The price elasticity of marriage

Tory proposals to give tax breaks to married couples might cause a surprisingly large increase in the number of people getting married. That’s the implication of this new paper (pdf), which concludes that “even small changes in the cost of marriage can have significant effects.”
The authors established this rather cunningly. In 1980, 34 US states required people to take blood tests before they got married; these could cost up to $200, though usually less than $40. Between 1980 and 1995 most states abolished this requirement. By comparing marriage rates in states that abolished the test requirement to other states, the authors can then estimate the effect of a small reduction in the cost of getting married.
And they found that, on average, the blood test requirement reduced the number of marriages by 2.8 per cent - that’s a large number for a small cost. And the effect is bigger for the poorer or less educated.
This suggests that demand to get married is quite price-elastic. If so, a tax break for married couples might increase marriages quite a lot.
Does this mean such a policy would be an effective way of reducing “crime, educational failure and worklessness” which, says Iain Duncan Smith, are “all fuelled by breakdown of family life"?
I’m not sure. The reason why small price changes increase marriages a lot is probably that there are lots of happily cohabiting couples who are just about indifferent between getting married or not. Cutting the price of marriage tips these into wedlock. But it’s not these couples who are, for the most part, responsible for children being badly brought up. That responsibility lies instead with the couples who only met briefly for a quick knee-trembler in the doorway of JJB Sports. It’s less clear that these will marry for a tax break, and even less clear that they’ll become good parents by doing so.
So, even if marriage tax breaks increase  the number of marriages, they might not do much to mend our (allegedly) broken society. Maybe Laurie’s right - it is mere fetishism.

Comments

[Raedwald]

John Ermisch produced a paper for the ISER 'An Economic History of Bastardy in England and Wales' that contributes to the evidence on this subject (.pdf at http://tinyurl.com/mnnh5v )I quote:

"Marriage markets are subject to frictions. It takes time to meet potentially suitable members of the opposite sex and gather information, and whom one meets is a stochastic process. These market frictions affect who marries whom, the gains from each marriage and the distribution of gains between spouses. They also open the possibility of childbearing outside marriage as a rational choice, even when a woman can control her fertility perfectly....

The evidence indicates that cohabiting unions that produce children are much less likely to be converted into marriage and more likely to break up than childless ones (Ermisch and Francesconi 2000). About 65% of these fertile unions dissolve, compared with 40% of childless unions. Births in cohabiting unions make up 60% of recent non-marital births."

It's therefore women with the poorest marriage prospects, Ermisch suggests, that are the most likely to bear bastards.

Given the social costs of bastardy, measures that would increase the marriage prospects of those women most deficient in this department would pay the greatest social dividends.

[Frank the sales forecaster]

The US interest in gay marriage has been oddly coincidental with the end of the higher income taxes for marrieds (formerly refered to as "the marrage penalty".)

Put cost benefit analysis of social goods/costs of marriage here. Put discussion of assumptions about marginal gain/loss created by the last incremental increase here. To conclude, put emotional belief rationalized by above assumptions here.

Me, I think we ought to remove almost all cost from getting married. I would prefer to limit marriage to any two people who want to get married (more than 2 is a corporation.) I'm also for a marriage penalty. All those benefits can't come without some social cost somewhere (or is there a free lunch?)

Evidently I need to read Iain Duncan Smith. I have a hard time putting worklessness at the feet of broke down family life. If he means no work available the economist in me is concerned, if he means sloth then I become concerned he is mis-placing the source of clinical depression.

[Leigh Caldwell]

Surely the financial cost of the blood test is not likely to be the most relevant factor?

From the paper:

...there may be psychic costs associated with a BTR. As Bowman (1977) observes (referring to tests for sickle-cell anemia), “the mandatory testing for carriers of genetically determined diseases at the time of marriage application can result in serious psychological trauma, for the decision has already been made to marry.” Applicants may wish to avoid learning about their disease status, or may want to keep this information from their partners. There may also be non-negligible disutility from a visit to the doctor, or from the procedure of having blood drawn.

The authors do not attempt to disaggregate the financial from these other costs, or to compare the effects in states with different levels of cost. This would probably be difficult to do as most of the cost is the private cost of a doctor's visit, but without it I don't think you can draw meaningful conclusions about price elasticity.

Indeed, a simpler conclusion might be that in 2.8% of couples, one partner has - or believes they might have - one of the conditions being tested for. This would disincentivise them from taking the test and would thus make it less likely that they'd marry. Admittedly, should this be the case it would be a rare instance of a law achieving almost exactly what the makers intended.

[Tom Freeman]

Off the top of my uninformed head, couldn't much of the US effect be down to the unpleasant intrusiveness of having to have a blood test, rather than the cost?

And isn't it the case that avoiding a cost is a more powerful deterrent than acquiring a benefit is an attractor?

[chris]

Leigh, Tom - it's a fair point. But equally, it could be that the majority of people who have a condition that a blood test would reveal wouldn't want to marry their partner anyway.
Tom - yes, prospect theory says people prefer to avoid losses than seek gains. But offsetting this, the gain from tax breaks for marriage would probably be much greater than the out-of-pocket cost (plus inconvenience) of the blood tests.
So, I'm not sure we can dismiss the relevance of this research so easily.

[jameshigham]

Tory proposals to give tax breaks to married couples might cause a surprisingly large increase in the number of people getting married. That’s the implication of this new paper (pdf), which concludes that “even small changes in the cost of marriage can have significant effects.”

That would be a wonderful thing if:

1. they meant it more than an election gimmick;
2. they had the money, which they don't;
3. they meant it.

[Leigh Caldwell]

I wonder if it would be possible to find any figures on people who had the blood test and then _didn't_ get married...

[AMcguinn]

You suggest that the "marginal marriage" will have little effect on the quality of parenting. Possibly. However, the pro-marriage argument is about social norms. The happily-not-married couples are the ones making the unmarried family respectable, and if they start to marry for financial reasons, there could be a multiplier effect as people follow their example.

Likely? I have no idea. But that's the argument as I understand it.

[Marriage Help]

Sometimes, the couples walk out of their marital lives easily, if their thinking clash, and end up with devastating consequences. But, if they opt for marriage help in such situation and change the way they think, they can create pleasurable and fulfilling lives for themselves.