Monday, April 18, 2005

Gay Marriage Is Wealth Maximizing?

Over the weekend the Oregon Supreme Court nullified 3,000 marriage licenses issued to gay couples saying that a county cannot go against state matrimonial law.

I know I know this stuff has been played out, but i thought it might be interesting to bring some economics to the discussion. :)

First let's answer why people get married in the first place. There is nothing that you can do in marriage that you can't do outside of it. You can live together, have kids, have fights, and all of that fun stuff. So why do you need a slip of paper from the government that says you're going to do those things? I think an example might help answer that question.

Let's say that two people live together and do all the things married couples do, but they aren't officially married. It could be that after they have been "married" for a while they both become specialized to the "family". For example, I can't just go out and get another husband. The replacement wouldn't be our children's father, he wouldn't know my erogenous zones, he wouldn't know how I like my eggs, he just wouldn't be the same. So my husband is like a specialized asset. This puts him in the position of being able to threaten to leave the "family" if I don't compensate him for staying. IOW: He might try to appropriate some of the quasi-rents i recieve from being "married" to him.

This threat of spousal "hold-out" might lead to couples devoting resources to avoid "hold-out" or might prevent them from getting "married" at all. One way of avoiding this problem might be to establish a long term contrat between the two of them that is costly to get out of. That's exactly what marriage is. You agree to love and live with one person for the rest of your life and if you break the contract you will pay dearly (according to some Christians the cost of breach is eternal damnation).

So by preventing gay couples from entering into this contract we are generally discouraging them from getting "married" at all. For social conservaitves that's exactly what they want, but this means that the economy is generating less "family production" and even if that doesn't show up in GDP estimates it's still a loss we should recognize. Does thi mean the gain to gay couples will exceed the loss to social conservatives? I don't know. That's an empirical question that's probably impossible to answer. So I guess even utilitarianism and welfare economics have their limits.

What do y'all think? Is the story convincing? What am I leaving out? Is Gay Marriage REALLY Wealth Maximizing?

PS* I'm not really married fellas. :)