Ray has made an excellent point, I have to admit... PC games, X-box and all that easily cost what an average Tamiya kit cost... Indeed, kids have the choice of not doing models and do something else. I still think most boys (at least) will give models a try, though. And that's where the price of a kit comes in. It's normaly the parents that come up with the money to buy a kit. Responding to a 'impulse need' from a kid, I'd say the average parent would say 'what about this $10 Ferrari from AMT rather than $30 Ferrari from Tamiya' ... We might know better, but we are 'experienced ' modelers and we see things differently than the average dad and mum. Only after showing commitment and interest in this first few cheap(er) kits would the average parent invest in more expensive (and possibly better designed) kits (unless it's the birthday present from Granny: i.e. the biggest box in the shop!)...
The hobby has greatly involved since I was a kid. I used to get Matchbox, Airfix, Heller, ESCI kits for next to nothing then, and would only venture into more expensive Fujimi, Hasagawa and (very rarely) Tamiya kits once I got a certain experience behind me. Even back then, I quickly learned to stay away from some manufacturers (Lindberg, Revell, Frog,..).
Whether you build an Airfix or a Tamiya kit, you're still likely to get something that looks very much the same unless you have some basic building/painting skills under your belt. Unsupervised, a beginner in the hobby is as likely to make a mess of the canopy, the suspension, the road wheels, the tracks,.. with a Tamiya kit than with an Airfix one. A basic Aifrix Series 1 kit must have, what, 30-40 parts at most. Look how much more complicated is a 'fairly simple' 1/72 A-4F from Fujimi..! That's even without looking at the decal sheet!
Today, would be modelers are still likely to get the odd very old Revell kit and be somewhat discouraged, but I'd say that most kits nowadays are better designed than in the past, and that they are less likely to quit modeling because of poor quality kits. But young modelers and new modelers want 'instant' gratification and therefore, ease of building might well be a deciding factor.