Get Married, Get Wealthy?
How singles subsidize married people
Posted August 31, 2010
The article on WomenEntrepreneur.com had a simple title: Marriage pays. It was reprinted elsewhere under equally enticing headings (e.g., "Turns out, marriage really does pay off.") The first paragraph proclaimed:
"A 15-year study of 9,000 people found that those who married and stayed married during that time built up nearly twice the net worth of people who stayed single."
The author linked to a press release from 2006. I looked up the original journal article and found that the author's initial claim is true: The people in the study (baby boomers, around age 24 at the start in 1985) who got married and stayed married did end up with nearly twice as much net worth per person than the people who stayed single. (Net worth is what you would expect - add up all assets, such as home value, car value, CDs, stocks, and cash, and subtract your mortgage and all of your debts.)
The author filled up the rest of her 2-page story by generating reasons why married people might build up more wealth than single people, often referring to her own partner, Martin. I'll get to those speculations soon.
First, though, whenever you read a comparison between "those who married and stayed married" and those who stayed single, you know there's something squirming under the rug. What about those people who got married and did not stay married? The author doesn't mention anything about that, even though the title of the press release (also accurate) was, "Divorce drops a person's wealth by 77 percent, study finds."
Looking at the groups the researcher studied, what actually happened is this:
- People who stayed single the whole time grew their net worth steadily every year for the 15 years.
- Those who got married and stayed married grew their net worth even more rapidly than singles did.
- Among those who got married and then divorced, their wealth started dropping four years before they divorced, reaching a low point the year before the divorce. There is a "slow but modest recovery" after the divorce.
Our friends at Onely sent me the heads-up about this WomenEntrepreneur.com story. (Thanks, Christina and Lisa!). They highlighted their "favorite" explanation offered by the author for the greater wealth of continuously married people:
"How about the added resources of marriage? Marriage brings a network of familial support in the form of parents, aunts, uncles, cousins, nieces and nephews who all know something or someone who can help you along the way. As often as we might feel life would be easier without all that additional family, we have to accept that the larger network of folks who are invested in our marriage are also invested in our future and our goals."
As Onely quipped, "Apparently single people don't have anyone to help motivate them to achieve goals. Who knew?"
One of my "favorite" explanations is this one:
"Wealth-building is a slow, difficult process that requires judgment and perseverance. Having the accountability and support of a spouse surely adds to the success of the endeavor."
Who could have good judgment or perseverance on a slow, difficult process without a spouse? (Everyone look away from those people with spouses who are already losing net wealth four years before they divorced.)
Where is the author getting these explanations? She's making them up. When the researcher got to the discussion section of his journal article (where speculation is encouraged), he offered no guesses, but simply restated his findings. He also added a word of caution: "It is possible that the causation goes in the opposite direction with wealth impacting marital status."
I was still curious about what was happening, so I looked around for other evidence. I found a study that examined one possible explanation: Maybe married people are just better at saving than single people are. In the research, 2,000 low-income Americans were offered the opportunity to invest in Individual Development Accounts, which are savings accounts with matching funds. When the authors first compared married people to singles, it appeared that the marrieds saved larger amounts and saved more frequently. But they also looked at other ways the two groups may have varied, and found that the married people were different in important ways - for example, they started out with more income and more assets than the single people did. Once the authors controlled for those kinds of factors (so that the single and married people being compared were similar in income, assets, etc.), they found no differences. Single and married people saved the same.
So why do continuously married people end up with more net worth? Here are just a few of my own proposed explanations. None of them are mentioned by the WomenEntrepreneur.com author, and they rarely appear in any other accounts:
- Married couples are offered deals for things like car insurance, restaurant meals, and travel packages; they then end up paying less per person for the same goods and services than single people do.
- Married people can sometimes get in on a spouse's health insurance plan at a reduced rate. Too bad, singles - you get unequal compensation for the same work.
- Even looking just at salary (and not benefits), married men get paid more than single men, even when they have the same seniority and accomplishments, and even when they are identical twins. (References are in Singled Out.)
After a decade or more of paying less and getting more, continuously married people indeed accumulate more wealth. They are being subsidized by the singles who pay full price while the marrieds get discounts. They are the beneficiaries of the form of singlism that awards more to married people for the same work.