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UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION THERESA BASSETT and CAROL KENNEDY, PETER WAYS and JOE BREAKEY, JOLINDA JACH and BARBARA RAMBER, DOAK BLOSS and GERARDO ASCHERI, DENISE MILLER, and MICHELLE JOHNSON, Plaintiffs, vs. RICHARD SNYDER, in his official capacity as Governor of the State of Michigan, Defendant. ______________________________/ PLAINTIFFS MOTION TO EXCLUDE TESTIMONY OF JOSEPH PRICE Plaintiffs Theresa Bassett, Carol Kennedy, Peter Ways, Joe Breakey, JoLinda Jach, Barbara Ramber, Doak Bloss, Gerardo Ascheri, Denise Miller, and Michelle Johnson, by counsel, hereby submit this Motion to Exclude Testimony of Joseph Price. In compliance with Local Rule 7.1(a), on February 14, 2014, Plaintiffs counsel conferred with Defendants counsel. Plaintiffs counsel explained the

Case No. 2:12-cv-10038-DML-MJH Hon. David M. Lawson Mag. Michael J. Hluchaniuk

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nature of Plaintiffs motion and its legal basis, but Defendant did not concur in the relief sought.

Dated: February 17, 2014

Respectfully submitted, /s/ Amy E. Crawford

Michael J. Steinberg (P43085) Jay D. Kaplan (P38197) Kary L. Moss (P49759) Attorneys for Plaintiffs American Civil Liberties Union Fund of Michigan 2966 Woodward Ave. Detroit, MI 28201 (313) 578-6814 msteinberg@aclumich.org kaplan@aclumich.org kmoss@aclumich.org

Donna M. Welch, P.C. (admission pending) Bradley H. Weidenhammer (admission pending) Amy E. Crawford Debra K. Lefler (admission pending) Attorneys for Plaintiffs Kirkland & Ellis, LLP 300 North LaSalle St. Chicago, IL 60654 (312) 862-2000 dwelch@kirkland.com bweidenhammer@kirkland.com amy.crawford@kirkland.com Amanda C. Goad American Civil Liberties Union Foundation 125 Broad Street, 18th Floor New York, New York 10004 (212) 549- 2627

John A. Knight American Civil Liberties Union Foundation 180 N. Michigan, 2300 Chicago, Illinois 60601 (312) 201-9740

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UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION THERESA BASSETT and CAROL KENNEDY, PETER WAYS and JOE BREAKEY, JOLINDA JACH and BARBARA RAMBER, DOAK BLOSS and GERARDO ASCHERI, DENISE MILLER, and MICHELLE JOHNSON, Plaintiffs, vs. RICHARD SNYDER, in his official capacity as Governor of the State of Michigan, Defendant. ______________________________/ BRIEF IN SUPPORT OF PLAINTIFFS MOTION TO EXCLUDE TESTIMONY OF JOSEPH PRICE

Case No. 2:12-cv-10038-DML-MJH Hon. David M. Lawson Mag. Michael J. Hluchaniuk

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TABLE OF CONTENTS STATEMENT OF ISSUES PRESENTED.............................................................. iii MOST APPROPRIATE AUTHORITIES ............................................................... iv TABLE OF AUTHORITIES .................................................................................... v INTRODUCTION .................................................................................................... 1 BACKGROUND ...................................................................................................... 2 ARGUMENT ............................................................................................................ 4 I. II. Rule 702 Permits Admission Only Of Reliable, Relevant Expert Testimony. ...................................................................................................... 4 Dr. Price Lacks Any Empirical Basis To Say The State Will Benefit Economically By Incentivizing Public Employees To Marry Rather Than Cohabitate. .................................................................. 5 A. B. III. Dr. Price Lacks Any Empirical Basis To Say Marriage Causes Better Outcomes Than Cohabitation. .................................................... 7 Dr. Price Lacks Any Empirical Basis To Say Marginal Marriages Cause The Same Outcomes As Average Marriages. ......... 11

Dr. Price Ignored Costs And His Own Methodology ............................... 15

CONCLUSION....................................................................................................... 19

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STATEMENT OF ISSUES PRESENTED 1. Dr. Price opines that Michigans Domestic Partner Benefit Restriction

Act is economically rational because it creates an incentive for couples to marry instead of cohabiting and marriage produces outcomes that are more economically advantageous to the state versus cohabitation. But Dr. Price admitted he has no empirical basis to opine that marriage produces better outcomes than cohabitation, nor to opine that marriages motivated by government policies generate the same outcomes as marriages generally. Should his proffered testimony therefore be excluded as unreliable under Federal Rule of Evidence 702? 2. Dr. Price opines that Michigans Domestic Partner Benefit Restriction

Act will creates a net economic benefit to the state, meaning its economic benefits will outweigh its costs, but admitted he considered only benefits, not costs, contrary to his own stated methodology. Should his proffered testimony therefore be excluded as unreliable under Federal Rule of Evidence 702?

