This summer I am going to attend three weddings. Ok, this is not an interesting fact, I know. But this is the reason why I started writing these posts about what I called the Economics of Love. In the end, what motivates people to enter the market for partners is the final intention to get married sooner or later (more or less explicit for women, but I think also latent for men). Why, then, do people want to get married, I asked myself?
Economists started to think about the Economics of Marriage almost 40 years ago with the seminal contributions of Gary Becker with his JPE article, “A Theory of Marriage”. Whenever I speak to non-economists about this literature, they look at me as if economists were immoral nerds. This attitude is widespread and maybe reflects the simple scepticism about the idea that economics can explain any realm of life, as Lazear explained in Economic Imperialism.
To understand the main contribution of that paper and the literature that followed, one needs to know that, at the time of writing, in the 70’s, many women were still out of the labor force. Thinking about the family as a small firm producing non marketable goods, let’s say warm coffee brought to you in bed when you are still sleeping, assistance when you caught a flu and you’re down, Becker’s insight was that, if the man was the provider of financial resources while the woman was the provider of childbearing and domestic activities, a marriage could only mean one thing: gains from specialization. This would have entailed advantages for both partners. You can say this is not a romantic argument for marriage, but still, it’s economically sound.
Since then, societies have undergone enormous changes and transformations. The most important ones are the woman slow but continuous emancipation and increasing government intervention. By providing explicit insurance schemes, like pensions and health care, the governments have reduced the incentive to build a family, which was traditionally the informal provider of such services. Governments have thus also increased the opportunity cost of women to stay out of the labor force while raising their returns from investing in education. In concomitance, formal markets have started producing goods that have reduced the comparative disadvantage of men in doing domestic activities. The combined effect of these transformations has been a constant, declining relevance of legal marriages. Since there are fewer gains from specialization, there are as well reduced incentives from getting married under the economic viewpoint of Becker.
What is driving then my friends’ decision to get married? Paradoxically as it may sound, the argument advanced is that, by these very same changes, today, marriage can only be a spontaneous decision driven by pure, romantic love. As you commonly observe, people tend to hang out with people with more or less the same background: economists with economists, lawyers with lawyers, Brad with Angelina…In a couple, a man and a woman do not gain by sharing resources anymore; they gain by sharing common values, interests, ideas. In the economists ‘jargon, a couple is not a unit of production anymore but a unit of consumption. People “merge” because they like to consume the same goods, and they like to do it together. This is what is called “Hedonic Marriage”, which basically means, you enjoy a marriage since you think you really are “two of a kind”.
The final remark is the following: if marriage is becoming a “hedonic” institution, when will we observe a marriage happening? When will people decide to get married? It is clear that such a decision is not only influenced by pure “love”, but also by people’s attitudes toward this institution, which are somehow determined by their relative cultural background. Depending on the type of society you come from, you may still enjoy the “hedonic” aspect of sharing your life with someone else, without feeling the need to get “married” in a legal sense. Vice versa, you may be forced to marriage by a society where pressure to get married is higher, without feeling completely involved. We will see in Part IV that these factors have important implications for currently observed phenomena of delayed marriage, cohabitation, and declining divorce rates.