Questionable Assumptions of New Mexico Child Support Statutes
The Commission Report contains similar language regarding Income Shares. There are two assumptions in this model that increase the amount of child support that should be noted. First, someone has assumed that the appropriate expenditure should be based upon an “intact household.” Some people choose to have children without ever having what is being called an “intact household.”
The second assumption is that after the dissolution of the intact household, the child should still receive the same amount of family resources she would have if the parties were together in their intact household. At first glance, that may sound like an all right proposition. Sure, why should the children suffer because the parents broke up, or never even had an “intact household.” On the other hand, our State statute is designed so that the total amount that would be spent on that child is in one home. Repeat, all the money that would be spent on a child in an intact home is transferred to one home after a divorce. Interpretation: Primary Physical Custody is the financial jackpot.
What is the Rothbarth estimator?
David Betson compiled a report on the economic data from the 1980 to 1986 Consumer Expenditure Survey. Betson argued that the Rothbarth estimator seemed to have the most “economic validity and plausibility” for calculating child support.
The estimator compares families with and without children. Assume there are two adults without children living together and they have a combined income of $3,000. This couple spends $300 a month on alcohol, tobacco, and adult clothing. The estimator then says find me a home with two adults and two children that spends $300 a month on alcohol, tobacco, and adult clothing. Suppose this second home has a monthly income of $4000. The $1,000 difference is then deemed to be the amount that is spent on two children for a family with a combined income of $4,000 and two children. Accordingly, a family with a combined income of $4,000 should be spending $1,000 on rearing their two children.
Equivalency Measures
The expenditure on the alcohol, tobacco and adult clothing is used as an equivalency measure. When the two homes spend the same amount on these goods, it is assumed that they are equally well off, or, put another way, have similar welfare. There are two recognized problems with this measure. First, the purchase of alcohol and tobacco may be inelastic. That is to say that the first thing some people purchase may be there cigarettes and beer. To put it another way, when money is tight there still is beer in the refrigerator. Robert Williams argues that there is not a statistical difference if you remove the tobacco and alcohol from his calculations. This however leads to another problem.
As an example, a typical couple with a combined annual income of $64,000 only spends $1,400 annually on adult clothing. This amount is approximately 2% of their annual income. This is a pretty small determinant to be using to calculate what the appropriate child support should be. This is to say, a minor change in adult clothing expense can have a major impact on what the appropriate child support level should be.
I also hope you noticed that child support in New Mexico is designed to ensure that the "custodial parent" has a similar level of welfare as when the parties were together. Repeat: you will pay enough in child support so that your ex-spouse has just as many cigarettes and beers as when you were married, which assumes you were married. About 45% of children are born out of wedlock these days.
I also think a good case can be made that this discussion is pretty far away from a determination of what a child needs to be happy and well adjusted.
- Theory Overview
- Theory Page 1 -Legislative Background
- Theory Page 2 -Statute Assumptions, Rothbarth Estimator and Equivalency Measures
- Theory Page 3 -Allocation of child support
- Theory Page 4 -Support for Allocation and Summary