How the New Model of Marriage May Drive Income Inequality

(Photo: Boston Public Library)

(Photo: Boston Public Library)

Our last two podcasts, “Why Marry?” (Part 1 and Part 2) explored the broad and deep changes in the institution of marriage. One theme was that the old marriage model of “production complementaries” has shifted to one based on “consumption complementarities.” Here’s Justin Wolfers on the subject:

We have more time, more money, and so you want to spend it with someone that you’ll enjoy. So, similar interests and passions. We call this the model of hedonic marriage. But really it’s a lot more familiar than that. This is just economists giving a jargon name to love. So you want someone who’s actually remarkably similar to you or has similar passions that you do. So it fundamentally changes who marries who.

But is this change also related to income inequality? Wolfers briefly referenced that idea a few years back; in a recent article for Vox, the economics Jeremy Greenwood, Nezih Guner, Georgi Kocharkov, and Cezar Santos further the argument:

Think about the following simple thought experiment. Suppose that there are only two types of people, equal in numbers, those that went to college and those who did not. Those who went to school earn $30 and those who did not earn $10. If educated men marry uneducated women and uneducated men marry educated women, then every household will earn $40 in total. So, household income is perfectly equalised. Now, imagine a world in which educated people only marry other educated people. Then, a household made up of an educated man and an educated woman will earn $60 versus the $20 earned by a household that consists of only uneducated spouses. The households at the top of the distribution would have three times the income of those at the bottom.

Obviously, the example above is a dramatic simplification of reality, but it does capture an important trend that is actually taking place in the U.S. economy. To study its impact, we track samples of hundreds of thousands of households from the U.S. Census Bureau for the period 1960 to 2005 (see Greenwood, Guner, Kocharkov and Santos 2014). The upshot of the analysis is that rising assortative mating together with increasing labour-force participation by married women are important in order to account for the determinants of growth in household income inequality in the U.S.

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  1. Enter your name... says:

    That seems quite common-sensical, but is it “new”? I believe that “money marries money” was the dominant theme of weddings for the last several centuries.

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  2. NZ says:

    “So you want someone who’s actually remarkably similar to you or has similar passions that you do. So it fundamentally changes who marries who.”

    Right, because it used to be that people married way outside their social circles, income and education levels, geographic locales, races, and so on. Nowadays people only seem to want to marry their exact opposite-sex replicas living next door.

    As Borat would say, “Not!”

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    • AdvocatvsDiaboli says:

      But it used to be that only men made money, so this cumulative effect of households with two high earners and households with two low earners is comparatively new. Also a potentially huge effect on inequality.

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      • NZ says:

        I have no basic disagreement with that logic. (Thumbs up.) I just don’t think that married couples used to have wildly divergent passions and interests.

        For example, my grandparents are comically different in terms of temperament, but nearly identical in tastes, preferences, interests, worldview, etc. My wife and I are much more different from each other in this respect.

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      • Melissa says:

        NZ, you’re not taking into account change over time. You didn’t know your grandparents when they first got married – their tastes, worldviews, etc. might have converged significantly since then due to shared experiences, conversation, etc. So comparing your grandparents’ similarity now to the similarity between partners in a new marriage today is entirely irrelevant.

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      • Enter your name... says:

        Unless “used to be” means “middle-class white families in the middle of the 20th century”, “But it used to be that only men made money” is not actually true.

        Farm wives **worked**. They were significantly responsible for the income on the family farm.

        Also, when you’re talking about the highest income earners in the past, “earning money” looked a lot like “inheriting money”. High-income men wanted to marry heiresses, which has the same income-inequality-producing effect as them marrying doctors and bankers today.

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  3. stavraetos says:

    @first comment… the key difference here I believe is that women are earning their own money. Money marries money refers to inherited money (as I understand it). This on the other hand is saying that women’s participation in the labor force along with the assortative mating are contributing to rising household income inequality.

    @NZ the key difference which I don’t think is clearly spelled out is “production complementaries” vs “consumption complementaries”. Marriage 50 years ago was more east to understand barter/exchange. The man brought home the bread and the woman took care of the house/kids. In this way, they complemented each other in production. Today, it is much more important to have similar interests or complementary consumption. Having similar interests and passions was simply not as important as a man being able to feed a family of four and woman being able to care for her family. So people did marry similar people as defined by race, geography, social class, etc. but passions and interests in life had very little to do with it.

