Authors: Marina Adshade
Dollars and Sex (24 page)
Todd Kendall's research uses data collected from 43,552 couples and finds that there is no relationship between access to the Internet and the probability of divorce. He also finds that couples in which the husband uses the Internet daily are actually less likely to divorce than those in which the husband uses the Internet less frequently. There is no relationship between how frequently a wife uses the Internet and the likelihood that the couple will divorce.
We really don't know what these men and women are doing onlineâthey could be shopping or downloading porn for all we knowâbut even without that information this is pretty conclusive proof that online dating and social networking sites are not a major cause of divorce. This doesn't imply that no married people are shopping for new mates on the Internet. It just means that those people would still be looking for a new mate even if they didn't have that resource available.
A LUBRICANT LEADING INDICATOR?
Can watching the market for sex toys help economists predict a recession?
Economists at their most playful like to find interesting ways to watch the market for signs of an impending economic downturn. After we get tired of watching inventories and production capacity, we turn to other leading indicators such as hamburger sales and whether or not doughnut shops are moving into downtown cores.
One of the most famous leading indicators of a recession is lipstick sales. Leonard Lauder, who was chief executive of the cosmetics company Estée Lauder until 1999, observed that in the lead up to a recession, lipstick sales tend to increase. It turns out that an inexpensive way to make a woman feel good is a fun way for economists to forecast hard economic times.
Lipstick sales did not predict the economic downturn in 2007 and 2008, though, and sales in that market have been flat over the last few years. Another feel-good market is booming instead: the market for personal lubricants and sex toys.
Market research in 2009 found that sales of lubricants and sexual-enhancement devices were rocketing in the recession. The argument for this surge in sales of sexual aids sounds much like the argument made for lipstick; people need a cheap way to feel good in tough times (or you might say they need a way to get hard in hard times).
The real test as to whether or not this market is a good indicator of economic activity will be revealed in the recovery. If the sales of his-and-her gels and vibrators go limp over the next year, then I think we have a winner.
Maybe then we should ask
The Economist
to start reporting on the sex toy and lubricant markets. After all, they seem to share my perspective when it comes to providing stimulating economic analysis.
If this does not convince you, there is research from the Netherlands that also examines the relationship between marriage quality and Internet usage and finds that the more frequently an individual uses the Internet, the happier they are in their marriage.
Using data collected from married couples, Peter Kerkhof, Catrin Finkenauer, and Linda Muusses find that frequency of Internet use is associated with happier marriages, marked by partners who keep fewer secrets, feel more attached to each other, and have a greater passion for their relationship.
When they looked only at compulsive Interest users, however, they found that those addicts experienced declining intimacy and passion in their marriages over time, spent less time with their partners, and were more willing keep secrets from them. Overall, the quality of their relationships was lower and appeared to be deteriorating over time. This deterioration wasn't because they spent all their time online but rather because the compulsiveness of their behavior hurt their marriages.
MARRIAGE AS INSURANCE IN HARD TIMESThere were many problems in Jane's marriage in the story I shared with you at the beginning of this chapter, particularly John's unwillingness to negotiate with Jane on important family decisions, but eventually it was his joblessness that eroded the weak foundation of their marriage.
Besides the toll that living through a period of economic hardship places on a couple, job loss removes one of the reasons for being married in the first placeâto have some additional support when things go wrong. If marriage is a form of insurance in hard times, then when one person in a marriage has already lost his or her job, the insurance, in terms of income for the second person, is essentially gone.
MY HUSBAND THE JUNK BOND
In making financial decisions, women are far less willing to take on risky assets than are men; they appear more risk-averse. Single individuals, in turn, are more risk-averse than married individuals, and so it follows that married women, historically at least, appear to be more willing to take on risky assets than are single women.
If we think of a husband as another asset in a portfolio along with stocks, bonds, and real estate, this behavior of married women makes sense, but only if a husband is a low-risk asset. With the additional safe asset (i.e., the husband) in a married woman
'
s portfolio, it makes sense that she seeks to balance her portfolio by purchasing riskier assets. So married women are not really less cautious than single women, they just look that way because we are ignoring her safe asset that puts his feet on the coffee table at night.
But here
'
s the thing: over the last forty years, the asset that is a husband has evolved from behaving like a risk-free asset to behaving more like a junk bond
â
a high-yield asset with a high risk of default. Add to that the volatility in the housing market (essentially the returns from which the junk bond pays out in the case of default), and the riskiness of the husband asset has increased over time.
If this is true, and if the husband-as-portfolio item argument explains the lower risk-aversion of married women, then as divorce rates increase, we would expect to see the risk-aversion gap between married and single women shrink.
New research by Italian economists Graziella Bertocchi, Marianna Brunetti, and Costanza Torricelli finds that, starting in the early 1990s, the risk-aversion gap between single and married women actually widened as married women entered the workforce and began behaving more like men
in their investment decisions. But that all changed in the beginning of the twenty-first century; since that time, the marriage gap in risk aversion has narrowed considerably and married women have increasingly begun to behave in their investment decisions just like single women
â
they are acting more risk-averse.
