Same‐Sex Marriage and Negative Externalities*

Objectives. Conventional theory regarding externalities and personal choices implies that in the absence of negative externalities, there is no economic rationale for government to regulate or ban those choices. We evaluate whether legally recognizing (or prohibiting) same‐sex marriage has any adverse impact on societal outcomes specifically related to “traditional family values.” Methods. Using data from 1990 to 2004 in the U.S. states, with statistical controls appropriate for the particular model, and with fixed effects, we test the claim of the Family Research Council that same‐sex marriage will have negative impacts on marriage, divorce, abortion rates, the proportion of children born to single women, and the percent of children in female‐headed households. Results. We find no statistically significant adverse effect from allowing gay marriage. Bans on gay marriage, when they are not overturned, appear to be associated with a lower abortion rate and a lower percentage of children in female‐headed households. However, allowing gay marriage also shows the same or stronger associations. Conclusions. The argument that same‐sex marriage poses a negative externality on society cannot be rationally held. Although many might believe that this conclusion is so obvious that it does not warrant testing, many politicians use this argument as a fact‐based rationale to legitimize bans on same‐sex marriage.