Betsey Stevenson and Justin Wolfers on why we study families

I’m often asked why my research is economics and not sociology. Justin Wolfers and Betsey Stevenson give one answer as part of a longer Q&A on their research:

Your other areas of research focus include marriage, divorce, and family. Why would these areas interest economists? Or business leaders?

Dr. Stevenson: Economics is about how people make decisions optimally, given that they’re facing constraints. That framework can be applied anywhere, not just to things that are about dollars and cents and the economy. Families and labor markets are intimately connected, and to understand one, it’s helpful to understand the other. That’s because decisions about labor force participation and about what kinds of jobs to take and what kind of hours to keep are made within the context of family lives. What happens in families affects the way people make those kinds of decisions. And what happens in labor markets affects the decisions people make about families. Economists are also interested in families because we have come to realize that there are many parallels between family and labor markets.

Dr. Wolfers: The first place that people notice the similarities between family and economics is in what some have called the marriage market, which looks a whole lot like the labor market. People search for partners the same way they search for jobs. When you find a spouse or a job that looks like a good fit, you take it. And you must make a decision about how much time to spend searching for the perfect spouse or the perfect job before accepting a job or a spouse.

Related Content:

  1. Anticipating Divorce
  2. For Valentine’s Day, on Love and Marriage and Economics

On anticipating divorce, again

Related to my post earlier this week, a new working paper shows that women in the US respond to increased divorce rates by working harder. Knowledge of high divorce rates appears to be enough to incentivize working harder in anticipation of even a probabilistic one-earner household. I haven’t had the chance to read the paper itself (I will, but 68 pages!?), but Ezra Klein discusses it here:

Why would this be the case? Researchers believe it’s because marriage provides “implicit social insurance” for women, who are still more likely to be the secondary income-earners in the U.S. and Europe. So in the U.S., where divorce rates are higher, “women have a higher incentive to obtain work experience in case they find themselves alone in the future,” they write. “European women anticipate not getting divorced as often and hence find less reason to insure themselves by working as much as American women.”

A longer treatment of the paper by the authors is on the VoxEU website.

Referenced: Chakraborty, Indraneel, Hans A Holter and Serhiy Stepanchuk (2012). “Marriage Stability, Taxation and Aggregate Labor Supply in the US vs. Europe”, Working Paper.

Anticipating divorce

This Journal of Human Resources paper by Elizabeth Ananat and Guy Michaels is a few years old now, but as I’m readying my first dissertation chapter for submission, I’ve been reading up and reminding myself of various literatures and it seemed appropriate. Ananat and Michaels present an intuitive, causal story for how divorce causes women to live in poverty. It seems pretty straightforward: the break-up of a marriage means women are less likely to live in a household without income from someone else, but also that women work to compensate for such income losses by going back to work, moving in with siblings, etc.

Divorce increases the probability of living in a household without other earners. In fact, we estimate that breakup of the first marriage significantly increases the likelihood that a woman lives in a household with less than $5,000 of annual income from others—the likelihood rises from just over 5 percent for those whose first marriage is intact to nearly 50 percent for those whose first marriage breaks up. However, women can and do respond to income loss from divorce by combining with other households, through paths including remarriage or moving in with a roommate, sibling, or parents. Moreover, women further compensate through private (for example, alimony and child support) and public (for example, welfare) transfers, and by increasing their own labor supply.

I use the same logic to say that as long as she has some idea that the divorce (or union dissolution in my case as I include unmarried couples) is imminent, a woman should make compensatory decisions regarding the future loss of income, not just the immediate loss of income.

E.O. Ananat with Guy Michaels. “The Effect of Marital Breakup on the Income and Poverty of Women with Children.Journal of Human Resources 43.3 (2008): 611-629.

How to look rich by not breastfeeding

Almost every time that I’ve presented one of my dissertation papers, someone comes up to me to tell me about some experience they have had that is relevant to my paper. Often, they’re not happy. My paper on parental relationship quality and reading to children tends to really rile up single mothers, all of whom want to tell me how they managed to be good parents despite having unhappy marriages. Mostly, I reiterate how these are average and then just smile and thank them for their input.

Occasionally, though, someone tells me something inspiring, or sad, that really touches me. A student came to tell me about her own experiences with a violent relationship after I presented some of my research, and many others have told me stories about parenting.

