Wednesday, August 22, 2007
What is the cost of marriage?
To an economist, the cost of an activity is what you give up to pursue it.
In the year following a divorce, women's living standards fall by 27 percent while men's living standards rise by 10 percent.Steven Landsburg's classic column on Why Men Pay To Stay Married argues that the difference is a compensating differential, the "price" that men pay to women to compensate them for the relatively unpleasant job of marriage.
If men stay in marriages that cost them a lot of money, that just proves they really like being married. They're getting something they value, and they're paying for it.
When I first read this 8 years ago, I thought it was funny. Now, after 19 years of marriage, I wonder why the price is so low.
In the year following a divorce, women's living standards fall by 27 percent while men's living standards rise by 10 percent.Steven Landsburg's classic column on Why Men Pay To Stay Married argues that the difference is a compensating differential, the "price" that men pay to women to compensate them for the relatively unpleasant job of marriage.
If men stay in marriages that cost them a lot of money, that just proves they really like being married. They're getting something they value, and they're paying for it.
When I first read this 8 years ago, I thought it was funny. Now, after 19 years of marriage, I wonder why the price is so low.
For more on marriage, see these posts.
To All,
ReplyDeleteThe one thing that comes to mind after reading that article by Mr. Landsburg is opportunity costs. After divorce, men's standard of living increase by 10% but the costs of marriage, the basis for it is in itself the opportunity costs of not being married at all. The question is, a 10% raised standard of living, but who's standard, mines and yours are probably different or we place different values on it. Maybe the 10% gained by divorce was the sunk and hidden costs that were not fully understood before the step was taken.
Regards,
Dave. Empire State
In October of this year I will be getting married for the first, and hopefully last, time. Both of us have great credit scores and solid financials. As New York City residents, we moved in together right away. Down here in the city the cost of living is more expensive than most parts of the country. Whether people are married or dating, in NYC couples will often live together to save on rent and share the cost of heating. The apartment my fiancé and I live in now could only be affordable with us being together. If we were to break up or get divorced, both of us would have to move out of the area we currently live in and see a change in living standards.
ReplyDeleteRelationships will always entail opportunity and sunk costs. I do believe though that men experience higher sunk costs than women. Think about the tradition of a man paying for the dates. Let’s pose the scenario that it takes about 4 or 5 dates before a serious designation of “relationship status” is established. Each date runs approximately $50-$75. After 5 dates at $75 a pop the man has spent $375 and there is only a 50% chance that it will turn in to a relationship.
Our fairy tale society teaches women and men that they have specific roles. Even now, post the feminist 1970’s when women were supposedly liberated, women expect men to pay for dates as illustrated above. But I think that expectation is something we are taught throughout our lifetimes.
DeleteMy husband, who I met in 1982, paid for our first date. We both worked in NYC and our salaries certainly did not pay for elaborate dates. I paid for our second date and have made a solid financial contribution to our marriage. When it is expected for men to pay for dates, it allows corporations to decide to pay men more because they seem to have more overall expenses. This is the attitude that women have faced, and contributed to for many years.
If a marriage is working properly, there should be “compensating wage differentials.” Sometimes one spouse will bring more to the marriage than the other, but if the marriage is working, then each spouse has some kind of compensation that allows them to feel they have been compensated for seeming to do more and that keeps the marriage working.
Marriage is not a fairy tale. It is a business arrangement between two people, a job. Two people feel that their lives together will have more overall advantages than being apart. Not just emotional advantages, but monetary advantages too; maybe more so in the long term. It is up to women to step up and ask for what they want. Too often women get less in all ways, less money, less voice in decision making, because they just don’t speak up and ask for what they want. It is a risk as women we have to take. Just like with stocks, sometimes the risk pays off and sometimes it doesn’t. But when it does, the benefits can be outstanding.
Landburg's article is a very interesting concept to consider that men enjoy marriage more than women. I have to say that I have never really given that concept much thought to being valid, but when you bring in the issue of the biological clock then it does make a great deal of sense. For men, waiting a longer period of time is the opportunity cost to finding the perfect partner and wife. There may be a lot that they may feel they are missing out on during this time period they are searching for the perfect person, but the benefit is that they are finding someone they can spend the rest of their life with happily. Women who more or less settle for a partner or husband in order to start a family and not go without having children and a family may take the risk of marrying whomever is available and willing to marry them in order to have children. The downside of this is that they may not have taken that additional time to ensure that the man they are marrying is the one that they will be able to live with and love for the rest of their lives, resulting in a greater chance of divorce. It is important to always consider all options that all available and determine if the opposite route might be the better choice to make.
ReplyDeleteThe cost of marriage is what one would give up in order to be married. In society today, people are quicker to move in with one another to lesson their individual payout and enter into a financial burden. Once one is married their net income almost doubles. Married couples usually invest or save more to achieve joint long-term goals, while singles are often living paycheck to pay check because they contribute more than 75% to their household bills and other miscellaneous expenses. One reason singles have no room to save is because they pay a higher tax than married couples. On the flip side, if both own homes, married couples have a larger standardized deduction.
ReplyDeleteThe variable to it all is if children are in the picture, location and whether they invest in retirement or not.
While this takes into account finances during marriage, the tables seem to turn during and after a divorce where the cost seem to pile up at very quick pace. These are expenses singles don’t have to worry about. The cost-benefit analysis depends on the individuals involved. No one really thinks about how marriage can turn ugly until it does. Everyone wants the happy ever after but how often that really happens is the real question.
I have had this discussion in the past, on several occasions as a matter of fact. I have had this discussion when I was single, engaged, married and married for a long time! In terms of cost I have always summed it up like this:
ReplyDelete• When you are single everything costs a $100
• When you are married everything costs a $1,000
• When you have kids everything costs $10,000
Of course I am joking the financial impact of marriage and kids is significantly more than I am stating; it’s simply cheaper to stay single of course! All kidding aside, I will take the bait on this. I do pay my wife to stick around and I am getting the better end of the deal. You see, my wife is the CEO of our family and our lives. She is in charge of the entire operation, she manages the whole show. Don’t get me wrong I am on the board, but she directly runs the company. Whether it’s budgeting, planning our schedule, caring for the assets (kids), researching a new car, cooking, cleaning or shopping around for what we need she is in charge. She is the visionary, we pitch ideas to her and she makes it work somehow or points us in another direction. It all gets done, she is the CEO and she does it for a fair price!!
JG