Marriage and Parental Investment in Children

Marriage ain’t what it used to be. Consider that:

• In 1950, almost half of all women were married by age 20 and for men the age was 23. By 2010, the median age of first marriage had increased to about 24 for women and 27 for men.

• More people are opting out of marriage. In the 1950s, about 10% of men age 30 to 44 were never married; the fraction was up to around 20% by 2010.

• The divorce rate doubled between 1960 and 1980 (but has declined by 25 percent since then).

• Cohabitation has increased, particularly for less educated men and women.

Largely as a consequence, many more children are being born out of wedlock. In 1950, 10% of births were out-of-wedlock; this increased to around 40% of all births in 2010. Most astoundingly, more than 70% of black children are now born out of wedlock.

The “retreat from marriage” is strongly patterned by race and social class. Although it is true that college educated men are getting married somewhat less than in decades past, almost all of the change has occurred among lower educated men (figure below).

 

It used to be that college educated women were the least likely to get married and lower educated women were the most likely; now the situation is completely reversed.

These patterns – which are rooted in a myriad of factors including changing social norms, the decline of blue-collar labor, incarceration, and changes in marriage and child support laws – have been implicated as a possible cause of income inequality. Children born in households with either a lone mother or cohabiting parents are more likely to experience family instability and economic strain.

Less appreciated, entry into marriage may be a selective response to economic inequality, with consequences that differ depending on people’s place in the socioeconomic hierarchy. In a new NBER working paper, Shelly Lundberg and Robert Pollak make the argument that marriage is a commitment mechanism for high educated parents, enabling them to increase their investment in their children, which in turn improves the likelihood that children will fare better in an increasingly stratified society.

To make a persuasive argument, Lundberg and Pollak must show that marriage is preferable to cohabitation for investing in children, and that this benefit of marriage is much stronger for more affluent, educated parents.

They begin with the observation that many of the benefits of marriage should be available to cohabiting couples too. Living together enables joint production (traditionally, one person works while the other takes care of children) and joint consumption (couple split the rent and the cable bill). But these benefits can occur in the case of cohabitation too. The argument for marriage therefore can’t be made simply on the grounds that it’s a time or money saver.

The economic benefit of marriage lies elsewhere:

“Marriage is more costly to exit than cohabitation, and this higher exit cost enables marriage to act as a commitment device that fosters cooperation between partners. Some degree of commitment is valuable in any shared household because of transactions costs—even roommates must rely on one another to pay a share of next month’s rent—and all commitments, including marriage, are limited. Marriage represents a stronger commitment because the social and legal costs of exit are greater than the costs facing roommates or cohabitants, even though the legal costs of marital exit have decreased as fault-based or mutual consent grounds for divorce have been replaced by state laws permitting unilateral divorce.”

Children are the prime investment that couples value. Parents may not always think about their childrearing as a form of investment, but many of the inputs that begin very early in childhood (money for violin lessons and summer camps, time spent reading books) are likely to pay off later when children transition into college and careers. In an increasingly high stakes “winner takes all” society, the returns to an investment in children – and the consequences of not making this investment – have grown even more.

The figure below (which @Bill_Gardner also featured earlier this week) represents the stark and growing inequality in money spent by parents on their children.

If marriage, which facilitates intensive investment in children, is such a no-brainer for affluent and highly educated parents, why is the case less good for poorer and low-educated parents? Lundberg and Pollak offer two explanations. First, low and high-educated parents may not value the same qualities in children, which would therefore change their investment strategies. Highly educated parents may place a higher value on children that strive and achieve, whereas less educated parents may place a higher value on children that have strong survival skills (or in some cultures, are obedient of adults).

Second, even if both sets of parents value the same things, highly educated parents may be able to make more productive investments in their children. A parent that has a college degree may be able to better steer their time and money toward investments that have larger payoff for their children. For example, more highly educated parents may be better at reading storybooks and helping with homework, choosing the “right” summer camps, and fostering emotional development than parents with less education.

These hypotheses may strike some readers as culturally insensitive, but that does not necessarily mean that they are incorrect. Economic theory and ethnographic literature both support the idea that parental preferences and gains to investment can be importantly shaped by social context, opportunities in the community, and cultural and human capital (like the ability to communicate with teachers and other parents, and to adapt new ideas in childrearing).

However, these explanations are also likely to be incomplete. First, it is unclear why – if highly educated parents are motivated to maximize their investment in a child – they would not already assume that the other parent would do the same in the event of a divorce. In fact, we know that divorce does cause parents (especially fathers) to sometimes withdraw investment in their children. Why? One reason may be that fathers believe they can free ride on the investment of the mother (and possibly her new partner). But another reason may be that divorce diminishes the time non-custodial parents have with their children, and their ability to control the resources going to the children. In other words, the motivation for investment does not diminish after divorce, but the return on the investment does.

Second, from the other direction, less educated parents may decline to enter marriage not because they are less likely to experience the benefits of joint investment in a child, but because they cannot find another partner who has enough to offer in terms of resources for making a co-investment. Less educated women have a smaller pool of stably employed men to choose from, and many of these men bring problems into the household that can outweigh the joint investment benefits. Children in these families would still benefit from joint parental investment, and the parents may even wish for this investment to take place, but the investment is outweighed by the likelihood that the marriage will be plagued by other issues (such as financial worries, domestic violence, or incarceration).

Whatever the reason, the fact that inequality in parental investment is widening provides a clear imperative for public policy to get involved. The case can be made in two directions – either, the government should be spending more money on children of less educated parents to correct for very low levels of parental investment, or steps should be taken to improve the likelihood that low educated parents overcome the barriers to marriage and thus find ways to increase their relationship capital and their financial resources. Ideology often makes this debate shrill, but we need more good data.