Today, I presented the second chapter of my dissertation at the Central Pennsylvania Consortium’s annual Women, Gender, and Sexuality conference. That’s a mouthful, no? My second paper explores the extent to which promises of financial support given to single mothers by the fathers of their children have an influence on financially-constrained investments in children as the child gets older.

As we all finished, a woman who works at the College came up to tell me her story of growing up in Jamaica. She told me how formula was marketed to upper class mothers and so became a sign of wealth. And conversely, breastfeeding became a sign of poverty. Many mothers with few resources, she said, wanted to appear as though they were giving their children formula–the marketed as healthier option as well as the option that signaled ability to pay. Consequently, these mothers would use their limited resources to buy formula, but then would water it down in order to have more opportunities to show they were feeding their children with formula.

It broke my heart to hear it, but it also showcases a rather important problem that economists have. When we rely on survey data and on averages, all of these women would say that they used formula, but likely the nutritional outcomes for their children would be much different. So, not only is there a reporting problem whereby poor mothers might understate for how long and whether they breastfed, but the quality of the alternative has much more variability in nutritional value.

Outside of the measuring problem, I don’t think we’re all that good at identifying these types of what we would call irrational behavior. Without having interviewed women in depth or been there to witness this behavior, we likely would not include it in our analysis, leading to biased estimates.

Back to Becker

Two weeks ago, this blog got more hits in a day that it had during the entirety of its existence (~8 months). It wasn’t a big number relative to other blogs, for sure, but it was really exciting for me. Thanks for stopping by and reading and a particular thanks to Modeled Behavior and Brad DeLong and others for tweeting that post.

While it’s still hard to know exactly who is reading this (hi, Mom!), wordpress does give me an idea of where the clicks are coming from. One source that seemed to pop up a lot after the big day was the blog of a New Zealander who took issue with my characterization of Becker. He essentially argues that painting Becker’s ideas as antiquated can be quickly undone by releasing the gender constraints from the model. Let men do the laundry, essentially, and let women do waged work.

It’s a compelling proposition, but I believe the problems with applying Becker’s model go much deeper than the gender role issue. Changes in marriage and the resulting decrease in the usefulness of Becker’s models are a result of rather significant demographic and policy shifts. While there are certainly families who continue to operate under a strict separation of labor that leads to one partner earning wages and one staying at home, this is a rapidly diminishing proportion of American families, regardless of there is a male or female partner performing a particular gender role. Simply, fewer people are getting married, more and more women are having children out of wedlock, and divorce rates remain very high.

Specialization on the home/waged work divide is really only beneficial to both parties when the time horizon is unlimited, i.e., a marriage lasts a long time; or there’s so much inequality in the match that the low-earner has a high probability of being sufficiently taken care of if the match ends. It’s particularly damaging when partnerships end and the one who has foregone market labor is suddenly without compensation for household work in a world that (in almost all circumstances) demands at least some level of capital. Marriages, these days, don’t last that long, at least on average. This makes the risks of specialization much higher, particularly for one performing the unwaged work.

If you want to claim that “modern couples” specialize on a lesser level–say one does the laundry and one does the cooking–as a result of comparative advantage, you don’t reap the gains from complete specialization that are what make the Becker model tick. And, correct me if I’m wrong as I’m not a trade economist, but hasn’t the comparative advantage model pretty much been debunked?

Outsourcing is a solution, yes, when the two parties in a marriage have similar levels of human capital, similar desires to work, or face constraints such that raising a one-income family is impossible. But that doesn’t exist in Becker’s framework and I don’t think it jibes with the idea of domestic production. Once you add in a third person whose primary purpose is domestic production (child-rearing, cleaning, cooking, etc), the two-person model of production then becomes a model of consumption. The couple use their earnings to buy childcare, housecleaning, meals made, etc, in exchange for more leisure.

Interestingly, Justin Wolfers on Monday on twitter claimed himself as an exception to a recent paper claiming that male academics did less parenting than their female partners. While I applaud him for taking control of his parenting, he has a third person in the mix. He and his partner employ a nanny full-time to take care of their child. I don’t doubt that he’s presenting himself honestly, but I wonder how much of the equal parenting is a result of having a nanny, and how it might change if he didn’t. He says himself in the NYT profile that having the nanny allows him and his partner to do fun things with their daughter, like coloring, instead of fighting over getting dressed. Again, it comes down to shared consumption, rather than shared production.