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MOST APPROPRIATE AUTHORITIES Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579 (1993) Kumho Tire Co. v. Carmichael, 526 U.S. 137 (1999) Tamraz v. Lincoln Elec. Co., 620 F.3d 665 (6th Cir. 2010)

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TABLE OF AUTHORITIES Page(s) CASES Best v. Lowe's Home Ctrs., Inc., 563 F.3d 171 (6th Cir.2009) ...................................................................................5 Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579 (1993) ......................................................................................... 4, 19 General Elec. Co. v. Joiner, 522 U.S. 136 (1997) ......................................................................................... 5, 14 Jack Henry & Associates, Inc. v. BSC, Inc., 487 F. App'x 246 (6th Cir. 2012) ............................................................................5 Johnson v. Manitowoc Boom Trucks, Inc., 484 F.3d 426 (6th Cir.2007) ...................................................................................5 Kumho Tire Co. v. Carmichael 526 U.S. 137 (1999) ...............................................................................................4 Lawrence v. Raymond Corp., 501 F. Appx 515 (6th Cir. 2012) ...........................................................................5 Nelson v. Tennessee Gas Pipeline Co., 243 F.3d 244 (6th Cir. 2001) ..................................................................................5 Newell Rubbermaid, Inc. v. Raymond Corp., 676 F.3d 521 (6th Cir. 2012) ..............................................................................4, 5 Tamraz v. Lincoln Elec. Co., 620 F.3d 665 (6th Cir. 2010) ..................................................................... 5, 14, 19 United States v. Langan, 263 F.3d 613 (6th Cir. 2001) ..................................................................................4 United States v. LeBlanc, 45 F. Appx 393 (6th Cir. 2002) ......................................5 STATUTES v

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2011 Mich. Legis. Serv. P.A. 297 (West) ..................................................................1 M.C.L. 15.58115.585 ..........................................................................................1 RULES Fed. R. Evid. 702 .......................................................................................... 4, 14, 19

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INTRODUCTION In December 2011, the Michigan legislature passed and Defendant Snyder signed into law the Public Employee Domestic Partner Benefit Restriction Act (the Act), which creates a discriminatory ban on partner health insurance coverage while leaving employers free to provide benefits not only to their heterosexual employees spouses, but also to other legally related or even unrelated individuals. 2011 Mich. Legis. Serv. P.A. 297 (West) (codified at M.C.L. 15.58115.585) (Ex. A). In December 2013, Defendant disclosed his expert, Joseph Price, an empirical economist who claimed he had analyzed the economic impact of restricting public employee health benefits to couples who are married and could opine that [r]estricting partner health benefits to married couples creates an additional incentive for couples to marry and this decision to marry produces economic benefits for the state of Michigan, whereas [e]xtending these benefits to cohabiting couples . . . increases the relative incentive to cohabit instead of marry. (J. Price, Economic Impacts of Michigans Public Employee Domestic Partner Benefit Restriction Act of 2011 at 1, 42 (Ex. B, hereinafter Price Report)) But despite calling himself an empirical economist and emphasizing in his Report that (outside of the context of litigation) he employs rigorous empirical

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methods, Dr. Price admitted in his deposition that he has no empirical basis to assert that marriage generates any positive outcomes versus cohabitation, has no empirical basis to assert that the marriages allegedly caused by the Act would generate the same outcomes as marriage generally, and has analyzed only hypothetical benefits of the Act, not costs, in violation of his own stated methodology. The Court should exercise its gatekeeper role under Rule 702 to exclude Dr. Prices testimony as unreliable because it lacks any empirical basis and violates his own stated methodology for assessing net economic benefits. BACKGROUND Dr. Price opines that the Act is rational with respect to its impact on different-sex couples, because it provides an incentive for different-sex couples to marry instead of cohabiting, which in turn produces economic benefits for the [S]tate. (Price Report at 9, 42) This opinion is grounded on two main foundations: (1) data purportedly showing that married individuals have better outcomes on key metrics including income, health, and criminality, id. at 13-27, and (2) data purportedly showing that economic costs and benefits impact an individuals decision to marry (suggesting that legislation barring public entities from providing a benefit to cohabiting individuals, while permitting those entities to provide the benefit to married individuals, will induce individuals to marry), id. at 28-40.

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Dr. Prices opinion, however, is linked to his data only by his say-so. The relevant comparison for purposes of evaluating the economic impact of the Act is marriage versus cohabitation. Yet Dr. Price has no empirical basis to say that marriage produces better outcomes than cohabitation with regard to any of the outcomes he highlights in his report: household income (and the related rates of poverty and public benefit use), propensity to commit crimes, and health outcomes. See below at II. Further, he is unable to say whether the outcomes of marginal marriages (marriages resulting from the Acts incentives) will mimic the outcomes of the average marriages his report relies on to reach its conclusions. See below at II.B. Dr. Prices opinion also violates his own stated methodologywhich would compare expected benefits of the Act to its expected costsbecause he ignores any of the Acts expected costs, including: (1) the disincentive the Act provides single individuals to cohabit (a cost within the framework of Dr. Prices study, because his own data suggest that cohabitation produces better results than remaining single), (2) lost tax revenue from couples who might choose to leave the state, (3) lost tax revenue from the taxes previously levied on now-nonexistent benefits for cohabiting couples, and (4) the cost to the State imposed because of an increase in the number of uninsured individuals. See below at 16-18. In addition, Dr. Price makes no attempt to quantify overall costs or benefits, and therefore he

