TILL DEBT US DO PART

COUPLES + MONEY | September 12th 2008

"As belts tighten, tempers flare", writes Joanna Moorhead in "Couples + Money". Simon Cox, a business writer for The Economist, examines the economics of coupledom...

From INTELLIGENT LIFE magazine, Autumn 2008

When companies face financial
hardship, they are often tempted to merge, splitting their costs and combining
their customers. Couples do the opposite. The weight of unpaid bills and
overdue loans can break a relationship: the unspoken vow that haunts many
marriages is "till debt us do part".

But a
demerger makes little economic sense. Ever since Gary Becker of the University of Chicago published "A Treatise on the
Family" in 1981, economists have thought of the family as a factory, combining
inputs of money and time to produce domestic bliss. This marital enterprise has
obvious advantages over its competitor, the single-person household, just as
the factory can outdo the lone artisan. Couples enjoy economies of
scale--sharing a bed, a kitchen and perhaps a car--and can benefit from a
division of labour between them.

It will
surprise no one to learn that men devote more hours to paid employment, women
to housework. But contrary to popular belief, these two contributions balance
out, on average, in most rich countries. In America, according to a report by
Michael Burda of the Humboldt University of Berlin and others, men do 313
minutes a day of market work and 163 minutes of housework (liberally defined as
anything you could pay someone else to do for you), whereas women do 201 and
271 minutes, respectively. The great exception is Italy, where men, in the words of
the novelist Ian McEwan, "expect their wives to replace their mothers, and iron
their shirts and fret about their underwear".

The
economic gains from coupledom are substantial. For middle-aged women, the cost
of living in a married couple is 30% less than the cost of living alone,
according to calculations by Arthur Lewbel of Boston College
and Krishna Pendakur of Simon Fraser University, using Canadian prices. For
men, it is about 20% less. Marriage, it seems, is a bargain.

But how
do couples divide these spoils? Economists
once touchingly assumed that spouses wanted the same things and acted as one to
achieve them. Households were "glued together" in Amartya Sen's phrase. Now
economists think of marriage as a bargain in a second sense. Husbands and wives
haggle over cash, chores, care and consideration. By one recent estimate, the
split in Britain
is 40:60 in favour of the man. But these deals are not set in stone. When the
government started paying child benefit to wives not husbands, in the 1970s, Britain's unglued households began spending less
on booze and home-cooked food and more on restaurants and takeaways, according
to Jennifer Ward-Batts of Claremont
McKenna College.
They also spent £6 more a year on toys.

Bad
times can force a painful renegotiation. Of unemployed men consigned to
household chores, Friedrich Engels wrote: "One may well imagine the righteous
indignation of the workers at being virtually turned into eunuchs." That
indignation has lingered in the 160 years since he wrote about it. Anne Solaz
of France's
National Institute for Demographic Studies (INED) has shown that when French
women lose their jobs, they do more housework and their husbands do less, as
one might expect. But when French husbands are laid off, their wives do no less
housework, even though the man does more. Perhaps he doesn't do it very well.

These
bargains may not be fair. But economists typically assume they are efficient.
Between them, spouses create the biggest pie possible, even if they do not
split it equitably. No other bargain could make one of the spouses better off,
without making the other worse off. The traditional family, for example,
strikes a bargain in which the wife sacrifices her career prospects to raise
the children both spouses want, freeing the man to make more money. If the
husband is sufficiently generous with his improved earnings, the bargain should
make them both better off.

But this
model of marriage is becoming obsolete, according to Betsey Stevenson and
Justin Wolfers, an unmarried couple at the University
of Pennsylvania's Wharton School.
Because people live longer and breed less, couples spend a smaller fraction of
their lives together with children. No need, then, for one to specialise in
child-rearing, the most demanding of domestic tasks. Many other chores can now
be automated or outsourced. Before electric appliances, it took four hours to
wash 38lb of laundry, by stove-heating water, scrubbing on a washboard, then
wringing by hand or mangle.

Households
also now spend less time, and more money, feeding the family. But even in America,
working couples still spend nine and a quarter hours a week putting food on the
table. At America's
average wage of $20 an hour, that time would be worth $185 in the labour
market. People are under-using the take-out menu.

The
marriage factory faces a second threat: couples now find it harder to make
their bargains stick, because vows can now be broken cheaply and without
stigma. If a woman agrees to sacrifice her career to make a home, her prospects
outside marriage diminish, leaving her with less conjugal clout. The husband
might therefore be tempted to renege on his commitment to share his earnings
equitably. But if his wife anticipates this outcome, she won't make the bargain
in the first place. The rise of easier, "no-fault" divorces, Betsey Stevenson
shows, has made American women less willing to have children or to pay their
husband's way through college. And no one takes home economics anymore.

Coupledom
has changed, these two economists argue, from a mode of production to a mode of
consumption. Instead of complementing each other in their work, spouses
complement each other in their pleasures. The husband enjoys cinema-going more
because he goes with his wife. In the traditional economic conception of the
family, one spouse provides the things money can buy, the other provides the
time good housekeeping demands. Now a spouse is someone to spend time and money
with. That may be some consolation when economic misfortunes leave a couple
with more time and less money than they'd bargained for.

Picture credit: korbatz/flickr

(Simon Cox is a business correspondent for The Economist.)