Photo: iStock
Photo: iStock

The economics of marriage

Gary Becker's theory that marriages are based on the division of labour fails to explain why many are forced to make sub-optimal choices

Finding a suitable partner can be a really painful business. Economists have devised methods to understand this process. The story goes back to the father of economics, Adam Smith. He wrote about division of labour for a pin factory, arguing that it is better to have specialized pin-makers instead of having equal number of general handymen.

Economics commentator Tim Harford extends this argument in his book The Logic of Life to marriage and makes an emphatic claim that “the family has rational roots. It is the oldest pin factory of all". People marry because it makes economic sense.

The idea that rational calculations may underpin romantic relationships goes back to the 1970s when Nobel Prize-winning economist Gary Becker first postulated an economic model of marriage, arguing that marriage was based on the principle of division of labour, and that gains from marriage were determined by how efficient this division was.

In Becker’s model, finding a spouse is based on two core principles. First, he assumes that the exchange between the couple is voluntary. Second, that there are people—on Internet boards, classified ads of newspapers—looking for other people, signifying the presence of a market. There is a demand for prospective spouses and an abundant supply of hopefuls.

In Becker’s own words, “According to the economic approach, a person decides to marry when the utility expected from marriage exceeds that expected from remaining single or from additional search for a more suitable mate. Similarly, a married person terminates his (or her) marriage when the utility anticipated from becoming single or marrying someone else exceeds the loss in utility from separation, including losses due to physical separation from one’s children, division of joint assets, legal fees, and so forth. Since many persons are looking for mates a market in marriages is said to exist."

Marriage, sadly, is not the final outcome between two people who decide to be together. Who will go out to work? Who will do the household chores? Will they have kids (and how many)? These questions need to be answered once two people decide to marry.

The answer to the first two questions lies in division of labour, according to the Beckerian model. The one with comparative advantage at earning wages will go out and work; the other person has to do the dishes and probably stay at home.

The simplicity of the Beckerian model has appealed to many economists who have subsequently ventured into this arena with their toolbox. Some of them, though, are beginning to find that Becker may have oversimplified a bit too much.

Implicit in the Beckerian marriage market model is the fact that everything that happens post-marriage is determined while choosing the partner. This is obviously one of the weak links of this model. The truth is that whoever, within the marriage, has the greater share of resources or makes more money often calls the shots on most decisions.

In this case, the other person, if (s)he is able to foresee that their pay-offs from getting married are lower, can refuse the marriage and not getting married may be an equilibrium outcome.

Robert Pollak of the Washington University, St.Louis, in a new National Bureau of Economic Research working paper, shows that equilibrium within a marriage market is determined by how someone can foresee the gains (or tribulations) from the prospective marriage. Foresight may ruin the marriage.

Another key assumption in the Becker marriage model is that families pool their resources, optimizing a single objective function for the couple, in which only these pooled resources affect the choices made by the family.

In a 1997 study, Pollak, Shelly Lundberg and Terence Wales put this pooling hypothesis to an empirical test in which they examined the impact of a child benefit programme in the UK in the 1970s.

Until Margaret Thatcher assumed office, the programme paid money to all families with kids via tax benefits, typically to the husband. The Thatcher government restructured this programme and decided to pay the mothers cash. If pooling did work, everything else remaining the same, there shouldn’t be any shift in household expenditure pattern.

Pollak and others compared the expenditure patterns before and after the restructuring, and found a significant increase in expenditure on children and women’s clothing when women were paid.

Becker also ignored the fact that the utilities of spouses are not the same, and that bargaining within marriage determines the equilibrium outcome. In a 2009 Journal of Development Economics paper, Siwan Anderson and Mukesh Eswaran show that market wages have far greater bargaining power than that of household work.

Using data from rural Bangladesh, Anderson and Eswaran argue that working on one’s own farm is not so much better than staying at home, and that true autonomy comes only from having an independent source of income.

Bargaining within marriage is crucially hinged upon the ability of the person to find an easy exit from the marriage.

During the 1970s, divorce rates in the US started increasing. A combination of factors—including divorce legislation, the availability of contraceptive pills and the opening up of the labour market to women—delayed the age at marriage and lowered the barriers to exit the marriage.

The rising female labour force participation within the country contributed to the rise in divorces. If women had no opportunities outside the marriage, they would have resigned themselves to the drudgery of staying within a cruel marriage.

Race and caste barriers further complicate the marriage market.

In a 2010 paper, Daniel Ariely of Duke University and his co-authors, using data from more than 20,000 people who used a dating website, showed that race played a significant role in the choices people made. Economists Abhijit Banerjee, Esther Duflo and others examined data on people who placed ads in Bengali newspapers and found a strong in-caste preference.

Data from the 2011 Indian Human Development Survey shows that 95% of women married within their own caste and 41% reported to have no say in their marriage.

Becker’s marriage model, for all its attractiveness and simplicity, is inadequate in explaining why so many people are forced to make sub-optimal choices when they get married. Even if rational calculations play a role, they are not the sole driver of the marriage market. Social norms and institutions, biases and power relations influence the market heavily.

Economics Express runs weekly, and features interesting reads from the world of economics and finance.

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