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cannot possibly perform the weighing required to support his opinion that the Act will generate net economic benefits for the State. See below at 18-19. ARGUMENT I. Rule 702 Permits Admission Only Of Reliable, Relevant Expert Testimony. Federal Rule of Evidence 702 permits expert opinion testimony only when the expert is sufficiently qualified, and (1) his special knowledge will help the trier of fact to understand the evidence or to determine a fact in issue, (2) his testimony is based on sufficient facts or data and is the product of reliable principles and methods, and (3) he has reliably applied the principles and methods to the facts of the case. Fed. R. Evid. 702. Rule 702 demands an inquiry focused on the proffered testimonys relevance and reliability. See Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 597 (1993); see also United States v. Langan, 263 F.3d 613, 620-21 (6th Cir. 2001). An expert who presents testimony must employ[] in the courtroom the same level of intellectual rigor that characterizes the practice of an expert in the relevant field. Newell Rubbermaid, Inc. v. Raymond Corp., 676 F.3d 521, 527 (6th Cir. 2012) (quoting Kumho Tire Co. v. Carmichael, 526 U.S. 137, 152 (1999)). The question of relevance, or fit, is . . . preliminary, requiring, as a necessary precondition to admissibility, a showing that the proffered expert testimony is sufficiently tied to the facts of the case that it will aid the jury.

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United States v. LeBlanc, 45 F. Appx. 393, 400 (6th Cir. 2002) (quoting Nelson v. Tennessee Gas Pipeline Co., 243 F.3d 244, 251 (6th Cir. 2001)). With respect to reliability, [r]ed flags that caution against certifying an expert include reliance on anecdotal evidence, improper extrapolation, failure to consider other possible causes, lack of testing, and subjectivity. Newell, 676 F.3d at 527 (citing Best v. Lowes Home Ctrs., Inc., 563 F.3d 171, 177 (6th Cir.2009)). An experts opinion is unreliable where [t]here is too great an analytical gap between the data and the opinion proffered. Tamraz v. Lincoln Elec. Co., 620 F.3d 665, 675-76 (6th Cir. 2010) (quoting General Elec. Co. v. Joiner, 522 U.S. 136, 146 (1997)). An opinion prepared solely for litigation demands more rigorous scrutiny. See Lawrence v. Raymond Corp., 501 F. Appx 515, 518 (6th Cir. 2012) (citing Johnson v. Manitowoc Boom Trucks, Inc., 484 F.3d 426, 434 (6th Cir.2007)). Finally, the proponent of the expert bears the burden of proving the testimonys admissibility. See Jack Henry & Associates, Inc. v. BSC, Inc., 487 F. Appx 246, 255-56 (6th Cir. 2012) (citing Nelson, 243 F.3d at 251). II. Dr. Price Lacks Any Empirical Basis To Say The State Will Benefit Economically By Incentivizing Public Employees To Marry Rather Than Cohabitate. The heart of Dr. Prices opinion is the proposition that the Act is rational as a means of incentivizing public employees to marry instead of cohabiting, because

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marriage generates greater economic benefits for the state than cohabiting. (Price Report at 9, 42) Thus as Dr. Price confirmed, the relevant comparison for purposes of evaluating the economic impact of the Act is marriage versus cohabitation: Q: At heart, what youre opining on in your report is the economic impact of passing this law, the Benefit Restriction Act, which makes unequal the incentive to marry versus cohabit, right? A: Thats right. .... Q: . . . The two states of being that youre primarily concerned with comparing in your report are cohabitation versus marriage, right? A: Those would be the -- yeah, thats probably a fair comparison, yeah. Q: Because what youre saying in your report is that by denying cohabiting couples these health benefits you are disincentivizing people to cohabit versus marriage? A: Yes. (Price Dep. at 139:7-12, 134:16-135:1; see also id. at 137:15-138:2) Dr. Prices opinion rests on two foundational assumptions for which he lacks any empirical support: (1) that marriage generally causes better outcomes than cohabitation, and (2) that marginal marriages (those caused by a government incentive) cause the same positive outcomes he associates with marriage generally. But Dr. Prices opinions are not reliably based on data because, as he admitted, he lacks any empirical basis for either of these two premises.

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A.

Dr. Price Lacks Any Empirical Basis To Say Marriage Causes Better Outcomes Than Cohabitation.

Despite admitting that the comparison between marriage and cohabitation is at the very heart of his opinion that the Act is a rational effort to incent public employees to marry rather than cohabit, see supra, Dr. Price has no empirical basis whatsoever to opine that marriage generates better outcomes than cohabitation with regard to any of the benefits he discusses in his report: income (and directly related issues of poverty and public assistance), health, or criminality. Income, Poverty, Public Assistance: In his Report, Dr. Price opines that marriage has a direct impact on household income, which in turn has an impact on income tax revenue, poverty rates, and use of public assistance benefits like Medicaid, the SNAP/Food Stamp program, and other forms of government welfare assistance. (Price Report at 20-22, 13-19) But in his deposition, Dr. Price admitted he has no empirical basis to say that marriage results in any increase to household income relative to cohabitation: Q. As you sit here you dont have an empirical basis to say that moving cohabiting couples to marriage would increase their household income, fair? A. What do you mean by empirical basis? Q. Data or publishing study or any other empirical basis. A. None that Ive cited in my report. Q. And you cant identify one as you sit here, can you?