While divorce rates in many countries have been stable for more than a decade, in just three years (2000 to 2002) the divorce rate in Italy has increased by 45 percent. So, in a period of increased risk in marriage, the level of risk-aversion of married women has converged to that of single women. This is consistent with our hypothesis that married women are choosing to rebalance their portfolios with less-risky assets in response to the increase risk associated with their junk-bond husbands.
Job loss reduces the motivation that couples have to stay together. This probably doesn't matter for relationships that stand on a solid foundationâafter all there is no point in having insurance if the insurer backs out of the arrangement just when you need to make a claimâbut not all relationships have a solid foundation, and, for many, the loss of a spouse's job is the straw that breaks the camel's back.
New research by Judith Hellerstein and Melinda Morrill looks for evidence of a relationship between unemployment and divorce, and finds, somewhat surprisingly, that when economic times are good, people are more likely to divorce than they are when economic times are bad. In fact, when the unemployment rate goes up by 1 percentage point, the divorce rate falls by 1 percentage point.
There are two possible reasons for this counterintuitive result.
The first reason is that while in a recession some couples are more likely to divorce (i.e., those who have actually lost their jobs), other couples are more likely to stay married (i.e., those who haven't lost their jobs but fear that they might).
After all, you wouldn't cancel your car insurance just when the risk of an accident is at its highest; even if you no longer wanted it, you would wait until the risk has passed. One reason why divorce rates increase when unemployment rates fall is that improvements in the economy decrease employment uncertainty, reducing the need for the insurance marriage provides.
The second reason that more couples stay together in a recession is that falling house prices make it difficult to part with a family home whose value has fallen well below their expectation, or even fallen below the value of their mortgage.
Imagine you are married and you wish you weren't. If house prices have fallen, then buying a new homeâor two, since that is what you now need as a coupleâis more affordable than it had been in the past. So falling house prices might increase your willingness to end your relationship since finding a new place to live is now less expensive.
If this is the case, then when house prices fall, divorce rates should increase, and, alternatively, when house prices increase, divorce rates should fall.
According to research by Martin Farnham, Lucie Schmidt, and Purvi Sevak, while it is a good idea to buy new homes when the market is low, couples prefer staying in less-than-satisfying marriages rather than lose equity they had built up in their existing home. These authors contend that an emotional barrier to selling property at a loss encourages people to hang on to their homes, and stay in their marriages, in the hope of reducing that financial loss in the future.
They find that a 10 percent decrease in house prices decreases the divorce rate of college-educated couples (those who are more likely to be home owners) by an incredible 29 percent. When you consider that house prices fell by three times that amount (30 percent) between April
2006 and August 2010, this result translates into a massive decline in divorce rates.
For those who are less likely to own a home, falling house prices had the opposite effect on divorce rates; a 10 percent decrease in house prices increased the divorce rate of those who did not complete high school by an equally incredible 20 percent.
What this tells us is that recessions do have a destructive effect on marriages, but that effect is principally among poorer households. This shouldn't be that surprising given that low-skilled jobs are the hardest hit during recessions; in 2010, a person with less than a high school education was three times more likely to be unemployed than was a person with a college degree.
If the decision to divorce is related to unemployment and house prices, then maybe the decision to marry is also related to the state of the economy. According to the U.S. Census Bureau, the overall marriage rate for individuals between the ages of 25 and 34 fell by 4 percent between 2006 and 2010 (from 49 percent to 44 percent). While it is true that marriage rates have been falling for decades, this downward trend during the recession was different for one reasonâwhile the marriage rate for educated people stayed almost constant, the marriage rate of people with
only
a high school diploma, or less, fell precipitously to 10 percentage points less than it was a decade ago.
Whether or not this decline in marriage among less-educated workers is related to the recession is yet to be proved, but there is some evidence in recent years that marriage as insurance has been replaced with cohabitation as insurance.
According to a report by Rose Kreider, the number of heterosexual couples living together outside of marriage increased by 13 percent between 2009 and 2010. The biggest increase in cohabitating couples in this period was among those in which at least one person was unemployed; only 39 percent of couples who moved in together that year consisted of two employed people compared with 50 percent of couples who were already living together in 2009.
Also, men in these new couples were less likely to be employed than men in previously existing couples as well; 24 percent of the newly created couples were ones in which the man was unemployed compared with only 14 percent of those who were already cohabitating in 2009.
It appears that cohabitation acts as a form of bridging insuranceâmen and women are prepared to provide temporary insurance (housing for example) to their lovers when times are hard but unprepared to provide full marriage insurance.
Whether or not they will choose to marry when good times return remains to be seen. The one thing that is clear is that recessions and booms can significantly affect the way in which couples approach their relationships.
FINAL WORDS