So no, I don’t think you can generalize Becker, or bring him into the 21st century, by taking out the gender component. There’s just much more to it than that.

Environmental stress and obesity

I haven’t had the chance to read this paper yet, though I surely hope to get to it in the next week or so, but I think it’s rather fascinating. Gary Evans, a scholar at Cornell, shows that stressful home environments lead to obesity later in life. There is a rather large set of literature in fields such as medicine that link stressful home environments–embodied in poverty, unhappy parents, and more–to children’s outcomes–smaller incomes, less educational attainment, depression, and more. This work is of particular importance to some of my own work, where I show that a poor relationship between parents is correlated with a mother’s reading days with a child, which, in turn, is a good predictor of success later in life.

Dissertation

There is a large debate in the economics community about the value of putting out working papers. When a working paper creates significant buzz, whether in the media, on twitter, or even just among economists, the conclusions in the paper take hold. That first impression is shown to be very persistent, even when a later version of the paper comes up with opposite results.

At least as long as I’ve had this blog, I’ve had a note on my research page saying that links to working papers are forthcoming. I’ve completed my dissertation and am working on revising the chapters to submit to journals. I’m fairly certain that the big picture of these papers isn’t going to change and my advisors were insistent that each of my chapters was very close to that point. Consequently, revisions are small at this point, but that doesn’t mean that I can’t benefit from a little help from the internets.

Over the next few weeks, I will post each of the chapters of my dissertation here. Comments, suggestions, typos, criticism, etc. are welcome.

The evolution of marriage

Mark Oppenheimer has a semi-profile of Dan Savage, semi-critique of modern marriage in the NYTimes Magazine this weekend. Savages suggests that as we begin to expand the definition of marriage to include gay couples (as NY did last week and RI sort of did yesterday), we might also want to decrease our expectations around fidelity.

Interesting quote:

“In the feminist revolution, rather than extending to women ‘the same latitude and license and pressure-release valve that men had always enjoyed,’ we extended to men the confines women had always endured. ‘And it’s been a disaster for marriage.’ ”

Savage argues that before feminist movements sought marriage equality, men ran around with concubines and mistresses and it was mostly accepted. While this is a rather sweeping generalization, it is interesting to think about what would have happened if marriage had become more egalitarian in the sense that women were allowed to pall around, as opposed to men now being held to higher standards.

My interest in the subject is less on the benefits of nonmonogamy, and more on how a culture of “working through” cheating would affect divorce rates and children.

A number of papers in economics have recently tried to tease out the effect of divorce on children, but the trend, as Savage suggests, is towards advocating stability over monogamy. It’s not that he’s saying nonmonogamy for all, necessarily, just “the cultural expectation should be if there’s infidelity, the marriage is more important than fidelity.” When most of these papers talk about stability, they often refer to the mother having more than one partner or the father moving in and out of the picture multiple times, but the divorce brings a lot of trauma regardless of whether the parents ever remarry. The negative affects appear to be amplified when you add in new boyfriends and step-parents.

My research, however, shows that some of the negative effects may be in place whether or not the couple ever divorces. A lot of the economic reasoning behind the findings suggests that people are forward-looking and adjust their behavior (particularly investment in children) in anticipation of divorce. So, if we create a culture whereby sticking it out is the norm, we essentially raise the costs of divorce by increasing public admonition or shunning by peers or some other means. We could think about retreating from no-fault and unilateral divorce laws, but let’s say we don’t want to return to those dark ages, either.

We raise the costs of divorce and if we succeed, we keep more marriages intact. But if negative effects are in place before, or even in the absence of, divorce, and can be attributed to something other than anticipation of divorce, then we don’t really solve the problem of hurting kids. We maintain stability, in some sense, as a parent or parent’s lover isn’t walking in and out constantly, but kids aren’t stupid. Especially older children will likely notice something is amiss, behavior will change and we’ll still likely see negative effects. Will they be measureable? Will they be significant enough to observe? Perhaps not on average, but I don’t think asking parents to stay together, unhappy, solves the problem.