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A. I cant identify one as I sit here. (Price Dep. at 248:23-249:7) Consequently, Dr. Price also lacks an empirical basis to say marriage generates better outcomes than cohabitation with regard to income tax revenue, poverty rates or use of public assistanceall of which are a function of household income. While Dr. Prices report cites studies and data comparing married to

single individuals, these sources offer no empirical basis to conclude that marriage is a causal factor in any possible income disparity between married and cohabiting couples. See Price Dep. at 249:15-19 (So you dont have any empirical basis to say that moving cohabiting couples to married would cause an increase in tax revenue for the state of Michigan; is that fair? A. Thats fair.); id. at 207:15-24 (Q. So you take Thomas and Sawhills conclusion at face value, right? A. Thats correct. Q. In fact, Thomas and Sawhill dont conclude a marriage causes lower poverty rates versus cohabiting families, do they? A. They dont. Q. And they dont conclude that cohabiting family income would increase if they married, do they? A. They dont.); id. at 231:2-15 (Just to be clear, the [welfare rate] numbers that you quote in paragraph 13 is coming from Lichter comparing married to unmarried, right? A. Thats what I believe to be true. Q. As part of support for your opinions in this case you dont draw any data from Lichter that would allow you to compare cohabiting couples to married couples, right? A. I dont use their

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data. Q. And you dont have any other empirical basis to support the concept or the proposition that you state in paragraph 13 as between married and cohabiting couples, right? A. I dont.); id. at 239:3-17 (Q. And at no point in the work that youve done on this case did you run an analysis of ACS data comparing cohabiting couples to married couples? A. Yeah. Lets be clear, its comparing married individuals to unmarried individuals, so the unmarried would include be single and cohabiting people. I did not compare cohabiting and married. Q. For any purpose in your report, right? A. Thats correct. Q. And so all of the analyses that you ran of the ACS data compared non-married to married, correct? A. Correct. Q. And you uniformly ignored cohabiting versus married as a comparison? A. Yes. (emphasis added)). Dr. Price also admitted that he lacked any empirical basis to opine that moving cohabiting couples to marriage would cause any improvement in other outcomes he references in his report. (Price Dep. at 124:18-22; 160:24-161:4) Health Outcomes. In his Report, Dr. Price opines that marriage results in higher levels of overall health and lower levels of medical expenditures, and cites two studies as support for his statement: the Wood study and the Umberson study. (Price Report at 26, 27) But Dr. Price admitted those studies provide no

empirical basis to say marriage results in better health outcomes than cohabitation:

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Q. Do you agree with me Wood doesnt provide any empirical or even qualitative basis to distinguish between health outcomes of cohabitation or marriage? A. Yes. (Price Dep. at 139:21-139:24) Q. Umberson doesnt provide empirical support for the proposition that moving couples from cohabitation to marriage will improve their health, does it? A. I dont know. . . . [Q.] Do you know whether Umberson provides empirical support for the proposition that marriage versus cohabitation has any health premium? A. I dont know. . . . Q. Did Umberson even study cohabitation; do you know? A. I dont know. (Price Dep. at 157:12-15, 157:18-21, 158:11-12) And more broadly, Dr. Price admitted he has no empirical basis to say marriage produces any improvement in health versus cohabitation: In your report do you cite any empirical basis for the proposition that marriage creates positive health outcomes versus cohabitation. A. No. (Price Dep. at 160:24-161:4) Criminality. In his report, Dr. Price opines that the most direct impact of marriage is on the costs involved with the criminal justice system, and cites the Sampson study for the proposition that marriage reduces the odds of committing a crime by 35%. (Price Report at 23) Price (drawing on Sampson) hypothesizes four mechanisms by which marriage reduces crime. See Price Report at 24 (summarizing Sampsons hypothesis that marriage (1) creates an interdependent system of obligation and support; (2) changes the daily routine of individuals and pulls individuals away from deviant peers; (3) allows for members of the couple to monitor and control each others actions; (4) causes a psychological transformation that causes them to be more serious about life). But Dr. Price

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admitted in his deposition that he has no empirical basis to dispute that these four mechanisms would apply equally or more so to cohabitation, and does not cite any data supporting the proposition that marriage reduces crime versus cohabitation: Fair to say Sampson doesnt support the proposition that moving couples from cohabitation to marriage will have any effect on crime, right? A. His data wouldnt allow him to say that, yes. (Price Dep. at 124:5-8) And so with regard to evaluating the mechanisms that Sampson hypothesizes and you discuss in your report, you couldnt say that those mechanisms with regard to the Sampson cohort wouldnt be the same or even greater with regard to cohabiting couples today, right? A. Thats true. (Price Dep. at 126:1-7)

So as you sit here today can you point to any data that you cite in your report for the proposition that moving cohabiting couples from cohabiting to marriage will have any effect on crime. A. Nothing that I cite here in my report. (Price Dep. at 124:18-22) B. Dr. Price Lacks Any Empirical Basis To Say Marginal Marriages Cause The Same Outcomes As Average Marriages.

