TILL DEBT US DO PART
MONEY | September 12th 2008
"As belts tighten, tempers flare", writes Joanna Moorhead in "Couples + Money". Simon Cox, a business writer for The Economist, examines the economics of coupledom...
From INTELLIGENT LIFE magazine, Autumn 2008
When companies face financial hardship, they are often tempted to merge, splitting their costs and combining their customers. Couples do the opposite. The weight of unpaid bills and overdue loans can break a relationship: the unspoken vow that haunts many marriages is "till debt us do part".
But a demerger makes little
economic sense. Ever since Gary Becker of the
It will surprise no one to learn
that men devote more hours to paid employment, women to housework. But contrary
to popular belief, these two contributions balance out, on average, in most
rich countries. In America, according to a report by Michael Burda of the Humboldt University of Berlin and others, men
do 313 minutes a day of market work and 163 minutes of housework (liberally
defined as anything you could pay someone else to do for you), whereas women do
201 and 271 minutes, respectively. The great exception is
The economic gains from coupledom are substantial. For middle-aged women, the cost
of living in a married couple is 30% less than the cost of living alone,
according to calculations by Arthur Lewbel of
But how do couples divide these
spoils? Economists once touchingly assumed that spouses wanted the same things
and acted as one to achieve them. Households were "glued together" in
Amartya Sen's phrase. Now
economists think of marriage as a bargain in a second sense. Husbands and wives
haggle over cash, chores, care and consideration. By one recent estimate, the
Bad times can force a painful
renegotiation. Of unemployed men consigned to household chores, Friedrich
Engels wrote: "One may well imagine the righteous indignation of the
workers at being virtually turned into eunuchs." That indignation has
lingered in the 160 years since he wrote about it. Anne Solaz
These bargains may not be fair. But economists typically assume they are efficient. Between them, spouses create the biggest pie possible, even if they do not split it equitably. No other bargain could make one of the spouses better off, without making the other worse off. The traditional family, for example, strikes a bargain in which the wife sacrifices her career prospects to raise the children both spouses want, freeing the man to make more money. If the husband is sufficiently generous with his improved earnings, the bargain should make them both better off.
But this model of marriage is
becoming obsolete, according to Betsey Stevenson and Justin Wolfers,
an unmarried couple at the
Households also now spend less
time, and more money, feeding the family. But even in
The marriage factory faces a second threat: couples now find it harder to make their bargains stick, because vows can now be broken cheaply and without stigma. If a woman agrees to sacrifice her career to make a home, her prospects outside marriage diminish, leaving her with less conjugal clout. The husband might therefore be tempted to renege on his commitment to share his earnings equitably. But if his wife anticipates this outcome, she won't make the bargain in the first place. The rise of easier, "no-fault" divorces, Betsey Stevenson shows, has made American women less willing to have children or to pay their husband's way through college. And no one takes home economics anymore.
Coupledom has changed, these two economists argue, from a mode of production to a mode of consumption. Instead of complementing each other in their work, spouses complement each other in their pleasures. The husband enjoys cinema-going more because he goes with his wife. In the traditional economic conception of the family, one spouse provides the things money can buy, the other provides the time good housekeeping demands. Now a spouse is someone to spend time and money with. That may be some consolation when economic misfortunes leave a couple with more time and less money than they'd bargained for.
Picture credit: korbatz/flickr
(Simon Cox is a business correspondent for The Economist.)