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Cost and quality factors in parents' choice of after-school child care.

Cost and Quality Factors in Parents' Choice of After-School Child Care

What are parents to do when their child is dismissed from school, but their schedules do not allow them to be at home when the child arrives? Ostensibly, the problem is no different from any other consumer demand situation: parents can purchase the quantity and quality combination of after-school child care that yields them the maximum net benefit give their available resources (Maynes 1976). In practice, the after-school child care choice decision has unique aspects that render it worthy of special consideration.

In the first place a virtually costless alternative exists to market-purchased services in the form of the self care, or "latchkey," arrangement. Children can mind themselves until a parent comes home (Behan 1985; Garbarino 1981; Pecoraro 1984; Rooney 1983). In the second place, the inevitable cost-quality tradeoff, made necessary when better quality service can only be obtained at increased cost, has a special poignancy where child welfare is concerned (McMurray and Kazanjian 1982; McNairy 1984; Turner and Smith 1983). These factors, conceived in the light of a general and apparently worsening excess demand situation in the market for after-school child care (Bruno 1987), warrant careful modeling and analysis of the child care choice decision.

Possibly due to the aforementioned primal concern with the child welfare aspects of the situation, past research into parents' choice of after-school child care has tended to concentrate on the quality aspects of the choice. The focus of research has generally been comparison of alternative arrangements in terms of their impact on the child's social development or physical well being. In a recent paper, Walden (1989) has provided convincing evidence that high quality child care goes hand-in-hand with high cost. Other sojourns into the cost-quality interface have been few (see More 1980; Owens 1984; Rodes 1975; Powell and Widdows 1987; Rothschild 1978).

The lack of consideration of how cost and quality concerns interact in the parent's after-school child care decision is not due to any paucity of data on the cost side. As recent issues of the Family Economics Review have shown, a wealth of information exists on cost from several major data series (Schwenk 1986). Rather, an interdisciplinary approach to the subject is missing. Researchers on after-school child care have tended to approach the subject from their narrow perspectives of child care specialist, family economist, or preschool educator. The purpose of the present communication is to propose a model and related data gathering exercise that bridges these disciplines.

A MODEL OF AFTER-SCHOOL CHILD CARE CHOICE

Following Becker (1981), parents can be hypothesized to choose the cost-quality combination of child cate that maximizes the following utility (u) function:

U = u(C, q, Z1, ... Zm)

where C is the amount of child care consumed, q is the quality of child care, and Z1, ... Zm are quantities of other goods consumed.

Parents are constrained in their choice by family resources available. If pcq is the cost of a unit of child care of quality level q, then the budget constraint facing the family can be represented as:

Y = pcqC + pz1Z1 + ... + pzmZ

where Y is family resources.

Maximizing utility subject to the constraint and solving for equilibrium conditions gives demand functions in terms of market prices of the general form:(1)

D = d(pcq, pz, Y)

where D can represent demand for child care quantity and quality.

Application of the model is not quite so straightforward as the theory behind it. For one thing, the price and quality of child care and family resource variables are complex and multifaceted. For another, the market data on price and quality are not as readily observable by parents as, say, those of a regularly purchased food item. The question of data measurement is considered in the next section. Subsequently, the modification of the demand model to incorporate search factors is discussed.

When the need for after-school child care is perceived by parents, they will assess their stock of knowledge on the cost and quality of after-school child care. They then face a preliminary decision. Is there enough information available to make a final decision? If the answer is in the affirmative, the parents then decide which of the known options they will choose.

If parents judge that their initial stock of information is not sufficient to make a final decision, they must then conduct an additional information search. In accordance with the principles of search theory (Ratchford, 1980), the search will continue as long as parents expect the benefits of that search to outweigh the costs. The search function can be represented in reduced form as follows:

S = [E(pc1/pc0), E(q1/q0), SC]

where E(pc1/pc0)is the expected return to price search in terms of the hoped for improvement of price information after search (p1) over that before (p0), E(q1/q0) is expected return to search for information on quality, and SC is search cost. It should be mentioned that additional information searches may turn up new (that is, previously unknown) child care options, in which case the choice set facing the parents (q above) is expanded.