Even if Dr. Price had empirical support for the proposition that marriage creates positive outcomes versus cohabitation, his methodology and reasoning still would be fatally flawed because he has no empirical basis to assert that marriages caused by the Act would generate the positive outcomes he associates with marriage generally. Economists use the term marginal marriages to describe marriages that would not have occurred but for a government policy. (Price Dep. at 162:2163:12) In the context of Dr. Prices analysis of the Act, marginal marriages are those marriages he believes would be caused by the economic incentive the Act 11

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creates to marry (via disincentivizing cohabitation). (Price Dep. 164:7-20) Price testified that marginal marriages may differ from average marriages in any number of ways: they may be less happy than average marriages, may involve more spousal abuse, may have a higher divorce rate, may exhibit a lower commitment between spouses, may lead to less investment in child rearing, and may show worse outcomes for children. (Price Dep. at 167:15-168:18) These marginal marriages are absolutely central to Prices opinion: he says the Act is rational because it will produce marginal marriages, and those marriages will generate the positive outcomes he associates with marriage generally. (Price Report at 9; Price Dep. 164:7-12) But Price lacks any empirical basis to say that marginal marriages generate the same positive outcomes he associates with average, non-marginal marriages. Q. But the whole point is that marginal marriages are qualitatively different in the sense that theyre marginal so you dont know whether that marginal aspect creates the same or different outcomes versus average marriages, fair? A. Thats correct. (Price Dep. at 165:20-166:1) Q. And the converse is also true that studies showing outcomes for average marriages dont tell you about the outcomes you can expect from marginal marriages necessarily, correct? A. Thats right. Q. So as an empirical matter you need to understand what these marginal marriages are like in order to determine whether average 12

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outcomes for marriage will be manifested in those marginal marriages, right? A. Thats correct. (Price Dep. at 166:21-167:6) Q. If your basis for making a prediction about marginal marriages is based on average marriages you need to know the extent to which those marginal marriages will actually manifest those benefits or those outcomes, right? A. Thats true. Q. And if you dont know the extent to which marginal marriages actually demonstrate the outcomes that average marriages do you just dont know anything about those marginal marriage outcomes, right? A. Thats true. (Price Dep. at 170:15-171:1) Price admitted that one cannot assume as an empirical matter that marginal marriages demonstrate the same outcomes as average marriages, (Price Dep. at 172:14-18), yet his entire opinion rests on precisely that unfounded assumption. He knows nothing about the outcomes of marginal marriages and cannot cite a single study showing that marginal marriages generate the same outcomes as average marriages: Q: [I]n your report, do you cite any study showing that a policy that creates an incentive to marry caused positive outcomes among the marginal marriages? A: I dont.

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Q: Can you identify a study anywhere in the literature that shows marginal marriages induced by policies that incentivized marriage caused better outcomes than cohabitation? A. No. .... Q: Can you point to any studies anywhere showing that marginal marriages induced by marriage incentive policies produced outcomes comparable to non-marginal marriage, average marriages? A: I dont know of any. (Price Dep. at 203:7-11, 203:12-16, 205:19-23) Under Rule 702, expert testimony is not admissible if it represents merely the ipse dixit of the expert: opinions must have a reliable basis in data and a sound methodology. See Tamraz, 620 F.3d at 671 (The ipse dixit of the expert alone is not sufficient to permit the admission of an opinion.) (quoting Joiner, 522 U.S. at 146). Dr. Prices opinion that the Act will generate economic benefits for the state rests on the entirely unsupported assumptions that (1) marriage generates positive outcomes versus cohabitation; and (2) that marriages motivated by the Act would generate the same or similar outcomes as average marriages. Dr. Price has no empirical basis for either of these premises, meaning his opinion is unsupported by any data. Dr. Price should not be permitted to offer opinions as an empirical economist for which he admittedly lacks any empirical basis, and which reflect mere assumption or wishful thinking on his part.

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III.

Dr. Prices Flawed Methodology Fails To Support His Opinions Dr. Prices opinion that the Act is rational from an empirical economic

perspective requires, as foundation, a conclusion that the economic benefits of the Act outweigh its economic costs. (Price Report at 1; Price Dep. at 33:7-11 (Q. So when you say the economic impact youre talking about the net economic impact, right? A. That is correct. Q. Benefits less cost, right? A. Yes.); Price Dep. at 42:10-16 (Q. And you said you believe that the Benefit Restriction Act is an economically rational law, right? A. Thats correct. Q. So within the context of your opinion as an economist the laws benefits would have to outweigh its costs in order for you to say its rational, correct? A. Yes.(emphasis added)); Price Dep. at 42:10-16 (Q. To the extent youre offering any opinion about the rationale or whether the law is rational youre offering that opinion in the economic sense, correct? A. Thats correct.); Price Dep. at 39:24-40:3) Dr. Price testified that, as an economist examining the economic impact of anything, he would have to look at both costs and benefits, (Price Dep. 34:3-6 (Q. Right. So to be clear, as an economist examining economic impact of something you would look at both costs and benefits, correct? A. Yes.)), and that without understanding any costs associated with restricting partner health benefits to married couples it wouldnt be possible to opine on whether it creates a net economic benefit. (Price Dep. at 37:17-20 (emphasis added)) But Dr. Price did

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not apply his own methodology in analyzing the economic impact of the Act: he looked only at the Acts possible benefits and ignored its possible costs, didnt quantify the expected benefits or costs, and has no empirical basis to opine that the Act is rational. Dr. Price testified that the Act could create a number of costs. For example, he testified that cohabitation is associated with better economic outcomes than single-parenthood,1 and acknowledged that some single parents might choose to remain single because the Act removed an incentive to cohabit. (Price Dep. at 217:14-218:2) Price testified that the worse outcomes he associates with single parenthood versus cohabitation are a loss that should be counted against the expected benefits of the Act: Q. So to the extent youve removed that incentive to cohabit the difference in the observed outcome between single parent families and cohabiting families for that subset of the population is a loss associated with the Benefit Restriction Act, right? A. Thats true to the extent that those transitions occur.

