Education and Marriage

In class today we discuss education and marriage. While we see a general trend toward fewer and later marriages there are substantial differences across education. More educated men and women are marrying more than less educated men and women. They are also divorcing less. So highly educated people who are well-paid are combining their incomes and securing the benefits that come from marriage. Meanwhile less educated individuals are either not forming relationships (single parents) or forming relationships and living arrangements that are less durable (e.g. cohabitation). So on average there is either a low single income or two low but combined incomes. This is a topic that has been discussed substantially in news outlets. For example, here are articles from The Atlantic, Forbes, and Freakonomics.

You can imagine this has lead to substantial income inequality. For example, this study from a few years ago in the NBER reports that, “Data from the United States Census Bureau suggests there has been a rise in assortative mating….[I]f matching in 2005 between husbands and wives had been random, instead of the pattern observed in the data, then the Gini coefficient would have fallen from the observed 0.43 to 0.34, so that income inequality would be smaller.”

That assortative mating refers to people sorting into relationships with people like them. In this case, people with high education marrying people with high education. But, even for its coverage in the media, we probably do not discuss enough how rising income inequality is driven by patterns in marriage and divorce among those with high and low education.

Economics of Romance

In the immortal words of Haddaway, “What is love?” Despite being in bed all of Tuesday, and not being up-to-the-task of teaching Wednesday, I mustered enough energy to talk with the Economics Club at FSU about the “Economics of Romance”.

In that talk, I started with some good economics jokes — some of which can be found here. Skipped some really bad economics pick-up lines, and waxed about the dangers of thinking at the margin in a world that thinks about levels. For example, the next time your spouse asks whether the presentation you’re writing is more important than them …. well, don’t try to explain marginal thinking to them.

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Helpful Teaching Resources

In this brief post, I want to commend a few teaching resources that have been helpful over the past few months of teaching.

For teaching students the nuts and bolts of causal inference, the new Mastering Metrics videos with Josh Angrist on Marginal Revolution University are terrific. The causal animations from Nick Huntington-Klein (and other resources) are also very helpful. This app on linear regression from Luke M. Froeb and Keyuan Jiang is a helpful way to help students gain econometric intuition. They have a companion paper to the app on SSRN.

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Sex Ratios and the Marriage Market: WW1

Last week I wrote about the “marriage market“. In many ways, the marriage market is like a labor market: there are search costs, match quality, competition for mates, and so on. When one side of the market becomes more abundant, that side become less picky — their minimum willingness to accept goes down.

Today we examine war as a shock that makes women more abundant than men. The marriage market predicts this shock will mean a smaller fraction of women will marry but those that do receive a smaller share of the benefits from marriage. Also, a larger fraction of men will marry and receive a larger share of the benefits from marriage.

Ran Abramitzky, Adeline Delavande, and Luis Vasconcelos investigate marriage in pre-and-post World War 1 (WW1) France where an estimated 16.5 percent of the French male population died or were missing in WW1. You can see from the map below that some “departments” suffered greater losses than others. Across France, the sex ratio was nearly even before the war and after the war, “If we focus on singles, widows, and divorces who were 30 years old or younger but of marriageable age, there were approximately 2 men for every 3 women.”

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The idea of a “marriage market”

For those not familiar with the idea of a “marriage market”, consider the following quote from Gary Becker from his paper “A Theory of Marriage, Part 1” (emphasis own),

“Two simple principles form the heart of the analysis. The first is that, since marriage is practically always voluntary … the theory of preferences can be readily applied, and persons marrying can be assumed to expect to raise their utility level above what it would be were they to remain single. The second is that, since many men and many women compete as they seek mates, a market can be presumed to exist. Each person tries to find the best mate, subject to … market conditions” (p. 814)

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Taxes and Commitment

An American tourist in a foreign land surveys the surroundings. Down on the river he sees a boat at a distance coming into town. The men are being whipped as they row the boat filled-to-the-brim with fresh produce. Angered at the sight, the tourist rushes down to the dock to meet them as they unload. He tells the men of their value and worth. He yells at the man who whipped them. Then, a twist happens. The men explain that they were concerned they would not row fast enough and therefore were worried the fresh produce would spoil before getting to market. They hired the monitor to ensure they all rowed fast.

The source of that apocryphal story is unclear, but the economic content is rich. The men were concerned with the free-rider problem and sought a commitment device to ensure their fast rowing. How often are we willing to suffer the lashes of inefficiency to obtain some measure of the public good?

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The Church and Public Assistance

When the unexpected happens, who are you going to call? One of the important social functions of religion is that it operates as social insurance. For example, someone who cannot afford groceries, rent, or some other staple like their utility payment might contact their local church leader and ask if there is possibility for assistance during this difficult time. At this point, some might be saying, “They shouldn’t have to do this. The government should provide a safety net for these people.”

There is certainly a connection between the social insurance function of the government and churches. For example, Daniel Hungerman (2004) uses the 1996 Welfare Reform Act to document that the church and state are substitutes in the provision of social services. Part of welfare reform was to restrict welfare payments made to immigrants. Therefore, churches in states with a larger share of immigrants should see a greater decline in welfare payments and, if the church and state are substitutes, a larger increase in church spending on social activities. That is exactly what Hungerman finds. For every one dollar reduction, churches increased spending by 20 – 38 cents.

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Vaccine Allocation

If you haven’t read Jeremy’s earlier post on vaccine allocation take a few minutes, it’s worth the read. We have fewer vaccines than people who want vaccines. Also, who actually gets vaccines is being decided through a priority system established by the federal government.

