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)]