In terms of the child care choice model, the complications represented by the need for a search can be incorporated by making the decision process sequential. Figure 1 illustrates the process.

In Figure 1, the parents' choice of after-school child care is modeled as the end result of an evaluation of information about cost and quality characteristics of known options. The process commences at the time the need for after-school child care is perceived. If parents feel that the known information is enough to enable them to make a decision, they will proceed to do so, as represented by the horizontal arrows going from left to right in Figure 1. Should they feel that a search for additional information is warranted, then the search will take place, and a choice follow, as represented by the diversion between assessment of information and choice in Figure 1.

The socioeconomic status of parents will play a role in the assessment of information about child care options. For example, cost will be assessed in the light of family resources, as the constraint equation implies. The influence of socioeconomic status is represented by contributory vertical arrows in Figure 1.

Finally, the decision process may not terminate when the choice of a care option is made. Once a program of child care has commenced, experience with the program might generate information that was not considered in the original decision. The new inforamtion may force a reassessment of the available options and result in an alternative option being selected. For example, a sitter may have personality characteristics that disturb the child, and the parents may decide to hire a different sitter or switch to a nonsitter arrangement. This prospect is represented by the broken arrow labeled "feedback" in Figure 1.

Applying the Model to Child Care Choice

They are two key data requirements for the model to realistic choice situations. First, the elements of cost and quality that determine parents' choices need to be identified. Second, the information search decision needs to be circumscribed. With these elements in place, researchers can proceed to assess the relative importance of cost and quality elements in observed choice decisions.

Cost can be divided into three categories. The first is direct money cost of known options. This would normally be program fees or babysitter wages. Second is time or money that may be required for incidentals, such as meal preparation or fees for outings. Third is time or money associated with transportation of child to and from the chosen option. Costs may or may not be incurred in each of the categories by any available child care option.

Quality can be divided into four categories. First are program factors, which are characteristics of the program being considered, such as educational content or recreational facilities. Second are child care factors, or factors relating to the physical quality of facilities offered, such as safety or cleanliness. Third are neighborhood factors, such as incidence of crime. These factors are external to the child care option but comprise its environment. Fourth are child factors, which represent the fitness of the child for the option, and would include such things as parents' perception of the child's maturity and the child's own preferences. PArents may not consider all four categories or even the same items in any one category when making their finald decision, but for the purpose of application of the model, all are regarded as potentially important to the decision process.

The final choice in Figure 1 is influenced by the extent of the information search that precedes it. Parents can opt to base their choice on their prior stock of information or postpose the choice until they have acquired additional information. A critical consideration here is that information is an economic good: acquisition of additional information requires expenditure of time or money on behalf of parents. Furthermore, the cost of the marginal piece of information can be expected to increase as more information is sought. This is because parents will likely exhaust cheaper sources of information, such as a phone call to a friend, before turning to more expensive sources, such as placing an advertisement in the local paper. In the final analysis, obtaining the information required to make the optimal decision on after-school child care may be so arduous and costly a process that the information search may be cut off before the best affordable program is identified.

IMPLEMENTATION: PARENTAL CHOICE OF AFTER-SCHOOL CHILD CARE

IN A MEDIUM SIZE MIDWESTERN COMMUNITY

With the elements of the model specified and a taxonomy of cost and quality in place, the next step is to devise a survey instrument to investigate the relation between cost and quality in parents' choice of after-school child care. An experiment to develop an instrument that could be used to implement a test of the model is described. The instrument was validated in a nonprobability sample drawn from industrial settings and center-based programs in a midwestern community of about 100,000 residents.

The survey instrument commenced with sociodemographics, including questions on family size and members' ages and income and occupation of parents. General questions on current child care arrangements followed, with special care takne to probe the extent of the information search involved and the relative weight given to cost and quality factors in the choice. Following this, the questionnaire branched to pursue the choice decision further by three possible broad alternative forms of child care, namely self care, sitter, and formal program.

When administering the questionnaire, personal interviews were preferred to a mail or telephone survey. In choosing a personal interview approach, richness of detail is traded off against numbers of returns in that interviews are costly in terms of research resources. An implication for data analysis exists: the study yielded 41 usable cases, a number that does not allow use of some of the more sophisticated techniques of multivariate analysis.