The other large problem with raising the costs of divorce is differentiating between socially acceptable causes for divorce and not socially acceptable causes. If we say that one-night stands should be overlooked, what about a weekend fling? Or a two-week fling? Or a month-long tete-a-tete? Where do we draw the line? Savage realizes the Schwarzeneggers, for instance, were doomed, but what’s in the middle? And the intersection of cheating and intimate partner violence is much larger than I think Savage realizes. Infidelity is often a tool of abuse and while a culture that overlooks a fling might seem a big leap from a culture that overlooks a slap or controlling money or a broken arm, I think we’re far enough down that road already.

To his credit, Savage advocates each couple figuring the process out for themselves. Monogamy, he says, still works for some couples even if it doesn’t work for all. Keeping it together for the kids may seem like a noble goal, but it’s not a one-size-fits-all goal, and the associated negative externalities could be large.

On not getting divorced

Divorce, we all know, is traumatic. Even if we are the lucky few who managed to watch our parents lovingly stay together our entire lives, we realize that we are the lucky few. Children of the 70s and 80s are all too familiar with divorce. We consoled our friends through it, we had dinner at friends’ houses in tense, uncomfortable situations and we likely see divorce as the norm. Perhaps people aren’t meant to stay together forever.

There is a lot of research that says that children of divorce have worse outcomes than children of parents who stay together. The causal link is tenuous, at best, which was the primary motivation for one chapter of my thesis. Surely, we know that couples who decide to get divorced are different than those who stay together, but that doesn’t mean all couples that stay together are the same, and it doesn’t mean they are happy or that they shouldn’t get divorced. In short, we have all this information about how divorce affects children, but in reality, we know that it isn’t likely the mere act of divorce that might hurt children, but rather how parents’ behavior and decision-making change when they’re thinking about divorce and moving toward divorce, even if they never get there.

While presenting this paper, as I’m sure other scholars of divorce and children have experienced, I’ve been asked, several times, whether the policy implication is that people shouldn’t get divorced. Should we be spending more money on marriage promotion or free couples’ counseling or something to encourage couples to stay together, for the good of the children? I think that my goal, in some ways, was precisely the opposite. Not that we should encourage divorce, but rather that concentrating too much on divorce as being bad for kids ignores everything that happens leading up to a divorce, it ignores the fighting and bargaining and trauma that results when parents are unhappy, regardless of whether they get divorced. It may be even that we’ve vilified divorce so much that parents who likely should get divorced, don’t.

The New York Times today offers some evidence of a backlash of sorts against divorce. They cite a marriage study that shows that those same children of the 70s and 80s, my generation and those a bit older than me, are less likely to get divorced than our parents. While the divorce rate hovers around 50% for the population, the rate for recent college-grads within 10 years of marriage is closer to 10%. Despite the fact that we’re not seeing these people through the whole of their marriages and lives yet, that’s a big difference. It should be noted, however, that fewer women my age are getting married at all. The same study showed that women aged 25-29 were much less likely to have ever been married, in fact, half of all women in that age range had never married. So, we’re dealing with a smaller base, here as well. It might be that the marriages that are occurring are just better marriages, as other people are waiting.

Regardless of how exactly the numbers play out, the Times used these stats, and anecdotes and books, to show that divorce has become almost taboo among some segments of society. The article tells horror stories of storybook wives and mothers being outcast from the social spheres once they decided to divorce, a decidedly different take on divorce than the feminist, liberating, now-you’re-free state that they say ruled earlier generations.

Though it’s easy to toss out theories of social pressure in middle age as bunk, there is evidence that social networks (and I mean communities, not facebook) can have a profound effect on the decision to divorce. One recent paper found that having a friend or family who divorces makes you much more likely to divorce. Contrary to how this may sound, it doesn’t appear that divorce is actually contagious, like the measles. Rather, it is likely that seeing someone else get divorced changes perceived costs and benefits of divorce. If a friend goes through a divorce, you may see how hard it is on her and her family, but you also see the benefits later on of her new situation. And if she has already done it, you benefit from not being the only one.

In communities where divorce is looked down upon–be it for religious reasons, or ‘for the kids’, the costs for divorce likely remain very high, even if you know someone who has done it. It is precisely situations like these where economics trips up. In modeling divorce or investments in children, we control for what we can, but knowledge of a community’s stigma about divorce likely remains unknown. In the case where such a stigma is correlated with race or income, we might ascribe effects to race or income where they don’t belong.