See, e.g., Price Dep. at 206:20-207:2 (Q. You cite Thomas and Sawhill for the proposition that only 7.6 percent of married parent families with children are below the federal poverty line compared with 34 percent for single parent families with children and 21.5 percent for cohabiting couples with children, right? A. Yes.); id. at 210:18-22 (Q. But what you say in paragraph 14 is you say that theres a difference that you can observe in the poverty rates between single parent families and cohabiting families, right? A. Yes.).

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Q. So whatever the magnitude of that loss would be needs to be factored in against the expected benefits of the Benefit Restriction Act, right? A. Thats correct, with the caveat that -- yeah, thats right. (Price Dep. at 218:3-14) But Price admitted that he has no empirical basis to say that the alleged benefits of the Act outweigh the losses associated with eliminating the incentive to cohabit: Q. And you dont know and cant say as you sit here today how many of the single employees affected by the Benefit Restriction Act could be motivated to cohabit as a result of what was previously available to domestic partner benefits, right? A. Thats right. Q. And you dont have any empirical basis to estimate the number that would be motivated to marry as a consequence of the Benefit Reduction Act, right? A. Thats correct. Q. So you have no empirical basis to even compare those two numbers, right? A. Thats correct. (Price Dep. at 220:1-24) Dr. Price also admitted that he never considered a number of other costs imposed by the Act: he didnt consider lost tax revenue from same sex couples who might leave the state because of the Act, (Price Dep. at 105:18-22); he didnt make any effort to estimate whether more couples are likely to marry as a result of the Act than move out of the state because of it, (Price Dep. at 107:1-6); he didnt

17

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consider any lost revenue from taxes that would have been levied on benefits eliminated by the Act, (Price Dep. at 107:12-22); and he didnt consider at all the cost to the state of the Act increasing the number of uninsured.2 (Price Dep. 106:16-24) In the end, Dr. Pricethe empirical economistadmitted he has no empirical basis to even compare the Acts benefits against its costs and therefore cannot opine on whether the Act actually creates a net economic benefit: Q. Just to be clear, you havent attempted to quantify sort of the gross economic benefits you would expect from the Benefit Restriction Act, right? A. Thats correct. Q. And you havent attempted to quantify sort of the gross economic costs to the Benefit Restriction Act? A. Thats correct. Q. So you dont have an opinion specifically about whether the Benefit Restriction Act creates a net economic benefit or net economic loss, right? A. I wouldnt be able to pin down a specific. (Price Dep. 218:22-219:8) In other words, Dr. Price admits that the economic benefits of the Act that he refers to in his report (Price Report 9) not only cannot be quantified, but they may not even outweigh the untold economic costs. As
2

In addition, the Price Report fails to consider that the higher salaries he claims will result from marginal marriages will come out of the pockets of local public employers.

18

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such, Dr. Prices opinion that [r]estricting partner health benefits to married couplesproduces economic benefits for the state of Michigan is not reliable and should be excluded. CONCLUSION If Rule 702 and the Daubert line of cases mean anything, they mean that experts may not present baseless assumptions in the guise of empirical analysis. See, e.g., Tamraz, 620 F.3d at 675-76. Dr. Price holds himself out as an empirical economist whose work outside of litigation relies on data and employs rigorous empirical methods, but in this case offers only unsupported assumptions about marriage versus cohabitation and fuzzy-math economic analysis that counts only benefits while ignoring costs. For these reasons, Plaintiffs respectfully request that the Court exclude Dr. Prices testimony. Dated: February 17, 2014 Respectfully submitted,

/s/ Amy E. Crawford Donna M. Welch, P.C. (admission pending) Bradley H. Weidenhammer (admission pending) Amy E. Crawford Debra K. Lefler (admission pending) Kirkland & Ellis, LLP 300 North LaSalle Street Chicago, Illinois 60654 (312) 862-2000 Michael J. Steinberg (P43085) 19

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Jay D. Kaplan (P38197) Kary L. Moss (P49759) American Civil Liberties Union Fund of Michigan 2966 Woodward Avenue Detroit, Michigan 28201 (313) 578-6814 John A. Knight American Civil Liberties Union Foundation 180 N. Michigan, 2300 Chicago, Illinois 60601 (312) 201-9740 Amanda C. Goad American Civil Liberties Union Foundation 125 Broad Street, 18th Floor New York, New York 10004 (212) 549- 2627 Attorneys for Plaintiffs Theresa Bassett, Carol Kennedy, Peter Ways, Joe Breakey, JoLinda Jach, Barbara Ramber, Doak Bloss, Gerardo Ascheri, Denise Miller, and Michelle Johnson

20

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Exhibit A

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Westlaw
M.C.L.A. 15.581 Page 1

Effective: December 22, 2011


Michigan Compiled Laws Annotated Currentness Chapter 15. Public Officers and Employees (Refs & Annos) Kig Public Employee Domestic Partner Benefit Restriction Act (Refs & Annos)
.4 .4

15.581. Short title

Sec. 1. This act shall be known and may be cited as the "public employee domestic partner benefit restriction act".

