DISQUS

OpenMarket.org: The Economics of Divorce

  • HansBader · 1 year ago
    In the above post, when I said,

    "In states like Massachusetts, most of the income in a custodial parent’s household is typically child support,"

    I should have said "much" rather than "most," as in:

    "In states like Massachusetts, MUCH of the income in a custodial parent’s household is typically child support."
  • HansBader · 1 year ago
    Child support levels actually tend to exceed the cost of raising children. Above I discussed the 2000 JLARC study of Virginia’s child support laws, which was based on the blatantly false premise that a Basic Child Support Schedule, such as Virginia’s, is supposed to cover all the costs of raising children. See JLARC, Technical Report: The Costs of Raising Children (Senate Doc. No. 9) (2000), pg. III, Summary (including all “health care” and “child care” costs in the costs to be covered by the Basic Child Support Schedule).

    Virginia law, by contrast, says that the basic child support obligation is not itself supposed to cover all child rearing costs, since some child-rearing costs, including but not limited to “health care coverage,” are to be awarded on top of it. See Va. Code § 20-108.2 (E) & (E) (additional child support obligations covering “costs for health care coverage,” day care expenses, and “extraordinary medical and dental expenses” “shall be added to the basic child support obligation”).

    The JLARC Report's failure to exclude health insurance and day care costs from consideration in reviewing the adequacy of the Basic Child Support Schedule was a major error, especially for poor households, for whom these costs awarded on top of the child support schedule can be bigger than the schedule itself. See Herring v. Herring, 33 Va. App. 281, 531 S.E.2d 923 (2000) (of the $1498 total child support obligation, 55 percent ($823) was from day care ($667) and children’s health insurance ($154) combined, and only 45 percent ($675) was from the child support schedule). Effectively, the JLARC study would require non-custodial parents to pay health insurance and day care costs twice: once as part of the costs included in the child support schedule, and a second time as an extra statutory add-on for health insurance and day care (see Va. Code § 20-108.2(D)&(E)). Such double-counting is no justification for increasing the child support schedule.

    That same double-counting occured in a less egregious form in subsequent Virginia bills to increase the child support guidelines, such as 2006 HB 733 and SB 220, which failed to exclude health insurance costs (which rise faster than the general inflation rate), and day care costs from consideration in making inflation adjustments to the Basic Child Support Schedule.

    Speaking of inflation, child support guidelines in most states, such as Virginia, already contain built-in inflation adjusters that are adequate for all but the wealthiest households and excessive for certain poor households. For example, Virginia’s Basic Child Support Schedule is self-adjusting for inflation, for two reasons: (1) it increases child support awards as the parents' income increases, and income rises with inflation; and (2) inflation is disproportionately accounted for by the categories of expenses not included in the child support schedule but awarded on top of it (such as medical expenses and health insurance, see Bureau of Labor Statistics, Table 1A, Consumer Price Index for All Urban Consumers, available at http://www.bls.gov/cpi/cpid04av.pdf).
  • HansBader · 1 year ago
    A recent article by Dr. Stephen Baskerville suggests that the economic losses from divorce for non-custodial parents, and divorced husbands, are generally quite large:

    "Contrary to highly sensationalized but now discredited statistics on the alleged financial hardships of divorce to women, economic researchers have concluded recently
    that 'it is the non-custodial parent, usually the father, who suffers the most [following divorce]. In every case and for every income, according to our analyses, the payer of child support is never able to cover household expenditures if paying child support at guideline levels' (Folse and Varela-Alvarez 2002, 273). The study’s authors add, 'These simulations may actually under-represent the circumstances of non-custodial parents because they do not include expenditures for their children beyond child support' (285)."

    Dr. Stephen Baskerville, "From Welfare State to Police State," Independent Review, Volume 12, No. 3, pp. 401-422 (2008), at page 407, quoting Kimberly Folse & Hugo Varela-Alvarez, "Long-Run Consequences of Child Support Enforcement for the Middle Class," Journal of Socio-Economics, Volume 31, No. 3, pp. 273-286 (2002), at pages 273 & 285.

    Dr. Baskerville was formerly at Howard University and now is at Patrick Henry College.

    His article also contains an interesting discussion of the evolution, flaws, and perverse incentives contained in federal child-support regulations.

    He has also written an interesting and thought-provoking book called "Taken Into Custody." It provides a fascinating look into contemporary child custody, divorce, and family law.
  • Cash Advances · 1 year ago
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