People do not seem outraged about the priority system. Probably this is because the priority queue has some grounding in our moral intuitions. In the absence of market allocation, you are forced into some allocation criteria other than price. What would the “right” allocation be? People seem to gravitate towards principles of merit, need, and equality (see my earlier post here) and one could view the allocation to healthcare workers as meeting the criteria of merit. These individuals are currently on the frontlines of exposure to the virus and have endured significant stress the last nine months.

At the same time, it is worth asking whether a switch to the allocation of vaccines through a market mechanism is better. Markets are appealing because there is so much information to take into account (e.g. should an X-Ray tech get the vaccine before a teacher). The presence of externalities complicates the story and implies that non-market allocation could do better. Though there appear to be substantial coordination problems with our current central planning approach.

Like other economists, I see the power of markets to coordinate plans and that makes me lean towards an auction format. I am not confident the government can centrally plan towards a more efficient allocation. However, I admit the ethics of distribution according to willingness to pay makes me reluctant to use auctions. I would favor randomization of who gets the vaccine (all have an equal chance which is morally appealing) with opportunities for side-payments where people can take advantage of their local information. Jeremy suggested a lump sum transfer for the poor but it seems this would introduce new complications like who counts as poor (what percent of FPL) and the correct size of the lump sum transfer.

This approach of randomization likely has the added benefit that it randomizes potentially adverse shocks. Because the vaccines were expedited in clinical trials, there could be unique and unknown long term consequences due to the nature of our current situation and how studies are conducted. If something bad does happen, shocks will be less concentrated within industries and medical distrust will be less concentrated within a subgroup. That seems like a valuable outcome that I haven’t seen people discuss (though I have been busy this week submitting grades and preparing for a new semester).

Civil society and purpose

Any discussion of building a humane economy that addresses important needs like purpose, security, and opportunity would be incomplete without civil society — the third sector composed of our families, churches, affinity groups, and civic organizations. 

In this post, I will touch on purpose. This year our conversations have been dominated by COVID-19 and discussions about the costs and benefits of state and local policies. In August 2020, the CDC released a report on the mental health effects from the lockdown and the results leave one stupefied. Among young adults (18-24 years old), 25 percent had suicidal ideation. One of the authors’ proposals includes “promoting social-connectedness” suggesting the dearth of community played an important role.

The anguish described above also calls to mind recent attention on “deaths of despair”. This refers to the rise in mortality among middle-aged white men starting in the late 1990s from suicide, overdose, chronic liver disease or cirrhosis. What causes these deaths of despair? In their book Deaths of Despair and the Future of Capitalism, Anne Case and Angus Deaton write,

“Destroy work and, in the end, working-class life cannot survive. It is the loss of meaning, of dignity, of pride, and of self-respect that comes with the loss of marriage and of community that brings on despair, not just or even primarily the loss of money.”

This is also reflected in Marco Rubio’s plea for a common-good capitalism where he cites deaths of despair as a ripple effect from an “economic re-ordering” and holds up the primacy of creating jobs that provide dignified work. This is important. As Adam Smith has noted, “Man naturally desires not only to be loved but to be lovely,” and work helps a man to feel he has made a contribution and is deserving of love and respect. At the same time, I want to resist the temptation to think despair flows only from economic conditions.

In his book Sickness Unto Death, Kierkegaard claims that humankind falls into despair when we have a misunderstanding about who we are as human beings. But, for Kierkegaard this despair can serve an important role. Despair signals our need for God, the only one who can heal our despair. A couple years ago at the Southern Economic Association meetings, I saw some preliminary work that suggested these deaths of despair were pre-dated by the decline in occupations but actually corresponded to earlier declines in religious participation. In order for life to have meaning, a person must have faith, and that faith is sustained in communities.

The key point is this: Man cannot live on economics alone. More depth is needed and this can be found in our communities. If a person removes themselves from important communities that can have a negative impact on their flourishing.

Here is a question: Before the fall of man, was everything perfect in the Garden of Eden? No.  “The Lord God said, “It is not good for the man to be alone. I will make a helper suitable for him.”” (Genesis 2:18) We want to love and to be lovely. There must be some other for us to direct our love and receive love from. And, while that other could be a higher power like God, even Adam before the Fall, wanted that love to come from another human. Small groups like our churches provide the context through which this natural inclination can be pursued. Obviously there are other groups too like families, recreational organizations, civic organizations, etc.

Small groups can be chosen for different reasons and with different levels of commitment. This is a good thing because it is akin to a portfolio of identities. Having many different communities where we can engage different pursuits seems preferable to worship at the altar of politics. When we talk about a life well lived, human needs like purpose, security, and opportunity seem important to meet. Economics and work are important for that sense of purpose but we should not overlook how a lack of community can lead to a loss of purpose.

Treating Marriage like a Luxury Good

In the United States, the median age of marriage has been climbing for decades. In 1960 the median age of first marriage for men and women was 22.8 and 20.3 respectively. Fast forward to 2019 and the median ages are 29.8 and 28. Here are the historical tables.

Qualitative studies that interview young people suggest they are waiting on marriage until their careers get underway. Marriage is now something you do once you have a high income. But, this treats marriage as if it were a consumption good.

Consider this blog post from Brides.com,

“With the rising cost of living, mountains of student loan debts, and a lack of job security, some of us just aren’t financially in a position to get married or settled down until we’re a little older.”

What is striking is how marriage is not viewed as a productive and helpful institution to overcome these obstacles in life. This runs contrary to the literature on the Economics of the Family that documents how marriage facilitates gains from trade, risk pools like an insurance policy, and allows couples to take advantage of economies of scale.

Yes, you can obtain some of these advantages with cohabitation but not at the same level of commitment.

This view of marriage as a luxury that is only consumed when your career and finances are in order is harmful because it leads to less opportunity. Marriage is productive and expands our possibilities.