The Logic of Life

The Economics of Marriage
The economic mysteries of daily life.
Jan. 15 2008 7:46 AM

The Logic of Life

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Ever since John von Neumann's game theory promised to help us understand love and marriage, economists have been interested in how people choose their partners and how relationships work.

It takes two to tango, and it also takes two to get married. Marriage therefore requires you to go out and find someone you want to marry, and persuade them to marry you. It's a matching problem, and it is not unique to marriage. Getting a job is emotionally a different proposition to finding a wife or husband, but in some ways it's similar: you need to consider a range of jobs, work out which ones you prefer, and persuade the employer that he likes the match as much as you do. And just as in the job market, who matches up with whom, and on what terms, will depend on what the competition is offering.

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Whom you marry depends on where you live, but also on how old you are and what race you are. Most people marry people of the same race, of a similar age and from the same area. 96 percent of married black women have black husbands, and over 96 percent of married white women have white husbands.

What might cause an imbalance in some of these local marriage markets? Imbalances in cities might be caused by unskilled young men rationally deciding to give up and move to the country, or stay there in the first place. But another major reason for men being absent from local marriage markets is prison. There are two million men in US prisons and just 100,000 women; and the men in prison are spread unevenly across age, race and geography. Huge numbers of young black men are in prison, and that is bound to pose a problem for the young black women they might otherwise have married. (It might also pose a problem for women of other races and in other states—but only if some women were inclined and able to hop from one marriage market to a better one. That does not seem to happen often enough to cancel out the effect of the shortage of marriageable young black men.)

In New Mexico, for example, 30 percent of young black men, aged 20-35, are in prison (or, less commonly, in a secure mental institution). That is an extreme case, but there are 32 states with more than one in ten young black men in prison, and ten states where one in six young black men are behind bars. That is a serious business for young black women.

According to economists Kerwin Kofi Charles and Ming Ching Luoh, where a large number of a particular racial group is in prison, women of the same age and race in that state do not enjoy the gains from marriage, or a stable relationship, that women in a more equitable situation do.

Charles and Luoh show that young black women facing a shortage of men try to increase their attractiveness as marriage prospects. The more men are in prison, the more likely women are to get themselves a job, and the more likely they are to go to college. College-educated people are much more likely to marry other college-educated people, so an education doesn't just make you smart, it wins you a smart husband or wife.

Improving their bargaining position in the marriage market is, of course, not the only likely reason for these decisions. Since the high incarceration rates of young black men mean young black women are less likely to marry, a college degree and a job look like a rational investment for a single girl who can't rely on a partner as a source of income. What's more, the likelihood of young black women not marrying is greatly exacerbated by another trend: it appears that young black men who are not in prison typically take advantage of their strong bargaining position by not bothering to marry at all.

Charles and Luoh are able to examine this statistically because they have data across all 50 states and for the 1980, 1990 and 2000 census. So they are able to compare the situation of women in different times and places, taking into account background trends as they vary across the country and from decade to decade. They estimate, for instance, that a one percentage point rise in the proportion of young black men in prison reduces the proportion of young black women who have ever been married by three percentage points. In states where 20 or 25 percent of the available men are in prison, young black women become very unlikely to marry. The effect is even more dramatic for uneducated women, since women tend to pair up with men of a similar education level, and uneducated men are particularly likely to end up in jail.

There are a lot of African-American single moms around, and some commentators are inclined to blame this fact on "black culture"—whatever that phrase might mean. But "black culture" doesn't explain why the single moms are disproportionately in the states where lots of young black men are in prison. Economics does: women's bargaining power is badly dented by the imprisonment of potential husbands. The better-educated guys stay out of jail, and they are smart enough to realize that with the competition locked up, they don't have to get married to enjoy themselves. "Culture" is no explanation; that women respond rationally to a tough situation is a much better one.

Even though it's mostly uneducated men that end up in prison, Charles and Luoh show that the negotiating position of women is so weakened that they end up more likely, not less, to "marry down"—that is, to marry men who are less educated than they are. So there's another reason for young black women to put more efforts into getting a degree and a job: even if they could find a husband, we could understand them being concerned that he wouldn't be a high-quality husband: maybe they couldn't rely on him to stay around, be a reliable father or a provider for the household. As the song goes, sisters are doing it for themselves—but not, in this case, for very encouraging reasons.