The sample of 41 was obtained through responses to notice posted at the sites chosen for study. The sample consisted of 38 mothers and 3 fathers (not related). The mean age of parent was 34.6 years, all were white, and 22 were single parents. As regards choice of child care arrangement in the sample, 11 had children in a self care arrangement, 16 used a sitter, and 14 sent their children to a centerbased program. While the sample was nonprobability one, its sociodemographic profile was similar to the parent community.

Findings

The key question relating to the relative importance of cost and quality in the choice of child care arrangement was an open-ended one asking what influenced parents most in the choice of their present arrangement. The items identified as factors by parents fell primarily into four of the categories in the taxonomy above, of which two (time and distance involved in transport) were cost factors and two (quality of program and child factors) were quality factors. Cost factors were uppermost in the choices of 15 (37 percent) of the parents sampled; the remaining 63 percent, therefore, felt that quality factors were of prime importance. Of the 15 percents who claimed cost factors to be of prime importance, 8 used a sitter arrangement.

That quality factors outweighed cost factors in choice of child care arrangement was confirmed by a round of questions that asked parents to rank on a 1 to 5 scale (5 = very important) the importance of certain items in the child care decision. Results are shown in Table 1. Altogether, nine items were rated by parents. Quality items, such as educational content and safety, generally scored high, while the two cost-related items (cost and convenience) were among the three lowest scoring items.

The notion that cost may be relatively more important to families with lower incomes is supported by a negative relationship between income and parents' rating of the importance of cost. Based on probability levels, the relationship was slightly stronger for latchkey parents (r " - .325, p = .053) than othrs (r = - .493, p = .107). These relationships emerged despite the fact that, as Table 2 shows, the actual costs of formal programs were within the margin of affordability of many parents.

Considering the information search process that accompanied the child care choice, the time involved in the search was fairly short for most parents. Indeed, 74 percent of parents reported spending less than an hour in their search. In response to further questions about information search, 22 parents (31 percent) indicated that they faced limitations in their abilities to conduct search. Cost, time, and transportation constraints accounted for the majority of the limitations. In addition, the quick search was not necessarily supplemented by later searches after the child had commenced a specific program. Only three parents claimed to have searched for an alternative to their existing child care facility.

While parents' search time for after-school child care was short, the actual stock of information drawn upon may have been large in that information may be built up over many years of living in a given location, and there are other people to turn to for help. The reported search would then only represent the time necessary to finalize the decision. Note, however, that short time searches were reported even by people who had no long history of residence in the community, and nearly half (46 percent) of the sample indicated that they received no assistance from other people or institutions.

CLOSING REMARKS

The objective of this study was to develop a model of the relationship between cost and quality aspects of the demand for after-school child care and to field test an instrument that would enable the model to be applied. The need for such a model is underscored by the prominence of child care in current public policy debate. The developed model is summarized in Figure 1 above.

A field test in a sample of 41 persons in a medium size midwestern town showed that the model can be applied to yield instructive results. Although a sample of the size used in the field test does not allow generalizations to be made, the results were of some interest on a local level and illustrated the potential power of the instrument for eliciting information relevant to policy making.

On the local level, the study produced some provocative comments about the nature of the after-school child care choice. In particular, questions were raised about the apparent highly abbreviated information search carried out by parents prior to making their child care choice. At the very least, the results call for further study of this phenomenon, given the importance of child care in human development. While quality factors are shown to dominate cost factors in parents' decision process, data indicate that cost is still an important factor and becomes more critical as parents financial resources diminish.

The results of the field test warrant an effort to extend the survey to the development of a large data base that would enable more detailed analysis of the decision to be made. For example, one could examine whether single parents considered different factors in their choice decision than did two parent families or whether age of children made a difference in choice decisions. The data base need not be confined to after-school child care: the model could be extended to embrace childcare in general. The kinds of information provided by the model are of immediate relevance to policy makers.

(1) The derivation that follows is adapted from Becker (1981, pp. 103-104). The Lagrangian is:

L = U(C, q, Z) + [alpha](Y - pcqC - pZ)

from which first-order conditions for constrained maximization are:

U/C = Uc = [alpha]pcq = [alpha[pi]C U/q = Uq = [alpha]pcC = [alpha][pi]q U/Z = Uz = [alpha][pi]z.