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    • NZ says:

      Like I said to AdvocatvsDiaboli, I don’t have a problem with that logic, I just don’t see the evidence. Couples who married 50 or more years ago generally strike me as well-matched in terms of passions and interests.

      It seems like an “Occam’s Butterknife” way of rationalizing something whose best explanation is much simpler–but might suggest other politically incorrect lines of inquiry.

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  4. Eduardo says:

    Hidden due to low comment rating. Click here to see.

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    • az says:

      No, if there is an equal number of jobs that require a degree as those that dont, they still wont have equal supply and demand, because you are forgetting that the jobs that dont require a degree are available to BOTH degree holders and non-holders, while jobs that require a degree are only open to half the population. Degree-holders will still have more options, ie more supply of potential jobs, and this added choice will make them gravitate towards higher pay on average.

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  5. Gibson says:

    It wouldn’t have made up a lot of the marriages, but I’ve heard multiple descriptions of high-society British marriages, particularly in the Victorian/industrial eras, as new money marrying old families. The new money is buying their way up, and the old family is getting a bailout.

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  6. Mark says:

    It isn’t clear to me that this would raise income inequality if measured as a ratio. Ignoring differences in pay based on gender, a 2 income high earning family earns roughly twice a single income high earning family (caveat, this is a simplification). But the same is also true for the 2 income low earning family. Thus, you still get the same ratio all other things being held constant. This could be a way to control for this effect. It is of course true that measured as a difference the 2 income high earners earn a lot more than the 2 income low earners, and will approximately double the inequality relative to single earner (‘old school’) comparison. Overall, though, this factor of two (at best) that might come from a marriage effect seems unlikely as a a strong component in the incredible strengthening of income inequality in the US over the past 40 years.

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    • Enter your name... says:

      I think what they’re saying, in Victorian terms, is “Why don’t all those rich men marry the poor dairy maids, and why don’t all those rich women marry the poor footmen?” That is, they’re not concerned about the proportion between high and low incomes, but the overwhelming presence of high+high and low+low families, with no high+low (or low+high) families in the middle.

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      • Tom Womack says:

        And, well, that does happen a bit; rich man goes to Thailand, comes back with wife who would otherwise be selling shoes in a Chiang Mai mall, provides finance for Thai restaurant. Sometimes there’s a divorce and wife keeps the restaurant. In any case, you get better Thai food and a general increase in the happiness of nations.

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  7. Jamison says:

    I have presented my argument for being married to 2 lovers instead of just one to my wife and friends. You know 3’s the magic number. 3 incomes, 3 parntes for children, 3 points of view, noalge, wisdom and wit. You would not need a larger house just a large master bedroom and you would be able to afford that with 3 incomes.
    Why is this such a unacceptable thoughts to society?
    If you have the love to give…
    (PS Im dyslexic so please look past the spelling and grammar)

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    • NZ says:

      “Why is this such a unacceptable thoughts to society?”

      For mostly biological reasons, polygamy almost always results in polygyny (one man with multiple wives). There will be a few women married to two men, but it will be very uncommon.

      Even if every man only takes 1 second wife (as you propose), this will result in an enormous decrease in the number of eligible bachelorettes while doing nothing to the number of eligible bachelors.

      When the ratio of eligible men to eligible women is sufficiently high, society experiences an increase in male-on-male infighting. Violence, destabilization. This holds society back.

      Look around at the world. Some places still commonly practice polygamy (much of the Middle East and Africa, for instance). What are those places like? How far have they advanced compared to places where monogamy is the law of the land?

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      • abar says:

        I’m glad that when polygamy came up someone immediately pointed out that that monogamy is what is better for men. Guys always envision that they themselves would have two beautiful wives, not that they would likely have either no dating/marriage prospects at all or that they would be stuck marrying “the leftovers”.

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  8. abar says:

    I’m surprised that the correlation in recent decades between education levels and having children in or out of wedlock didn’t factor in to this topic. Having children out of wedlock certainly adds to income inequality, ie how many single parents get to have a career vs have some jobs.

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