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It's a commonplace observation that the contraceptive pill wrought major changes in society. But when most people hear that, they probably think that the effects were mostly to do with college parties becoming a lot more fun. In fact, rational responses to the pill have had remarkably similar effects to those that come from imprisoning a significant chunk of the male population.

What's the similarity? Both heat up competition among women in the marriage market. Young black men who stay out of prison in a place like New Mexico rarely marry, and this is probably because they realize they do not need to marry to get sex. The contraceptive pill also makes it easier for men to get sex outside of marriage. The logic of evolutionary psychology says that women should be choosy about who they have sex with, because pregnancy in the wrong circumstances is extremely costly—but the logic of a woman who has control of reliable contraception is quite different. The preferences that evolution has shaped still exert powerful influence on our instincts, and many women remain extremely choosy and refuse to have sex outside marriage. But others, once armed with the pill, decided they could afford to have a little more fun.

The choosy ones are unlucky: the existence of other women who are a little freer with their favors weakens the bargaining power of the Madonnas, and means that men have less incentive to marry. Some men will not bother at all, feeling that they can get all they want from a playboy lifestyle. Or they may delay marriage until middle age, cutting down on the pool of marriageable men and increasing male bargaining power.

As we have seen, the rational response is for women to go to college, bringing them both better prospects in the job market and better prospects in the marriage market. Meanwhile, the more capable women become of looking after children by themselves, the less men need to bother. It's a textbook case of free-riding: with highly-educated women in excess supply, men have realized that they can get sex, and even successful offspring, without ever moving too far from the La-Z-Boy chair and the potato chips. Statistics seem to bear this out. There are nowadays four US women graduating from university for every three men, and this is not a particularly American phenomenon: in 15 out of 17 rich countries for which the data are available, more women are graduating than men. The most educated men in the United States were born just after the second world war and graduated in the mid 1960s—male graduation rates dipped after that, and have not yet returned to that peak. The rational choice perspective suggests it is probably not coincidental that this decline set in roughly when women got hold of the contraceptive pill.

Women's rational responses to the pill wrought other, socially far-reaching changes. The ability to delay, and to some extent control, the timings of their pregnancies also allowed women to plan their careers in a new way: rather than hurrying back to work after having children, they could decide to postpone their departure. That made it rational to invest in training for a career with a long pre-qualification period, such as law, medicine or dentistry. Female enrollment in law and medical school duly soared as the pill became available, because women knew they could qualify and establish themselves in a career without becoming a nun.

Delaying motherhood means big income gains for educated women, because of the economies of scale in education and work which reward those who spend a long time in college and then work long hours early in their careers. For every year by which a woman delays having her first child, her lifetime earnings rise by ten percent. Of course, someone who delays having children might earn more simply because her career is her priority, but you can get around that statistical minefield by looking at women who, because of miscarriages or accidental pregnancies, do not have children at the time they would have chosen. These random misfortunes, which mean women having babies earlier or later than they would have done, all point in the same direction: a year's delay adds about one tenth to lifetime earnings.

The pill also meant women felt more able to postpone marriage—why hurry? They could enjoy sex and a career without rushing to get married. And as more intelligent women delayed getting hitched, that meant that more intelligent men would be floating around, unattached. The dating scene became a more interesting place to dip in and out of for a decade or so, and the risk of being "left on the shelf" plummeted. The fewer people sprinted up the aisle, the less need for others to hurry. It looked like a cultural shift, but it had rational roots.

Another side-effect was on the expectations of potential mentors and employers. They had more confidence that women would not give up on their training or careers because of an accidental pregnancy; that increased confidence meant that more women got a fair chance in the workplace. This, too, was not merely the blinkers of discrimination being lifted from employers' eyes: it was a rational response to a world that had changed.

As we will see tomorrow, the pill also contributes towards a rational explanation of one last, much-discussed social phenomenon of the last fifty years or so: skyrocketing rates of divorce.

Tim Harford is a Financial Times columnist. His latest book, The Logic of Life, will be published in paperback on Feb. 10.

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