Econ 101: Family Matters

“In this simple economic approach, marriage is a long-term contract between two individuals to pool their resources and share household responsibilities, including raising children.”

– The Two-Parent Privilege

In 2024, nearly 45 percent of first marriages ended in divorce, a troubling shift from a century ago, when, in 1900, divorce rates settled at a mere 4 percent.  To find those impressive statistics today, one would have to travel to places like India, China, Pakistan, and Japan, where a significant number of marriages continue to be arranged by either parents, matchmakers, or community leaders.  While modern arranged marriages allow some input from the betrothed, divorce rates among planned couplings remain commonly low. 

In Melissa Kearney’s 2023 book, “The Two-Parent Privilege”, Kearney delves into the economics of the family structure and shows how a decline in middle-class employment opportunities has led to a weakening in marriage and the subsequent growth in one-parent, mostly mothers-only homes.  This economic shift has led to not only an increase in inequality and insecurity for an increasing number of children but also a growing divide in how children are raised.

As history has foretold, marriage is not only about love and companionship, but an economic force of nature for both parents and children.  Shared resources allow economies of scale as parents can specialize in tasks best suited to their strengths.  As such, marriage delivers a higher level of resources, long-term stability, and upward mobility for their children.  In addition to a nicer home in a safer neighborhood, superior education, and extracurricular activities, marriage also allows two parents to shoulder responsibilities, providing more time with children, and leading to better mental and physical health outcomes. 

Married adults are more likely to be active in the community, attend community events, and perform volunteer work.  With higher overall satisfaction and trust, married societies perform better.  Among women, married adult females are the safest and most economically sound. 

Yet, marriage rates are at historic lows.

Cohabitation, which seemingly provides all the benefits of marriage without a contract, is instead a poor substitute for the real thing.  Not only are these unions short-lived, but they tend to produce more partners.   Adding to its transience, living together may be used to postpone marriage, and therefore provides less stability from a lack of commitment.  Today, by the time men and women reach the age of 44, more couples have lived together than have ever been married. 

Ironically, while teen pregnancies and birth rates among the poorest have dropped, older educated women are now producing the most single-person households, with increases found in all ages, ethnicities, and education groups.  In 1960, a mere 5 percent of babies were born to unwed mothers; by 2022, that number was nearly 40 percent.  Single parents are five times more likely to be in poverty and are more likely to have children with disciplinary and behavioral problems.  Since single mothers are more likely to work outside the home, they have less time to invest in their children.  

Adding to the troubling surge of unwed mothers is the increase in unmarriageable American men, that is, men with stagnant wages and fewer employment possibilities.  Today, fifteen percent of men aged 24-54 are not working at all.  Because more women obtain college degrees than men, men are also less likely to be breadwinners.   To magnify the problem, cheap goods from China, the decline in factory jobs, and increased automation have all contributed to a lack of good middle-class jobs for non-college-educated men.  Holding a steady job is now the low bar for women looking for husbands and fathers for their children. 

Adding to their lack of economic stability is an increase in incarcerations due to expanded laws and harsher sentencing, draining the man pool, especially among blacks.  To make men more marriageable, we must improve their economic situation with more skills, more apprentice opportunities, and less college credential creep requiring degrees for work that doesn’t need them.  Traditional marriages are more likely when good-paying jobs are available. 

The changing social norms over the past half-century have also contributed to unwed motherhood, as there is less pressure for women to marry and less stigma for those who choose not to.  As such, when women do marry, they marry later and have fewer children overall. 

Today, sixty-three percent of American children have married parents, with nine out of ten living with their biological mother and father, the best-case scenario for a child’s well-being.  Marriage is still the most fundamental social and economic institution on earth that can provide not only stability for parents and children, but also for society at large.