Prof. Bryan Caplan

bcaplan@gmu.edu

http://www.gmu.edu/departments/economics/bcaplan

Econ 321

Fall, 2000

 

I.                     The Market for Mates

A.                 Most people today probably marry for love, but few regard all attributes as equally lovable.

B.                 Instead, most people are looking for a partner with desirable traits, such as:

1.                  Looks

2.                  Income potential

3.                  Youth

4.                  Positive attitude

5.                  Conscientiousness

6.                  Shared interests

7.                  Shared religion

8.                  Similar views on desired family size

C.                Normally people with a lot of desirable traits find it easy to get someone else with a lot of desirable traits to marry them.  "She's out of your league."

D.                When there is a wide difference in perceived "mate quality," people wonder "What does she see in him?"

E.                 This suggests that we can look at dating/love/marriage as a special kind of market.

F.                 Two interesting things.

1.                  It is usually a barter market, where a given level of "male mate value" enables you to "buy" a given level of "female mate value."  (Exception: dowries, bride-prices).

2.                  The S of men in the market for male mates is the same as the D for women in the market for female mates.

G.                This market works more or less like others: If a lot of men die in a major war, the price of men increases (and the price of women therefore decreases).

H.                 Another interesting application: Polygamy.  Demand for women is higher under polygamy.

I.                     How does the fraction of gay men and women affect the market for heterosexual marriage?

J.                  There are some attributes that most people agree are good: looks, income potential, etc.  On traits like these, we should expect to see (and do) "assortative mating."  People with "good" attributes marry other people who also have "good" attributes; if someone is weak on one good attribute, we expect them to be especially strong on some other good attribute.

K.                 This sparks competitive pressure to acquire these near-universally desired traits, and - to some degree - increases their quantity.

L.                  For other attributes, people disagree.  For example, Jews prefer to marry other Jews, but Gentiles prefer Gentiles.  Backpackers like to marry each other.  There is far less competition on this margin, because each niche has a mix of advantages and disadvantages.

M.                Some spouse correlations: spouses are similar in education, religion, hobbies, and - to a lesser extent - politics.  Personality correlations are weak.  There is very little evidence of any negative correlations - opposites do not, on average, attract.

II.                   Household Production and the Theory of Household Labor Supply, I

A.                 So far we've categorized time as either "labor" or "leisure."  Now let's sub-divide "leisure" further into "household production" and "fun."

B.                 Household production is cleaning, cooking, shopping, caring for children, and all of the other chores people do when they aren't working for others.

C.                Usually we think of "the economic agent" as an individual.  But we could also think of "the economic agent" as a family or household.

D.                Interesting insight: Households with a man and a woman can be seen as a single economic agent with two kinds of labor to allocate - husband labor and wife labor - between labor, household production, and fun.

E.                 If both husband and wife are equally good at household production, what is the obvious way to decide who will do most of it?  The person with the lowest market wage!  The family sells its high-value time in the labor market, savings low-value time for household production.

1.                  Alternative: Have both husband and wife work, and pay someone else to do their household production.  But for this to make sense the wife's wage must be fairly high (tax law reinforces this).

F.                 Two factors reinforce this point:

1.                  If the lower-wage labor is actually better at household production.

2.                  There are fixed costs of working - like commuting time.

G.                In principle, either the husband or wife could be the higher-earner.  But there are fundamental reasons why husbands usually earn more:

1.                  Children reduce women's job experience and interrupt their careers.

2.                  Anticipating this, women have weaker incentives to accumulate human capital.  (Average education levels show little difference, but fewer women go into high-earning technical fields).

III.                  Household Production and the Theory of Household Labor Supply, II

A.                 When needs for household production are large, there is a firm economic rationale for the traditional family, where the male earns almost all of the income and the female does almost all of the household production.  The rationale in a nutshell:

1.                  The family needs one person to do household production and another to hold down a job.

2.                  If both are equally able to do household production, it makes sense for the higher-paid person to work outside the home.  (Moreover, if women are actually better at household production, this decision is even clearer).

3.                  Because child-bearing interrupts careers, the lower-earning person will normally be the woman.  If women anticipate this, they invest less human capital, making the wage gap larger.

4.                  With fixed costs of working, it makes little sense to work only a couple hours per week.

B.                 But: The need for household production is not fixed.  It depends critically on both technology and the number of children.

C.                Both factors slashed the need for household production during the 20^th century.

1.                  Technology for household production drastically improved - dishwashers, vacuum cleaners, washing machines, etc.

2.                  Average number of children has drastically fallen.

D.                As time allocated to household production has fallen, women with children have become increasingly likely to remain in the job market - some in part-time work, others in full-time.

