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Marriage Meets the Joneses: Relative Income, Identity, and Marital Status

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  • Tara Watson
  • Sara McLanahan

Abstract

In this paper we investigate the effect of relative income on marital status. We develop an identity model based on Akerlof and Kranton (2000) and apply it to the marriage decision. The empirical evidence is consistent with the idea that people are more likely to marry when their incomes approach a financial level associated with idealized norms of marriage. We hypothesize that the "marriage ideal" is determined by the median income in an individual's local reference group. After controlling flexibly for the absolute level of income and a number of other factors, the ratio between a man's income and the marriage ideal is a strong predictor of marital status -- but only if he is below the ideal. For white men, relative income considerations jointly drive co-residence, marriage, and fatherhood decisions. For black men, relative income affects the marriage decision only, and relative income is tied to marital status even for those living with a partner and children. Relative income concerns explain 10-15 percent of the decline in marriage since 1970 for low income white men, and account for more than half of the persistent marriage gap between high- and low-income men.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 14773.

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Date of creation: Mar 2009
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Publication status: published as Tara Watson & Sara McLanahan, 2011. "Marriage Meets the Joneses: Relative Income, Identity, and Marital Status," Journal of Human Resources, University of Wisconsin Press, vol. 46(3), pages 482-517.
Handle: RePEc:nbr:nberwo:14773

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Cited by:
  1. Joan Costa-i-Font & Frank Cowell, 2012. "Social identity and redistributive preferences: a survey," LSE Research Online Documents on Economics 44307, London School of Economics and Political Science, LSE Library.
  2. Wen-Chun Chang, 2013. "Climbing up the Social Ladders: Identity, Relative Income, and Subjective Well-being," Social Indicators Research, Springer, vol. 113(1), pages 513-535, August.
  3. Macunovich, Diane J., 2011. "Re-Visiting the Easterlin Hypothesis: Marriage in the U.S. 1968-2010," IZA Discussion Papers 5886, Institute for the Study of Labor (IZA).
  4. Chen, Xi & Kanbur, Ravi & Zhang, Xiaobo, 2011. "Peer effects, risk pooling, and status seeking: What explains gift spending escalation in rural China?," IFPRI discussion papers 1151, International Food Policy Research Institute (IFPRI).
  5. Martha J. Bailey & Melanie Guldi & Brad J. Hershbein, 2013. "Is There a Case for a "Second Demographic Transition"? Three Distinctive Features of the Post-1960 U.S. Fertility Decline," NBER Chapters, in: Human Capital in History: The American Record National Bureau of Economic Research, Inc.
  6. Martha J. Bailey & Susan M. Dynarski, 2011. "Gains and Gaps: Changing Inequality in U.S. College Entry and Completion," NBER Working Papers 17633, National Bureau of Economic Research, Inc.
  7. Melissa S. Kearney & Phillip B. Levine, 2014. "Income Inequality, Social Mobility, and the Decision to Drop Out of High School," NBER Working Papers 20195, National Bureau of Economic Research, Inc.
  8. Marianne Bertrand & Jessica Pan & Emir Kamenica, 2013. "Gender Identity and Relative Income within Households," NBER Working Papers 19023, National Bureau of Economic Research, Inc.
  9. Laura Tach & Kathryn Edin, 2013. "The Compositional and Institutional Sources of Union Dissolution for Married and Unmarried Parents in the United States," Demography, Springer, vol. 50(5), pages 1789-1818, October.

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