How did we get to the point that all child support laws obviously benefit one parent over the other financially? How can we fairly differentiate between what money the custodial parent is using on the child versus on themselves?
Page 47 in The law and Economics of Child Support by William S. Comanor quotes a study by Weiss and Willis (1993)that “attempts to quantify the welfare effects of divorce based on 3 divorce models, ‘Fully efficient ex ante agreement; ‘quasi efficient ‘regime; and ‘ex post Stakelberg equilibrium’.
The ‘Full efficient ex ante’ divorce model suggests a few things. First, a mutually agreed upon contract during the marriage that each parent gives equal shares to the child, which leads to a raise in the custodial parent’s income, giving incentive to divorce as the custodial parent is now free to decide how the money is spent. Secondly, that this allocation is not self-enforcing and requires a binding contract that is third party enforced. That enforcement would require constraining the way the custodial parent spends the money. Third and finally, to ensure the money is only spent on the child and fully enforce this contract, the suggestion of using a debit/credit card that is only to be used on the child. This is nearly impossible to enforce as some expenses are shared by both the child and the custodial parent (such as the home). And leaves both parents with the incentive to distort the data provided to the enforcing third party (page 51).
In the quasi-efficient model “settlement is the standard method used in most child support formulas. It simply determines an amount that the non-custodial parent will pay to the custodial parent with no constraints on what that money will be used for”. Interestingly, this method raises the custodial parent’s income, lowers the expenditures on the child from the custodial parent while raising the non-custodial parent’s consumption of income slightly. This makes this method the least beneficial or desirable to anyone other than the custodial parent.
The ‘ex post Stakelberg equilibrium’ allows the non-custodial parent to voluntarily decide to “donate” support to the custodial parent. Who would do that?
The main concern seems to always come back to the paying non-custodial parent wanting insurance that their money is benefitting the child and not the custodial parent. This is nearly impossible to do. Therefore, money used as a control mechanism on the part of both parties involved.
Page 55 states Lessons of divorce settlements. 1. “Perhaps its major positive lesson is that optimal allocations of resources to children requires cooperative behavior by both parents who share in the costs of the children.” 2. “The major negative lesson is that even an optimally designed and perfectly enforced child support policy will not generally hold the economic welfare of a child harmless in the event of divorce because of the adverse incentives created by both parents when they find themselves unable or unwilling to incorporate the other parent’s interest in the child’s welfare into their own spending decisions.”