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ECONOMIC ANALYSIS

Marriage has some economic consequences

September 1, 2008

ECONOMIC ANALYSIS Marriage has some economic consequences

This month marks my parents' 50th wedding anniversary. And, at the risk of being labeled a hopeless unromantic, I thought I might reflect on some of the economic consequences of marriage.

I'll begin with taxes. Until 1969, when my parents celebrated their 11th anniversary, the federal income tax had no marriage penalty. In fact, from its inception in 1913 until then, married couples enjoyed a modest tax advantage (two deductions on the same income provided a small edge over singles). Congress tried to remedy this inequity, but as is so often the case, it backfired. From 1969 through 2003 (when the law was changed), the average married couple paid $1,400 more per year in taxes than they would if they had simply cohabitated. That is well more than $75,000 in extra taxes paid over that period by married couples (in present value terms).

All jokes notwithstanding, marriage adds to life expectancy by as much as five years for both spouses. The value of the additional life is a very real tangible benefit resulting in several billion dollars annually in the United States. With actuarial estimates of life value at upwards of $100,000 per person annually, a long marriage is easily worth a million dollars.

Virtually every economist who has studied education has found that the single biggest factor in a child's success in schooling is the role of parents. In my own research, I found that parental characteristics mattered more in educational outcomes than did all other factors combined. Of course, a stable marriage is part (but surely not all) of the impact we see on kids. But since we are spending perhaps $8,000 per student in public education each year, the true effects of parental quality on education costs is significant.

The intra-family dynamics of marriage have also seen plenty of study. Two effects here are worthy of mention. The first hearkens back to Adam Smith's observations about the division of labor. This notion suggests that individuals get better at certain tasks through specialization. So, if one spouse only cooks while the other only cleans the dishes, the couple enjoys a better meal and a tidier kitchen than if each did the work alone. This probably matters more in developing societies than in ours. However, if you had grown up eating my father's oatmeal or relying on my mom to keep the car running, you would surely value intrafamily specialization.

A second observation about marriage is that education and skills held by one spouse tend to spill over into the other's productivity. This is especially true with female education levels, which studies find play a significant and large role in the earnings of the man. This confirms every mother's marriage advice to her sons.

As interesting as all these tidbits may be, I somehow think they played no role at all in the decision of my parents to marry, for the heart has reasons that reason cannot know. And for that, I am truly glad.
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Hicks is director of the Bureau of Business Research at Ball State University. His column appears weekly. He can be reached at bbr@bsu.edu.
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