E.                 Interesting links between husband and wife labor supply remain when both work.

1.                  If the demand for one kind of labor increases, the supply of the other decreases, all else equal.  For example, if a wife's wage rises, then the family can afford to "buy" more of the husband's leisure.  If a husband's wage rises, the family may decide that it can afford to have the wife stay home with the children.

2.                  Similarly, if one family member is temporarily unable to work, we would expect the other family member to work more due to this income effect.

IV.               The Economics of Family Size

A.                  While there is some element of chance, to a large extent families can plan the number of children they want to have.

B.                 We should expect the demand curve for children to have the usual negative slope.  The cheaper it is to have kids, the more kids people have.

C.                One big part of the expense is the mother's foregone labor earnings.  The more income a mother can earn, the fewer kids we expect her to have.  This is precisely what we see - high-income women have fewer kids, and family sizes are smaller in rich countries than in poor countries.

D.                However, this argument is not air-tight.  As wealth increases, demand for all goods - including kids - rises. 

E.                 What we can say with confidence is that holding wealth constant, demand for kids is negatively sloped.  Thus, changes in costs of childcare, free grandparent assistant, free schooling, and per-child tax deductions all increase family size. 

F.                 Similarly, if children contribute to the family by working or doing chores, or eventually provide retirement income, family size will be greater than it otherwise would

G.                Landsburg makes an interesting related point on population.  Are there externalities of having children?

H.                 Many people, notes Landsburg, think that each child born gets a 1/5 billion share of world resources - implying negative externalities.  But that is wrong.  Rather, when a family has one more child, each child in that family gets a lot less, with little effect on anyone else.  If parents care about their kids, there is no externality.

1.                  This is especially clear from bequests.

I.                     Landsburg goes on to argue that there are positive externalities of child-bearing.  Most people like being alive, but parents probably under-weight that when they weigh having another child.

V.                 Divorce, Out-of-Wedlock Births, and Incentives

A.                 Divorce can also be analyzed from an economic point of view.  Individuals try to get divorces when they decide they are better off without their spouse.

B.                 Make divorce cheaper - more people get divorced.  Ban divorce - people think harder about who to marry.

C.                Complication - women's mate value generally falls more rapidly than men's.  Lifetime benefits of a marriage can be equal for both men and women, but men's benefits are more "front-loaded" than women's.  Alimony is one way to try to keep incentives well-aligned.

D.                Out-of-wedlock births too can be analyzed with economic tools. 

E.                 When children are expensive and/or single women are very poor, you see few out-of-wedlock births.  In the pre-modern period, a husband's support was often crucial just to keep a child alive.

F.                 When children get cheaper, women have more out of wedlock.  One simple way to make them cheaper is to pay benefits proportional to the number of children a mother has - a frequent criticism of the welfare system.

G.                As incomes rise, it becomes more feasible for a women to have children out of wedlock even without government help.

H.                 In the U.S., illegitimacy rates have risen for all social classes, but are much higher for poorer women.  For poor women, extra welfare probably makes a big difference.

I.                     If higher income makes women more inclined to have out-of-wedlock children, why do the richest women have the fewest?  Probably because on average they have higher "mate value" - when they want to have children, it is relatively easy to find a suitable husband.  Other women may face a choice between an out-of-wedlock child and no child at all.

VI.               Why the Standard History of Gender is Wrong

A.                 My take on the standard history of gender: Throughout human history, males arbitrarily forced women into a subordinate role.  At long last, feminist thinkers began "raising awareness" of the plight of women.  Through great struggle, women are at last - like men - able to pursue their dreams and ambitions, though of course full equality is still a long way off.

B.                 Why it's wrong:

1.                  The dating and marriage market has always been competitive.  The only historical change involves ownership: Does a women own herself, or does her father own her?

2.                  The traditional family structure was technologically necessary for most of human history assuming women wanted to have children.  An overwhelming majority did.

3.                  Family structure changed because technology reduced the burden of household production, and because families decided to reduce their number of children. 

4.                  Technology also narrowed the male-female ability gap by de-emphasizing physical strength.

5.                  This for the first time made it feasible for women to have both careers and children.

6.                  Women broke into the business world quite rapidly considering the size of the change.  Supposed "discrimination" reflected and continues to reflect real group differences. 

7.                  Except for women who forego child-bearing, differences will persist until reproductive technology radically changes.

8.                  Women probably do face some statistical discrimination, but in the absence of regulatory burdens, women could contract around these.  For example - penalty clauses for pregnancy enable women focused 100% on work to show how serious they are.

9.                  Feminist norms function as price controls in the marriage and dating market.  "Raising awareness" has often been counter-productive insofar as it matters at all.