When does marriage make economic sense?

By XN Iraki

Economists love equations and models. They often avoid soft issues that are hard to fit into their models and equations. Yet, it is such issues that occupy our time, energy and minds. Such issues include love, anger and motivation. To give credit where it is due, some economists have embraced such soft issues and spawned a new branch of economics-behavioural economics-which borrows a lot from psychology.

Let us focus on one such issue, marriage. Nothing arouses more emotions, sentiments and dreams than marriage, particularly for the young. It is a subject of movies and drama that occupy our time and psyche at times blurring the reality.

It is popular subject in our homes and most institutions seem to have unusual interest in marriage. The Government issues marriage licenses or certificates through churches and its own offices, which I find interesting. If marriage is about love, a legal contract would not be necessary.

The media also has its stake in marriage particularly when celebrities are involved, from golfers to marathoners and footballers. Yet like there might not be much difference between marriages among the holloi polloi and celebrities; both seek happiness whatever they conceive it to be.

We can leave the sentimental part of marriage to psychologists and sociologists who may suggest marriage ensures social stability and emotional satisfaction and focus on its economic part.

Does marriage make economic sense?

Economics 101 suggest marriage leads to economics of scale and scope. Economics of scale is best illustrated through cooking where cooking food for one person is not much different, cost wise from cooking for three people.

Through marriage, couples reduce their costs, through sharing the expenses from rent to food, transport and even bed! Most married men and women realise that the low cost associated with singlehood is an illusion. Marriage is the cheapest form of living.

Economics of scope means doing more with the same resources. Couples enjoy economics of scope through marriage; they can use the family setting as an entertainment forum, investment forum, education centre (particularly with home schooling). The family setting is also a source of security both physical and emotional.

Many Governments recognise the economic benefits of families and actively support families, may be the reason governments give licenses to protect the family as an economic unit or hub. It might also be another way to protect the family from "speculators" out to get part of wealth and stability created within the family. Some Governments even give families tax rebates. Some observers note that there are other invisible economic benefits of marriage.

Families tend to discipline the next generation ensuring it is more responsible and focused. This could be seen as an economic stimulus. Observers note family strength is one of the factors that have helped transform Asian countries from the Asian tigers to China and Japan into modern vibrant economies. Most visitors to Asia talk about roads and skyscrapers not about families and their stability with low divorce rates.

Married couples tend to think long term, which might lead to savings, accumulation of wealth and economic growth. Needless to say, it is through families that entrepreneurial values and wealth are passed from one generation to the next, probably more effectively than through schools.

Some even suggest that the informality in the family setting is great stimulus to creativity and innovation that are needed in a modern economy. Such informality balances the formality that is the hallmark of our key institutions from churches to Governments and unexpectedly schools.

 Research also seems to indicate married people live longer, are healthier and make greater contribution to the economy, far more than they consume. If marriage makes so much economic sense even to non-economists, why are younger people shying away from marriage? The unit has become a victim of its own success. After realising that marriage is a very success economic unit, speculators have joined in. Why else are divorces more common among the more educated and economically endowed?

Diminishing marginal utility

Why are divorces more common in developed countries? Rarely are the great economic and non-economic values of marriages publicised. But when things go wrong in marriage that becomes fodder particularly for the tabloids. Some argue that the end of the older (our traditional societies) has created a vacuum that modernity has exploited with the younger generation viewing marriage through a make believe world, not reality.

Some economists could also boldly argue that marriages eventually become victims of the laws of economics particularly that of diminishing marginal utility where married couples find less satisfaction in each other as time elapses. This could explain why divorces are more popular among the educated and affluent; they spend more time with each other…

Where do we go from here? How can we leverage on marriage to stimulate the economy?

The new Constitution has touched on marriage with some fearing it provides a leeway for speculators to ply on the wealthy and affluent through divorces. But is family life and its ethos part of our upbringing or do we wait to get married to learn about it the hard way? Can we make family life part of our curriculum? Why do we spend so little time learning about what most will eventually do-marry? Schools of Business seem to focus all their energy on firms and not family unit, which not only produce wealth creators, but also hold lots of wealth on this planet. Lots of theories on business and management seems to separate the corporate man from family man, yet the two are not mutually exclusive. What incentives does the Government give to married couples to mitigate the patience of bringing up the country’s most precious resource, children? Free education is not enough, what of tax rebates for the married?