CREDIT(S) P.A.2011, No. 297, 1, Imd. Eff. Dec. 22, 2011.

The statutes are current through P.A.2013, No. 277 (end), of the 2013 Regular Session, 97th Legislature. Copr. 2014 Thomson Reuters. END OF DOCUMENT

0 2014 Thomson Reuters. No Claim to Orig. US Gov. Works.

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Westlaw
M.C.L.A. 15.582 Page 1

Effective: December 22, 2011 Michigan Compiled Laws Annotated Currentness Chapter 15. Public Officers and Employees (Refs & Annos) K[g Public Employee Domestic Partner Benefit Restriction Act (Refs & Annos) 15.582. Definitions
,

Sec. 2. As used in this act:

(a) "Medical benefits" means medical, optical, or dental benefits, including, but not limited to, hospital and physician services, prescription drugs, and related benefits.

(b) "Public employee" means a person holding a position by appointment or employment in the government of this state; in the government of 1 or more of the political subdivisions of this state; in the public school service; in a public or special district; in the service of an authority, commission, or board of this state or a political subdivision of this state; or in any other branch of the public service.

CREDIT(S) P.A.2011, No. 297, 2, Imd. Eff. Dec. 22, 2011.

The statutes are current through P.A.2013, No. 277 (end), of the 2013 Regular Session, 97th Legislature. Copr. 2014 Thomson Reuters. END OF DOCUMENT

2014 Thomson Reuters. No Claim to Orig. US Gov. Works.

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Westi:avv.
M.C.L.A. 15.583 Page 1

Effective: December 22, 2011 Michigan Compiled Laws Annotated Currentness Chapter 15. Public Officers and Employees (Refs & Annos) Kg Public Employee Domestic Partner Benefit Restriction Act (Refs & Annos) .4.4 15.583. Restriction upon right of persons residing with public employee to receive medical benefits or other fringe benefits; effect of conflicting provisions in contracts entered after effective date of act Sec. 3. (1) A public employer shall not provide medical benefits or other fringe benefits for an individual currently residing in the same residence as a public employee, if the individual is not 1 or more of the following:

(a) Married to the employee. (b) A dependent of the employee, as defined in the internal revenue code of 1986. IFNI] (c) Otherwise eligible to inherit from the employee under the laws of intestate succession in this state. (2) A provision in a contract entered into after the effective date of this act that conflicts with the requirements of this act is void.

CREDIT(S) P.A.2011, No. 297, 3, Imd. Eff. Dec. 22, 2011. [FN1] 26 U.S.C.A. 1 et seq. The statutes are current through P.A.2013, No. 277 (end), of the 2013 Regular Session, 97th Legislature. Copr. 2014 Thomson Reuters. END OF DOCUMENT

2014 Thomson Reuters. No Claim to Orig. US Gov. Works.

http://web2.westlaw.com/print/printstream.aspx?prft=HTMLE&vr=2.0&destination=atp&.. . 2/10/2014

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We41.am
M.C.L.A. 15.584 Page 1

Effective: December 22, 2011 Michigan Compiled Laws Annotated Currentness Chapter 15. Public Officers and Employees (Refs & Annos) Nig Public Employee Domestic Partner Benefit Restriction Act (Refs & Annos) 15.584. Application of act; effect on inconsistent provisions in existing contracts Sec. 4. If a collective bargaining agreement or other contract that is inconsistent with section 3 [FN1] is in effect for a public employee on the effective date of this act, section 3 does not apply to that group of employees until the collective bargaining agreement or other contract expires or is amended, extended, or renewed.

CREDIT(S) P.A.2011, No. 297, 4, Imd. Eff. Dec. 22, 2011. [FN1] M.C.L.A. 15.583. The statutes are current through P.A.2013, No. 277 (end), of the 2013 Regular Session, 97th Legislature. Copr. 2014 Thomson Reuters. END OF DOCUMENT

2014 Thomson Reuters. No Claim to Orig. US Gov. Works.

http://web2.west1aw.com/print/printstream.aspx?prft=HTMLE&vr=2.0&destination=atp&.. . 2/10/2014

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M.C.L.A. 15.585

Page 1

Effective: December 22, 2011 Michigan Compiled Laws Annotated Currentness Chapter 15. Public Officers and Employees (Refs & Annos) Public Employee Domestic Partner Benefit Restriction Act (Refs & Annos) .4.4 15.585. Application of act; constitutional powers Sec. 5. The requirements of section 3 [FN1] apply to all public employees to the greatest extent consistent with constitutionally allocated powers.

