Stumbling and Mumbling: Cheryl & Cashley: the economics

January 28, 2008

Cheryl & Cashley: the economics

Should Cheryl divorce Cashley? The economics of the decision are more balanced than you might think.
The case for her doing so, other than that he's a lying cheating no-good shortarsed drunk with a dick the size of a bookie's biro, is two-fold:
1. She has good outside options. Research shows (pdf) that the probability of divorce rises, the higher is the woman's share of family income. What's more - and in this she differs from Ms Beckham - she has a good probability of getting herself a better bloke than Cashley. (Not me though - her bandmate Sarah has first refusal.)
2. Maslow's hierarchy of needs (and indeed diminishing returns) predicts that, as income rises, other personal goals become more important relative to income. Among these is self-esteem, and this points in only one direction.
Against this, two points argue for her sticking with Cashley:
1. Income hedging. Although Girls Aloud are one of the greatest pop bands in British history, public tastes are fickle, so Cheryl faces income risk. As hers and Cashley's incomes are probably uncorrelated, Cashley is a good hedge.
2. Joint incomes matter. The same research that showed that divorce rises with the wife's relative income also shows that divorce is less likely, the richer is the couple. This could be because spouses get utility from each other's income, independently of their own. Or it could be because a high joint income complicates the finances of the divorce decision. This effect, however, is weaker than the outside options effect.
The decision, then, is fimely balanced. But the 10-1 you could have got on them splitting at the start of the year now looks a good price.