ATM Book Club Week 7 (Chapter 6)

I’m running an informal book club on the blog devoted to All the Money in the World. You can join at any time; there are links to previous weeks at the bottom of this post.

This week we’re discussing Chapter 6, “The Marginal Cost of Children.” If you haven’t read the book, or want a refresher, you can read my USA Today column on a similar topic, “Hey Parents, the Third Kid’s a Bargain.” The point of that column is that the marginal cost of children falls as you add more children. I think the psychic cost falls too, as I wrote in a recent NY Times Motherlode piece on “Zone Defense.” And over at Free Range Kids, I blogged that one’s per-child anxiety level may fall too.

But the chapter itself goes beyond that to ask a different question: does it matter how much money you spend on each child? Does spending more on a child (and on certain things) give the child a leg up in life? Can our money help ensure a child’s later success or happiness?

Judging by the way many parents spend money, one would think the answer is yes. There are the lessons and sports teams, the tutoring, perhaps private schools. We started college funds for all our kids. In choosing childcare options, I’ve always been very cognizant of my kids being stimulated (and enjoying themselves), in addition to the usual matters of safety, convenience, etc. We’d certainly like to be able to give our kids lots of experiences. I’m taking the week off (so you might not see me much in the comments) in part to help create some experiences which I’ll probably write about next week. 

But does it matter? My husband has told me I should write one of two semi-related books. The first is called (with a nod to Jim Collins) Good to Great Kids. What can parents do to take reasonably intelligent, diligent children, and turn them into superstars? (Based on research and studies, of course). And the second book would be on what parents should tell their kids to study and professions to go into to have a good life in the next few decades.

I find myself a bit wary of both, though. First, I have been thinking a lot lately about Bryan Caplan’s book Selfish Reasons to Have More Kids. That’s a bad title, but the gist is that, combing through decades of twin and adoption studies, it’s pretty apparent that genetics is responsible for a lot more than parenting. Smart parents have smart kids and think it’s because they’re helping with the homework and reading to their kids, but really the kids would have done pretty well, in general, even if you’d slacked on the homework-monitoring. This argument can’t be reduced to the absurd — you can’t lock your kid in the closet and have him do OK — but within the norms of middle class parenting, we have a lot less effect, as parents, than we’d like to believe. I’m sure people have anecdotes to counter this, but anecdotes aren’t evidence, even if the human brain likes to think they are.

As for what children should study, probably math and engineering are good ideas, but not everyone is most drawn to those subjects. I think I could have done fine in STEM fields, but I prefer to write about such thing. Beyond that, predicting what will be the hot careers of the future is a fool’s game. Twenty years ago, pharma was great. Now it’s falling apart. I think the best thing you can tell kids is to learn to be entrepreneurial. If you’re in love with a field, go into it. If you’re not, choose a few you like and go into the highest paying one. As for what college to attend, I’m really glad I went to my expensive one, but there are plenty of expensive schools that don’t necessarily give you a ticket to success later on.

But I’m curious what people think. Do you think you can invest money strategically in helping your children do better in life? How? Are you doing anything with your children that you think will give them an edge later on?

Previous weeks:

ATM Book Club Week 1 (intro)

ATM Book Club Week 2 (Chapter 1)

ATM Book Club Week 3 (Chapter 2)

ATM Book Club Week 4 (Chapter 3)

ATM Book Club Week 5 (Chapter 4)

ATM Book Club Week 6 (Chapter 5)


photo courtesy flickr user anyjazz65


11 thoughts on “ATM Book Club Week 7 (Chapter 6)

  1. I think it is like a lot of things- lack of money can do a lot of harm, but once you hit a certain threshold, the return on spending more money probably drops fast.

    The problem is, I think figuring out what that threshold his would be very hard.

    The estimates I’ve seen (from Lise Eliot, I think) are that IQ is roughly 50-50 genetics and environment. As you say, it is very hard to tease apart.

  2. I think this is a threshold function, like nutrition’s affect on height. Genetics sets a potential limit that can be achieved with adequate parenting, just as genetics sets a potential height that can be achieved with adequate nutrition. My mom is a reading specialist, and almost no children with supportive families are illiterate, because their parents spend the time to read, help them learn to read, do computer programs for dyslexia, or whatever is needed. The DEGREE to which they read well varies. The kids who struggle enormously are almost all low-IQ children with low-IQ parents. (Low IQ children who are adopted generally have very supportive parents and approach average achievement.)

