I have experience in that I could work until my education is
complete. Then there is the cost of the product which is our children. It is said that
per child in a lifetime the cost to raise them is $245,000. Total costs for 5 children is
$1,225,000.These are the explicit costs of staying home. Implicit costs are
previously mentioned regarding the outcome of those who dont have the benefit of
a stay at home parent. The loss of income during a childs life which well set at 18
years, is $540,000. Economically it is a loss, but is it? To pay for daycare for the first
14 years is $7,000 per child. In my instance I have 5 so it would be $35000. So the
greater the output the greater the labor costs. To this point lets summarize some
numbers for a clear picture. The cost of raising my children in their 18 years is
$1,225,000. Income foregone over that time frame is $685,000 which well call an

economic loss at a negative -$540,000. However, if we take $405,000 off for saved
expense of daycare since I stay home with the children for 18 years; in the 245k
lifetime figure, not my conservative 14 years, the loss decreases to$ 135,000. The
U.S. Department of Agriculture released this figure in 2013. There is inflation to
consider in the costs of living and the slow trailing wage rate increases that do not
compensate for inflation. In it there was implied costs of $1380 a month daycare
costs for one child in the big city. That is at the higher end so I chose to manipulate
it according to local demand and supply. There is misc. costs included in their
figures which are cell phones, haircuts etc. All of these costs based on an average
variable costs that would decrease the gap by several more thousand over an 18
years span. $9600 for 4 years of phone use, haircuts average of $600 year for 5
children gives us $124,800. Fixed costs would encompass the food, diapers,
clothing, medical care, education. So in this average cost of raising a child it is
difficult to decipher between what is fixed and what is variable to break down actual
numbers and have a portfolio of projections and areas to cut in cost, but we can
theorize and give a basic big picture of the business sense of at home parenting.
Another consideration of costs that turn to savings and reduces the gap in the
long run is advances in technology and the increase in resources that one can utilize
for the benefit of raising children. There are many freebie activities, education
opportunities, community programs that can assist in the costs which reduce the
explicit costs. In my instance I had all girls and around the same time of year so
where clothing was concerned Ive saved an enormous amount of money with hand
me downs. I chose not to give phones to my kids till the age of 16 in which some
parents require them to pay for their own services. I garden in the summer and save
some money on food. Some of it I freeze for the remainder of the year. The list of
savings is there and available and reduces the loss of profit for wage earnings.
Theoretically speaking, looking at the average costs and pure numbers of
raising a child and the investment made by loss of income, the business of staying
home looks to be unprofitable. However, in real world application a stay at home
mother is savvy with her expenses by cutting corners with coupon cutting, hand me
downs, utilizing community and school programs for activities and benefits. The
cost of a maid service for one who works out of the home could be eliminated as the
stay at home mom performs these duties. Allocation of resources can be efficient
and result in economic growth and there are many angles to which a stay at home
mom can perform these cut costs. Positive externalities were mentioned before, but
in that I would include that if you raise a child to be a good, responsible citizen you
are contributing to the contributions of an economically thriving society which relies
on those individuals for taxes, greater and more diverse workforce, supporting older
generation economically and thereby increasing marginal productivity. This has
enormous impact on society and its supply and demand. Of course, as in all
economics there is a point of equilibrium and here there is no exception. There is a
profit maximization point. In the end, economically speaking? The business of a stay
at home mother is a normal profitable one with a high total utility. Ask any 80 year
old who has grown children and posterity and ask a child whose mother was able to
stay home with them.