In her recent New York Times Economix blog, UMass Amherst economics professor Nancy Folbre explains that we don’t really have an accurate calculation of the cost of caring for family (which includes elder care, child care, college education and so on) because we have not developed a Dependent Price Index.
Many social scientists, myself included, are struggling to quantify and analyze these trends. We need to develop a more systematic and unified approach.
Trends in real wages are typically adjusted for changes in the cost of living, as measured by the consumer price index. While this index needs improvement, no economist I know would ignore the need for it.
Trends in family income, however, are never adjusted for changes in the cost of caring for dependents, because we have not developed a comprehensive Dependent Price Index. The Department of Agriculture regularly estimates family expenditures on children, but ignores both the costs of college and the value of parental time.