Marriage

An Economic Account

(Miss Manners) also asks that you not bore her with explaining the comparative quality of marital and nonmarital relationships, especially when using the term "honesty" or asking the nonsensical question of what difference a piece of paper makes. Miss Manners has a safe-deposit box full of papers that make a difference. (Miss Manners' Guide to Excruciatingly Correct Behavior)

Marriage as a Firm

One way of looking at marriage is as a rather odd sort of package deal, an exchange in which the two parties agree to share income, housing, sexual favors, and activities such as cooking meals, cleaning house, washing dishes, and rearing children. Seen from this standpoint, a marriage is simply a particular kind of two-person firm.

A firm is not the only way of taking advantage of division of labor. Most of us take advantage of the comparative advantage¹ of the butcher, the baker, and the brewer, but we do not have to marry them to get our dinner. The wife in a traditional marriage may have a comparative advantage over the husband in cooking and the husband might have a comparative advantage over the wife in carpentry. But outside of the household, there are surely better cooks and better carpenters than either of them. Why does the couple limit itself to division of labor within the household?

The Reasons for Household Production

Few couples do; most of us obtain much of what we want by buying it on the open market. The typical family does, however, rely on household production for a considerable range of what it consumes: most meals, most domestic cleaning, much child care and education, and so on. Why are not these things too purchased on the market?

One reason is transaction costs. If you are going to build a house, it is worth hiring a carpenter. If you are simply fixing a few loose shingles, the time and trouble of finding a good carpenter, negotiating mutually satisfactory terms, and making sure he does the job may more than wipe out the carpenter's comparative advantage. The carpenter may be better at fixing the shingles than I am, but I am the one who gets wet if the roof leaks, so I have an incentive to do a good job even if nobody is watching me. And I have no incentive to waste time and energy haggling with myself over the price.

A second reason may be specialization, not in a particular product but in a particular set of customers. The cook at the restaurant my wife and I would go to if we spent less time cooking and more time earning money to pay for going to restaurants may be better at cooking than we are. But the restaurant cook is worse than we are at cooking for us. We, after all, are specialists in what we like.

Marriage and the Costs of Bilateral Monopoly

Why is it that marriage, in most societies, takes the form of a very long-term contract? One answer is that marriage, like other long term contracts, is a way of reducing the problems of bilateral monopoly. Individuals choose their mates on a large and competitive market, however much they may protest that there could never have been anyone else. But once married, they rapidly acquire what in other contexts is known as firm-specific capital. Changing partners involves large costs. Their specialized knowledge of how to live with each other becomes worthless. One, at least, must leave a familiar and accustomed home. Their circle of friends will probably have to be divided between them. Worst of all, the new mate, whatever his or her advantages, is not the other parent of their children.

Firm-specific capital creates a bargaining range. Each party may be tempted, in trying to get things his way, to take advantage of the fact that the other is locked into the relation and will choose to leave it only if things get very much worse. There is no way to eliminate such problems entirely, in marriage or in other contexts, but long-term contracting is a common way of reducing them. In many societies, although not ours at present, getting out of one marriage and into another is a difficult and expensive undertaking. Henry VIII had to change the religion of an entire country in order to cancel his long-term contract with Catherine of Aragon.

Enforcement Problems

It seems as though the ideal solution to bargaining problems would be a long-term contract that completely specified the obligations of both parties. Before the contract is signed, there is no marriage, no bilateral monopoly, and not much of a bargaining range. After the contract is signed, there is nothing left to bargain about.

To some extent, marriage is such a contract. It is, in principle, possible for a husband or wife to claim that the other is not living up to his or her responsibility, for a wife to sue a husband for failing to support her, for example. The problem is that one can not write and enforce a contract detailed enough to cover all the relevant terms. Just as under price control, an individual legally obliged to provide a product at a specified price can evade the obligation by lowering quality. So far as I know, nobody has ever successfully sued his or her spouse for cooking — or making love — badly. So a considerable amount of bargaining room remains and is used, even in marriages in traditional societies.

Love and Marriage

So far I have said nothing about love, which is widely believed to have some connection with marriage. It may seem odd to ask why we marry someone we love instead of marrying someone whose tastes agree with and whose skills complement our own and then conducting our respective love lives on the side, but it is a legitimate question.

One answer is that love is associated with sex, for reasons that can be explained (by sociobiology—economics applied to genes instead of people) but will not be here, and sex with having children. Parents much prefer rearing their own children to rearing other people's, and much of child rearing is most conveniently done in the home of the rearer. So it is convenient for a child's parents to be married — to each other.

