The Economics of Marriage and Divorce
Marrying for Money
Throughout history both love and money have been the major reasons for marriage. I remember reading somewhere a reference to George Washington telling his step-son that love is fine but more is needed for a marriage.
Washington himself is a perfect example of the pragmatic approach to marriage, having courted and married the richest widow in Virginia.
Advice From an Old Dentist
I still remember as a lad of 5 accompanying my Mother downtown on the bus for her semi-annual dentist appointment with the dentist who had cared fro her family's dental needs since she was a young child.
Following her appointment the old doctor came out to the waiting room where I was waiting and, when she introduced me to him, he bent down, shook my hand and, looking me straight in the eye, said in a very serious voice Remember son, it is just as easy to marry a rich one as a poor one.
Of course I, like George Washington's step-son, did not heed the advice and, not having rich parents like Washington's step-son, have had to spend my life working.
But I have no regrets and, if I were to live my life over again, would again choose my darling Bella over all the fortunes in the world without a second thought (she must feel the same way because when I proposed to her I told her I was broke and she still said yes).
Money, Love and Marriage
Throughout history love and money have been the two main forces behind marriage and, somewhat amazingly, regardless of which one has been the main force behind a person's marriage the other generally assumes equal importance following the marriage. While George Washington married for money, he was a good and loving husband and father to his two step-children (George Washington fathered no children with his wife, Martha).
Since the ancient times, economics has been as much a part of marriage as romance and sex. History records how countless numbers of men and women have advanced themselves financially and socially by seeking out and marrying someone much wealthier than themselves. Sometimes it is the individual alone who decides to seek wealth through marriage while other times it is family members who seek to advance the fortunes of the family by marrying off a younger member to a wealthy mate.
A major theme of the recent book and movie The Other Boleyn Girl is that of the sixteenth century English father and uncle seeking to advance the family fortune by strategically marrying off the children of Thomas Boleyn.
In the case of Anne Boleyn (who was the second of six wives that the English King Henry VIII ended up marry and discarding during his reign) the result was tragedy both financially and romantically with Anne losing her head and the family its fortune.
Another Anne, Anna Nichole Smith, succeeded in the economic realm enjoying great financial success through marriages but found only tragedy when it came to romance and her life in general.
However, some, like America's first President, George Washington, and England's greatest nineteenth century Prime Minister, Benjamin Disraeli, found both the financial and social success they sought from their marriages to wealthy women, as well as happiness and love in their marriages. Disraeli is often quoted as saying that he had married for money to which his wife quickly added ...but if you had to do it again, you would do it for love. and his marriage is often cited as an example of a very successful marriage of love.
On a more serious note, the family has always been the basic unit of society and the household, which throughout history has usually been the nuclear family, has been, and still is, the basic economic unit of society.
Whether one marries for love or money, economics becomes a major factor following the marriage.
A basic concept of economics is the idea of division of labor in which work is divided among people rather than being done by one alone. In most cases when two or more people are involved in the production process the output of their joint efforts is greater than the total output of each working alone. As those of us who have had the dual experience of trying to raise a family, manage a home and earn a living both as a single parent and as a married couple will attest - the task is much easier when sharing it with a spouse than going it alone as a single parent.
Cost Per Person for Married People Less Than if They Were Single
However, the economic benefits of marriage go beyond the division of labor.
Married couples share a single dwelling with a single casualty insurance policy insuring their home and possessions. In the case of two single people, two homes and two insurance policies are needed and this could result in the total cost for the two individuals living separately each paying as much as the couple pay together. Or, in the case of two income households the two together can afford more expensive living quarters than they could afford individually.
A family plan will insure two or more cars at a much lower price than will separate insurance policies on each car. Things like food can often be purchased in larger units to accommodate two or more people (including children) at a lower per unit cost than when purchased individually.
Even traveling can be less expensive as two people can travel in one car for considerably less than two people driving separate cars and a room for two at a hotel costs less than two separate rooms.
Cost of Divorce for Families
When people divorce and break up the marriage, all of these savings are lost which results in an adverse economic impact on the couple and their children.
The first economic impact is the cost of the divorce itself. Since marriage in civil law is a contract, there is a legal process involved in dissolving the contract.
In an amicable divorce with each partner agreeing to a division of the marriage assets and child custody issues, the legal cost of dissolving the marriage can be relatively small consisting only of court and document filing fees. However, if there are any disputes over property or children, attorneys and other professionals will need to be called in and the legal costs will skyrocket.
There are also costs involved with the division of assets as not all assets can be easily divided which means that for certain assets, such as a hours or car, one partner will get the asset and then have to come up with cash to buy out the partner's interest.
An alternative is to sell all joint assets and divide the cash proceeds. However, divorces generally are not postponed until market conditions are favorable. In fact in reality the opposite is often true as economic downturns are often the final straw that breaks a weak marriage which means that assets are often sold for less than they would fetch in a good market. This loss on the sale of assets results in another economic loss to the divorcing couple.
Once the costs of the divorce process itself are taken care of, other factors come into play.
Where once the couple occupied one dwelling together, they now need separate dwellings which means that the cost of housing can nearly double as each now must purchase separately what they formerly shared.
