Tag Archives: costs

Driving isn’t cheap: average car costs $9,100 a year

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Americans may love driving but it comes with a price. Here is a new cost estimate per car from AAA:

Owning a car will cost the average American driver more than $9,100 this year, the AAA has revealed.

The automotive club unveiled its annual study of driving costs on Tuesday and found that the average sedan owner will rack of $0.61 for every mile on the road. 

SUV drivers are in for even more pain in the wallet – $0.77 per mile or $11,600 a year.

The AAA estimates include nearly all expenses of taking to the road – from the cost of the car itself to gasoline, tires, insurance and repairs.

The data estimates that Americans drive 15,000 miles a year and drive a standard-size sedan like a Toyota Camry or Ford Fusion…

The survey assumes drivers buy a new car and keep it for five years.

So the figures change a bit depending on what kind of car it is and how old the car is but this is still pretty pricey. The common American cost-benefit analysis might look like this: a car gives me freedom, independence, and the ability to live more where I want to live (based on factors like housing prices and desired community) versus it costs a decent amount to drive. Actually, I suspect few people actually think about the total cost of driving as it tends to be experienced in increments: you fill up for gas here, pay insurance here, pay for repairs another time.

Rationalizing the economic costs of raising children

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Discovery News reports on two recent studies that look at how parents respond to information about how much it costs to raise children today:

New research suggests that people may exaggerate the perks of being parents to rationalize the financial costs of raising children.

Two studies, featured in the journal Psychological Science, measured more than 140 parents’ feelings after being presented with information regarding the hefty bill of raising a child. In the Northeast, raising one child to the age of 18 costs nearly $193,000, according to the research.

In one of the studies, researchers exposed half of parents to the overall costs of raising a child, while the other half received information about the costs as well as information suggesting that children care for and financially support aging parents later in life.

The team discovered that parents who were only exposed to the costs of parenthood (not the benefits) rationalized such costs by reporting a higher intrinsic value of being parents. The other group, which received information regarding the costs and benefits of parenthood, did not show an increase in rationalization…

These findings by no means suggest that parents do not enjoy parenthood or fail to love their children, but rather emphasize that parents are sometimes faced with conflicting feelings regarding the costs and benefits of having children.

It would be interesting to hear what it means to parents when they talk about “a higher intrinsic value of being parents.” Are there certain kinds of behaviors from children or experiences parents have with children where the economic costs end up outweighing “the intrinsic value”? How much can parents openly talk about the economic costs of children when it seems like a crass way to talk about their kids?

Dissenting voices: “There is no college cost crisis”

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So says Stanley Fish in his NYTimes review of economists Robert B. Archibald and David H. Feldman’s new book, “Why Does College Cost So Much?”:

The causes of the increase in college costs (an increase that has not, [Archibald and Feldman] contend, put college “out of reach”) are external; colleges are responding, as they must, to changes they cannot ignore and still provide a quality product. Chief among these is the change in the sophistication and cost of the technology that has at once transformed the setting of higher education and become one of the areas of knowledge higher education must impart to students.

This is an intriguing dissent from what Archibald and Feldman call the “new orthodoxy” or the “dysfunctionality narrative” of spiraling college costs.  As Fish himself opines:

As a dean who encountered the rising costs of personnel, laboratory equipment, security, compliance demands, information systems and much more every day, I knew [my own critiques written in 2003 were] basically right, but I am happy to ride (belatedly) on the coattails of people who really know what they’re talking about.

What do you think?  Is technology the major driver of increased costs in higher education?  Or are other, more relevant factors at work here?

Calculating the costs associated with a murder

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Whenever I see a researcher or lawyer put a dollar figure on a certain act, I’m always curious how they calculate this figure. Here is another example: a sociologist at Iowa State argues the total monetary cost of a single murder is just over $17 million.

Matt DeLisi, an ISU associate professor of sociology and director of the criminal justice program, led a team of five Iowa State graduate students on the study of 654 convicted and incarcerated murderers. Expanding upon earlier monetization estimates, they calculated the costs of five crimes — murder, rape, armed robbery, aggravated assault and burglary — in terms of the victim costs, criminal justice system costs, lost productivity estimates for both the victim and the criminal, and estimates on the public’s resulting willingness to pay to prevent future violence.

The sociologist argues this calculation was undertaken with crime prevention in mind:

“This area of research has really been run with prevention researchers,” he said. “That’s because what they find is that even if a prevention program is very expensive — and most of them are actually shockingly inexpensive — they’re still more cost effective than allowing these careers to unfold.”

Of course, focusing on prevention can be difficult and it may not eliminate all the crimes. But faced with the high costs of dealing with crimes after they are committed, some may take a longer look at preventative measures.

Colleges have debt too

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The New York Times has published an opinion piece by Mark C. Taylor, the chairman of the religion department at Columbia University, that puts a slightly different spin on the perennial college-costs-are-out-of-control argument.  He suggests that the institutions of higher education are themselves as indebted (and troubled) as their students:

There is a similarity between the debt crisis on Wall Street and what threatens higher education. Just as investors borrowed more and increased their leverage in volatile markets, many colleges and universities are borrowing more and betting on an expanding market in higher education at the precise moment their product is becoming affordable for fewer people.

It’s an interesting observation with potentially far-reaching implications.  There is always going to be demand for higher education, but it’s hard to see how a university like N.Y.U. can sustain debt levels higher than its endowment (“a staggering $2.22 billion debt with a relatively modest $2.2 billion endowment,” according to the article) in a world where “four years at a top-tier school will cost $330,000 in 2020, $525,000 in 2028 and $785,000 in 2035” if present trends continue.