The New York Times reported that Angelika Graswald, the former Latvian au pair looking to profit from a third American marriage, “stood to gain $250,000” from a life insurance policy on her fiance Vincent Viafore (story), the victim of a kayaking accident. This is the motive that authorities are citing for Graswald to allegedly murder Mr. Viafore.
However, a net present value calculation (spreadsheet) shows that Graswald would actually have made $231,026 in additional profit if she had simply gotten pregnant and harvested the child support at New York rates (17 percent of Mr. Viafore’s pre-tax income, reported as $167,000 in 2009).
Why would Graswald have incurred the risk of imprisonment if she could have made more money, on a net present value basis, as an unwed mother than as a murderess?
[The assumptions that went into this calculation were the following:
- 2 percent inflation rate
- 4 percent discount rate for NPV (since Graswald could have invested the $250k to earn perhaps a 2 percent real return)
- constant inflation-adjusted salary for Viafore using his reported 2009 income as a basis
- costs of ownership for the cash-producing child: $4300/year in 2015 dollars based on an analysis of U.S. government Consumer Expenditures data by UCLA professor William Comanor (previous posting)]
Related:
- “Au pair to green card”
- additional background with photos from Daily Mail
- Real World Divorce (contains data sufficient to calculate the profitability of pregnancy/child custody in states other than New York)
- “Take Out Some Insurance” by Jimmy Reed (classic blues song)
Why murder instead of pregnancy?
Because Graswald was arrogant enough to believe that hers was the perfect crime, and she surely would not have wanted the burden of motherhood.
In light of those two probabilities, it would seem far easier (and certainly cheaper) to collect Viafore’s life insurance than to litigate for, and actually receive, child support in New York State.
You forgot the assumption where a Latvian au pair is doing NPV calculations when deciding whether or not to murder someone. That’s the biggie.
(I don’t know the case, and make no assumptions about whether she killed the guy. Maybe she did, maybe she didn’t. But assuming she’d calculate the NPV on killing him vs suing him doesn’t pass the smell test, for me.)
Have you tried explaining net present value to a criminal? They want the money now.
(1) you’re ignoring that as an unwed mother there is actually going to have to be a child. she might not want the hassle, even if she was not planning on putting a lot of effort into it (i.e. the minimal amount of trouble she would have to deal with is more than she wants to deal with).
(2) not the first time someone prefers a smaller amount of money “right now” as opposed to more money “some time in the future”?
Gee, there are all sorts of possibilities. Maybe she’s infertile. It’s possible that she’s not familiar with New York state child support law. She might have wanted to find another boyfriend to murder, which would be easier if she didn’t have to care for a baby. Or maybe she used a different discount rate in her spreadsheet.