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
Advertisements

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.