The second answer is that love reduces, although it does not eliminate, the conflicts of interest that lead to costly bargaining. If I love my wife, we have a common interest in making her happy. If she also loves me, we have a common interest in making me happy. Unless our love is so precisely calculated that our objectives are identical, there is still room for conflict, in either direction; if we love each other too much, my attempts to benefit her at my expense will clash with her attempts to benefit me at her expense.

A more precise discussion of the logic of such situations will have to wait for a later post on the economics of altruism.

The Decline of American Marriage

Now that we have at least a sketch of an economic theory of marriage, we might as well do something with it. One obvious thing to do is to explain the decline of marriage in the United States and similar societies over the course of the past century. Why has marriage become less common and why has the effective term of the contract become so much shorter?

The simple answer is that the amount of time spent in household production has declined drastically, and with it the amount of firm-specific capital acquired by the partners, especially the wife. Earlier I remarked that it was not necessary, in order to get dinner, to marry one's butcher, baker, and brewer. In fact, a few hundred years ago, it was not uncommon for a man to be married to his baker and brewer and a woman to her butcher since all three professions were to a considerable extent carried out within the household, especially in rural areas. Dorothy Sayers, in one of her essays, suggests that men who complain about women stealing men's jobs should be asked whether they wish to return to women all the industries that used to be conducted by housewives and have now moved onto the market, such as brewing beer, preserving food, and making clothes.

One factor reducing the amount of household production has been increased specialization. Bacon, clothing, jams, and many other things are now usually mass-produced instead of made at home. Clothes and dishes are still washed at home, but a good deal of the work is done by the firms that make the washing machines.

Another factor has been the enormous decrease in infant mortality. It used to be necessary for a woman to produce children practically nonstop in order to be fairly sure of having two or three survive to adulthood, with the result that bearing and rearing children was virtually a full-time job. In a modern society, a couple that wants two children produces two children.

The result of these changes has been, for much although not all of the population, to convert housewife into a part-time profession. But household production in general and child rearing in particular are responsible for a large part of the specialized capital associated with marriage. With fewer children and less spouse-specific capital, the costs of divorce are much lower than they were a few generations ago.

Divorce is not all costs. There are benefits too; otherwise nobody would ever get divorced. If the benefits remain unchanged and the costs are reduced, the number of cases in which at least one partner finds that benefits are greater than costs will increase. It has. The increased divorce rate is neither inherently good nor inherently bad, evidence neither of increased freedom nor of declining moral standards. It is merely a rational adjustment to a changing world.

The decline of marriage is bad only insofar as it reflects the failure of institutions and expectations to adjust to new circumstances. The terms on which two people can live a happy and productive life together are not so simple that each couple can invent them independently in a few hours. The division of labor has a place in building institutions as well as houses. In a relatively static society, we can observe successful arrangements, patterns that have worked in the past and will probably work in the future. In a rapidly changing society, it is more difficult to figure out what kind of a contract we should or should not agree to and what kind of a marriage — or alternative arrangement — we should or should not choose. Hence there are likely to be more mistakes. Here as in most other areas, economic theory is more useful for describing the equilibrium than for describing the process by which we move from one equilibrium to another.

Diamond Chains

Most of us take for granted the practice of giving diamond engagement rings. In fact, it is quite a recent custom; prior to the 1930s, such a gift was relatively uncommon. Statistics on diamond sales are not very good until recent years, but it looks as though the use of engagement rings increased sharply during the thirties and forties, peaked in the fifties, and has declined somewhat since. Why?

There is a simple explanation, proposed by economist Margaret Brinig.² Prior to 1935, 47 of the 48 states permitted actions for breach of promise to marry, civil actions in which a woman who had been jilted by her fiancee could sue for damages. While damages could be based on a variety of injuries, the important one was loss of virginity, which in the marriage market as it then existed substantially decreased a woman’s opportunities for marriage. While men were reluctant to marry a woman who had slept with someone else, sex between engaged couples was common — evidence from several European cities in the late 19^th century suggests that about a third of brides were pregnant. The breach of contract suit served to discourage the traditional male strategy, immortalized in song and story, of seduce and abandon.

Between 1935 and 1945, the action for breach of promise was abolished in states containing about half the U.S. population; it is now almost unknown. Brinig argues that the custom of presenting a valuable engagement ring, which the woman was entitled to keep if the man broke off the engagement, arose as a substitute, a performance bond for a promise that had become legally unenforceable. She supports that conjecture with a careful statistical analysis of the available data relating diamond imports, income, marriage rates, and legal changes. More recently, as changing sexual mores have essentially eliminated the problem to which both breach of promise actions and diamond rings were a solution, the use of diamond engagement rings has gone back down.

[This post is based on part of Chapter 21 of my Price Theory]

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1. A useful concept explained in this passage from my Price Theory.

2. “Rings and Promises”