Houses have to be furnished (furniture, dishes, linens, cleaning supplies, gardening supplies, tools, etc.), which again results in each paying separate, full prices for what they used to pay once and share.
Homeowners insurance, heat and air conditioning, utilities, etc. are now needed for two dwellings, rather than one dwelling which is a further ongoing expense of divorce.
Car insurance must now be purchased separately by each and separate medical insurance will have to be purchased by each which again has the effect of nearly doubling the living costs of the two people. With separate dwellings comes separate real-estate taxes (if one or both rent this is included in the rent) will have to be paid on the two dwellings rather than one dwelling.
When Children are Involved the Cost to the Family is Even Greater
If the divorcing couple has young children there are additional costs which can be substantial.
If one spouse simply abandons the family and disappears, the other spouse gets full custody but also has to assume the full cost of raising the children. The court may require the absent former spouse to pay child support, but it is generally up to the spouse with custody to track down the former spouse and provide that information to the court before the civil authorities will enforce the ruling. The cost of finding and collecting the money generally falls on the spouse seeking the support.
If both spouses are present and one gets full custody the other will often be given visitation rights (as well as usually having to pay child support).
If the couple live in the same city the financial cost is small as it usually simply amounts to paying for a little extra gasoline by one or both to pick-up and drop off the children for the visitation rights.
However, if they live in different states this can result in flying the children back and forth which is considerably more expensive. In hostile divorces where one or both spouses continue their fighting which led to the divorce, visitation rights often become another area of dispute which frequently end up in court with both having to incur attorney and other fees. There are also the non-cash expenses of juggling time and plans to accommodate the visitation rights.
In the case of joint custody, which is becoming more common, there is considerably more traveling between homes and more complex scheduling which, if the one or both of the couples is hostile, can result in more legal infighting. Also, joint custody generally requires that, in order to keep custody rights, each spouse must continue to live in the area which often results limiting promotion opportunities that require moving or accepting a better position with an employer in another city or state. Having to turn down these opportunities can result in a substantial reduction in the individuals career and lifetime income.
Cost of Divorce on the Community and Society
As to the second part of the question, concerning the economic effect of divorce on society and the economy as a whole, divorce does have negative economic effects for society, with the first one being the courts.
Since marriage is a legal civil contract, the only way to dissolve them is through court proceedings which means that all divorces, both amicable and messy, require some court time and resources which adds to the already heavy load of work clogging our court system. While some of the costs of the court system are offset by fees paid by participants coming before the courts, society (read taxpayers) still has to foot a large part of the bill for the court system and when that system is forced to increase in size due to increasing business the taxpayers have to pay for that as well.
Litigants in other areas, besides marriage, are also burdened by the increased divorce proceedings as the additional load on the courts causes longer waits for everyone. Since in business time is money these delays add to the costs of business litigation which, in turn, is passed on to consumers.
There are also costs to the social service system, since the after divorce income and living expenses are not always equal leaving one, or occasionally both, spouses below the official poverty line which makes them eligible for things like food stamps, subsidized housing, subsidized medical care and possible cash welfare payments. The cost of these programs are borne by the taxpayers as are the costs of administering the programs.
Finally, there is also the negative impact of divorce on children which often requires additional counseling programs in schools as well as additional disciplinary problems by children who act out their problems in that arena.
Numerous studies have shown that boys growing up in fatherless households (which is often the case in divorce) tend to get into trouble with the law more frequently than their peers in homes with a father present, which leads to additional costs to society both in the direct law enforcement areas where taxpayers have to pay for additional police, more court time and personnel, additional probation personnel and services and additional prison personnel and facilities as well as the cost of the physical damage resulting from their crimes.
Studies have also shown that girls growing up in fatherless homes or homes where the father has abandoned them often have difficulty as adults in their relationships with men which leads to more divorces in the future.
Economic Progress Can Lead to More Divorce
Ironically, while marriage continues to be a very efficient economic arrangement and divorce continues to involve costs and financial strain, in the economically advanced nations of today's world, economics can also be said to play a role in encouraging divorce. While the economic benefits of a stable marriage remain as important as ever, rising prosperity and rapid economic growth have provided people with more alternatives.
In the past, most people could not afford the cost of divorcing and going it alone, especially when children were involved, and this tended to keep families together while making divorce rare.
Today's relative economic affluence makes it possible for many people to divorce with both spouses being able to survive and even prosper as separate households. Today's economic growth and prosperity has also meant that we, as a society, can afford to subsidize, through both our mandatory tax dollars and voluntary charitable giving, those who have trouble making it alone.
While few, if any, people elect to divorce and live on welfare or private charity, the existence of this social safety net makes it safer, economically, to leave a marriage and go it alone knowing that help is available if they fail to make it alone economically.
Despite the many tales from the past of couples living unhappy lives because they were locked in unhappy marriages that they could not get out of, more often than not the economic and legal constraints that forced people to stay together caused many to face and resolve their issues rather than running away. While none of us seek obstacles and difficulties in life, it is the facing and surmounting of these obstacles that ultimately leads to happy lives.
This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.
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© 2008 Chuck Nugent