    I think small amounts of extra money are essential- meet medical expenses, have tests for learning disabilities and vision if needed, etc. Next come the middle class “nice to haves”- swimming lessons, music lessons, perhaps more serious athletics or art lessons. These are what add up fast, in time and money (including gas for those of us who are rural), for multiple kids. Schooling costs are significant, either in the form of a home in a good school district, private school, or time to homeschool.

    I would REALLY like to see a study of how many research PhD’s/physicians/other accomplished professionals had two full-time working parents and spent the bulk of their time in a national average-level daycare or public school. I suspect the percentage is very low.

  3. Also- the more capable the child is, the more money helps. A child capable of speaking 5 languages (Maria Agnesi?) and doing advanced math will benefit more than the average child from 5 tutors.

  4. For us, with one stillbirth and one child with a birth defect, the risk of a child with significant challenges discourages an addition to the family. While the average (healthy) child may be very good, the challenges to a large family of a severely disabled child are significant. As a friend put it, “Quit while you’re ahead.”

  5. I loved Bryan Caplan’s book. It does make parenting a little less serious and more fun to focus more on the quality of our relationship with our kids than any one decision we make “making” or “breaking” their success in the future.

    I believe that by providing my kids with several siblings, they’re getting more opportunity to learn powerful social skills. Of course, I won’t be able to send all 7 of them to college, but they can pay their own way. They’ll appreciate their education more, I believe. If they choose to go that route. No matter what they choose to do to earn a living as adults, they’ll have to deal with other people, and many say this is the most important factor in employment success.

    1. @Carrie- I am one of three, but we’re all spread out quite a bit (5-6 years apart in each direction) so we weren’t that close growing up. So it’s amazing to me to see the interactions between my own three children, who are within 4.5 years of each other. Stick the older two in a hotel tub together and they invent a game with the soap and shampoo bottles. They are rarely bored. There’s fighting, of course, in a way I don’t remember there being with my siblings, but there’s also the stimulation of having a constant playmate.

  6. I think this is interesting… and the decision to have more kids does depend on how much you can either afford to provide all this stuff for that many or in how important all that stuff really is… when or if to take ballet or art lessons? for young kids it seems exercise is as beneficial as sports but at a certain age with more than one or 2 you might have to make hard choices.. there are also the lifestyle choices… once they are out of diapers we could all go skiing.. I could get that fireplace I’ve always wanted.. read a book without having it on the weekend to do list… etc… then again once you can read a book like that or go skiing.. they become more like adults and less like kids.. so that baby smell and fascination with the 3rd and fourth and more kids.. b/c they are little for so little…

    1. @Cara- one of the points I make in that chapter with sports is that the fascination with team sports is not necessarily great from a societal perspective. We’d probably be better off if more kids spent time learning sports/fitness activities they could do their whole lives individually — running, biking, swimming, yoga, weight lifting — vs. team sports like lacrosse or football which you are unlikely to do often enough as an adult to stay in shape. The good news about those individual sports is that at least running is relatively cheap. Biking can be cheap if you buy used bikes and pass them down between kids. Swimming requires a pool (so probably a gym or Y membership) but not much beyond that.

  7. I’m not sure about the value/necessity of all the extracurriculars (though they sure are fun!!) but I *do* think paying for kids’ college gives them a significant leg up, because then they don’t have to spend many hours working to pay for everything (so expensive!!).

    I think nicoleandmaggie have a post about this and how they have some students working full time while trying to study, who are having a hard time keeping up.

    That’s something my husband and I have committed to – being able to pay fully for college for all of our kids. Which is probably why we’ll only have 2 🙂

    Our parents did this for us, and that enabled us to go to a highly selective private university, and we didn’t have to work hours and hours during school to pay for it. Obviously, we are very, very lucky, but I do think it contributed significantly to where we are today.

    1. @ARC – I too want to be able to pay for college for my kids, and they all have college funds already for precisely this reason (though who even knows what college will look like or cost 18 years from now!) I’m grateful that my parents and some other relatives enabled me to go to an expensive school as well. On the other hand, my husband and his three siblings all went to Texas A&M, basically for free (their father taught there, plus as good, in-state students they got scholarships). They’re all highly successful people. I think that one bit of advice I’d give my kids is to go to a very, very selective school (like top 10) or else go to the flagship state school and do the honors college.

  8. Reading this chapter now. I even question if smart parents = smart kids. I know smart people with average parents and vice versa. And I also think intelligence is not easily measurable and only one factor in success.

    Anyway, I guess many people do think smart parents = smart kids and that’s why so many parents I know go on and on about the brilliance of their offsprings. They all secretly think it’s a reflection of themselves! Of course this often goes sour if the kid doesn’t become highly successful later in life. I know some older parents who lie about their kids “to save face”.

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