Tuesday, September 08, 2009

Economics of Marriage

More good stuff from NPR's Econ Fun-01:
Most people think that if you let an economist into your personal life they'll tell you how to re-balance your portfolio. While that might be true, economists see markets at play everywhere. Even in your romantic life.

Indeed, I'm one of the worst guests that you can invite to your wedding. Why? Because while most of your guests are listening for your love story, I'm listening for your contract. While others see a romantic courtship leading to the altar, I see people who are satisfied enough to stop searching for someone else.

Economists simply can't believe in one soulmate. There are too many people in the world and the odds of finding that one person in five billion are, well, you can do the math.

So if economists don't believe in soulmates, why do we think people get married?

Searching for a spouse is very similar to searching for a job. There is not one perfect job for each of us, but there are clearly better and worse jobs. So we hunt, for a spouse and a job. When do we stop? When the offer in the hand is better than the likely offer in the bush.

At a wedding I see a relationship that is good enough to settle down and start investing in.

If you get a reasonable rate of return, investment in your relationship will make it truly better than any other relationship you could have. And that's why I listen to people's vows: to understand what they want out of their marriage or in economist-speak, what they are contracting over.

How important are fidelity, loyalty, generosity, kindness? As an economist I think that a good marriage, like a good employment relationship, has shared vision, common interests, complementary abilities, and gains from specialization.

If you want to hold on to romantic illusion, don't invite me to your ceremony. But if you do, please don't sit me next to your cousin in banking; we likely have less in common than you think.

It sounds crass, but there wasn't anything I don't agree with. More importantly, my wife agreed too. For those interested here's our earlier posted marital contact.


  1. Interesting. A hard-line Presbyterian who doesn't believe in soulmates...

  2. Yeah sure marriage is pre-known, but so is my choice of lunch meats tomorrow. The whole "there is one person out there for everyone" thing just doesn't seem to hold water for me.

  3. Does for me. To each his own.

  4. I think the "contract" makes sense as a paradigm for choosing a spouse, but I don't think it works as a "lens" to look at marriage. Because if it were, the costs obviously are going to out weigh the benefits. Let's just say that my wife gets into an accident and I have to spoon feed her for the rest of my life. In one sense, the "contract" would be broken, but not the marriage.

  5. HITJF?,

    I would say that a paralyzed wife falls into the "better or worse" category. If anything, getting married is like an insurance plan, you have someone to take care of you if something bad happens. That's of course not even counting the many everyday benefits of being married.

  6. yeah i don't know why that's my name. i didn't put it in there. Yeah, that's what I'm saying, The decision to marry is viable through a contractual agreement, but the decision to stay married to the one who is paralyzed is not economically viable unless you look at the marriage through a lens where sacrifice is a virtue.

    Oh Harrison. I was listening to NPR the other day and there was an economist talking about the best and most efficient way to make friends on the first day of school. This guy was telling a story about a kid who misbehaved on the first day and the economist said it was brilliant for a lot of reasons. First, he realized that the risk is pretty low because most teachers are in a good mood and will "let the first one slide" so he wasn't in any real danger. And by misbehaving he communicates to the mass of people that he is a risk taker and not afraid to bend the rules. The economist said that it is completely unrealistic to think that this kid could actually talk with all 500 kids to see which one he wants to get to know, but if he distinguishes himself early, those who would be attracted to him will most likely be cut from the same cloth.

    The economics of high school... I thought about you. So make sure not to take any crap from any one on the first day. It's just a ploy to find friends...

  7. "but the decision to stay married to the one who is paralyzed is not economically viable unless you look at the marriage through a lens where sacrifice is a virtue"

    The decision for an insurance company isn't economically the best choice either, but they have a contract that says they promise to. Marriage is the same way (at least in the least romantic description of it).


You are the reason why I do not write privately. I would love to hear your thoughts, whether you agree or not.