The first-order conditions and the constraint, Y = pcqC + pZ can be solved for equilibrium values of C, q, and Z as functions of the shadow prices, [pi], and family resources, Y:

C = dc([pi]c, [pi]q, [pi]z, Y) q = dq([pi]c, [pi]q, [pi]z, Y) Z = dz([pi]c, [pi]q, [pi]z, Y).

Shadow prices are implicit: in terms of implementation of the model, it is more meaningful to express the demand equations in terms of the prices consumers would observe realistically. Hence the version of the demand equations shown in the text: D = d (pcq, pz, Y).

The first-order conditions can be used to demonstrate the interaction of cost and quality. Since the term q appears in the shadow price (or "cost") of child care ([pi]c), and since the term C appears in the shadow price of quality, ([pi]q), an exogenous increase in quality of child care will raise the cost and vice versa (see Becker 1981, p. 104).

REFERENCES

Becker, G. S. (1981), A Treatise on the Family, Cambridge, MA: Harvard University Press.

Behan, R. A. (1985), "Should Johnny of Janet Sit Themselves?" PTA Today, 10 (6) (April): 27-28.

Bruno, R. R. (1987), After-School Care of School-Age Children, December 1984, Special Studies P-23, No. 149, U.S. Department of Commerce, Bureau of the Census.

Garbarino, J. (1981), "Latchkey Children: How Much of a Problem?" Education Digest, 46 (6) (February): 14-16.

McMurray, G. L. and D. P. Kazanjian (1982), Day Care and the Working Poor: The Struggle for Self-Sufficiency, Community Service society of New York, New York, NY.

McNairy, M. R. (1984), "School-Age Child Care: Program and Policy Issues," Educational Horizons, 62 (2) (Winter): 64-67.

Maynes, E. S. (1976), Decision-Making for Consumers, New York, NY: Macmillan.

More, J. C. (1980), Parent Choice of Day Care Services: A Statistical Study of the Amount and Type of Care Used, Unpublished Ph.D. dissertation, Catholic University of America.

Owens, B. L. (1984), "Marketing a Proprietary Child Care System," Journal of Children in Contemporary Society, 17 (2) (Winter): 91-107.

Pecoraro, A. (1984), "What Home Economists Should Know About Latchkey Children," Journal of Home Economics, 76 (4) (Winter): 20-22.

Powell, D. R. and R. Widdows (1987), "Social and Economic Factors Associated with Parents' Decisions about After-School Child Care: An Exploratory Study in a Medium-Sized Community," Child & Youth Care Quarterly, 16 (4) (Winter): 268-277.

Ratchford B. T. (1980), "Cost Benefit Models for Explaining Consumer Choice and Information Seeking Behavior," Management Science, 17: 14-25.

Rodes, T. W. (1975), National Childcare Consumer Study 1975, Volume III: American Consumer Attitudes and Opinions on Child Care, Washingtom, DC: Unco Inc.

Rooney, T. (1983), Who is Watching the Children? The Latchkey Child Phenomenon, Senate Office of Research, California State Legislature, Sacramento, CA.

Rothschild, M. S. (1978), Public School Center vs. Family Home Day Care: Single Parents' Reasons for Selection, Unpublished Masters thesis, San Diego State University.

Schwenk, F. N. (1986), "Child Care Arrangements and Expenditures," Family Economics Review, (4): 1-7.

Turner, P. H. and R. M. Smith (1983), "Single Parents and Day Care," Family Relations, 32 (2) (April): 215-216.

Walden, M. L. (1989), "Estimated Effects of Higher Day Care Standards on the Price of Day Care," Proceedings of the 35th Annual Conference of the American Council on Consumer Interests, Baltimore, MD: 191-194.

Richard Widdows is an Associate Professor in the Consumer Sciences and Retailing Department, and Douglas R. Powell is a Professor in the Department of Child Development and Family Studies, Purdue University, West Lafayette, IN.
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Author:Widdows, Richard; Powell, Douglas R.
Publication:Journal of Consumer Affairs
Date:Dec 22, 1990
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