CREDIT(S) P.A.2011, No. 297, 5, Imd. Eff. Dec. 22, 2011. [FN1] M.C.L.A. 15.583. The statutes are current through P.A.2013, No. 277 (end), of the 2013 Regular Session, 97th Legislature. Copr. 2014 Thomson Reuters. END OF DOCUMENT

2014 Thomson Reuters. No Claim to Orig. US Gov. Works.

http://web2.westlaw.com/print/printstream.aspx?prft=HTMLE&vr=2.0&destination=atp&.. . 2/10/2014

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Exhibit B

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ECONOMIC IMPACTS OF MICHIGANS PUBLIC EMPLOYEE DOMESTIC PARTNER BENEFIT RESTRICTION ACT OF 2011

Expert report submitted on behalf of Defense in Bassett v. Snyder, Case No. 2:12-cv-10038 U.S. District Court for the Eastern District of Michigan

Submitted December 16, 2013 by Joseph Price, Ph.D.

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I. Assignment 1. The purpose of this report is to assess the economic impact of restricting public employee health benefits to couples who are married. I will first discuss ways in which marriage reduces expenditures and increases revenues for the state government of Michigan. Then I will discuss how changes in the economic incentives for marriage (such as restricting certain benefits to married couples) affect whether people marry. II. Qualifications 2. I am an Associate Professor of Economics at Brigham Young University, where I have worked since 2007. I received by Ph.D. in economics from Cornell University in 2007 and my emphasis of study was labor economics, health economics, and the economics of the family. 3. I have published 23 articles in peer-reviewed journals with another 7 that are accepted and will be published in the next year or so. My publications include articles in some of the top academic journals, including the Quarterly Journal of Economics, Demography and Management Science. My research has also received considerable media attention including coverage in the New York Times, Washington Post, Today Show, and many other news outlets. I am regularly invited to present my research at different academic departments and at various academic conferences.

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4. I am an empirical economist that has conducted research on the impact of marriage on infant health outcomes, factors that influence the decision to marry, parental investments in children, and the outcomes of children raised by samesex couples. Although the specific topics that I have studied vary, the common theme in my research has been the use of large datasets, rigorous empirical methods, and complete transparency in all of my empirical methods. I make my data and analysis code available to other scholars and often provide additional analysis based on inquiries from the media. 5. Over the last several years, I have also been asked to review the academic work of other scholars by over 40 different scholarly journals. This experience of evaluating the work of others in a variety of fields gives me a strong background in discerning between research that is likely to result in correct inference and research where there is likely to be some source of estimation bias that will affect the interpretation of the results. This request by editors to have me assist in evaluating the research of other scholars is also a signal of the trust that other scholars place in my assessment of good research. 6. I have received several academic awards, grants, and honors. These include the Wells and Myrle Cloward Teaching and Learning Faculty Fellowship, the Emmaline B. Wells Scholarly and Creative Work Grant, and an Education and Social Opportunity Grant from the Spencer Foundation. My CV is attached as Exhibit A.

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7. My opinions in this report are based on the sources cited in the footnotes as well as my own calculations using government collected data that is publicly available. I reserve the right to supplement or modify this report based on any documents or other discovery that becomes available during the case or any witness testimony that has not yet been given. 8. I am being compensated $300 per hour for my time to prepare this expert witness report. III. Summary of findings 9. Marriage provides economic benefits to the state of Michigan by reducing welfare payments, increasing tax revenue, and reducing costs incurred by the state related to criminal justice and health care. A couples decision to marry is affected by changes in the costs or benefits of marriage. Restricting partner health benefits to married couples creates an additional incentive for couples to marry and this decision to marry produces economic benefits for the state of Michigan. Allowing partner health benefits to extend to cohabiting couples increases the relative incentive to cohabit instead of marry. This shift away from marriage among heterosexual couples will result in higher costs borne by the state of Michigan (since 99.3% of couples in Michigan are opposite-sex couples). IV. Economic benefits of marriage 10. There are at least three ways that marriage provides economic benefits to the state of Michigan. First, it dramatically reduces the probability that a household

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will receive public assistance. Second, it increases the earnings of individuals and households, thus directly increasing tax revenues. Third, it promotes positive behaviors in individuals that reduces the costs incurred by the state in providing correctional facilities, health services, and educational interventions. 11. One of the most challenging issues in this area of research is the degree to which associations between marriage and positive outcomes represent a causal effect or merely a correlation. The research that I discuss in this report represent articles published in well-respected academic journals and rigorous efforts to estimate the effect of marriage on these different outcomes. 12. Most of the studies that I describe will be based on nationally representative data and not specifically about Michigan. To provide a more specific view of the economic benefits of marriage to the state of Michigan, I use data from the American Community Survey (ACS) from 2001-2011 for all adults (ages 25-65) living in Michigan. The ACS data provides direct measures of most of the outcomes discussed in this section. In each case, I provide the raw difference between married and unmarried adults in Michigan as well as a regression adjusted difference that controls for the individuals age, race/ethnicity, education, and citizenship status. I exclude from this analysis anyone living in a group quarters, which includes correctional facilities, residential treatment centers, military barracks, or college residence halls (though together these only constitute 1.5% of the original sample). Also, some of the measures that I discuss

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are only available in certain years of the American Community Survey and so my analysis for those measures will be restricted to a specific set of years. Marriage and welfare benefits 13. The most important impact of marriage on government expenditures is the fact that married couples are much less likely to be below the federal poverty line and as such are much less likely to receive any type of welfare or public assistance. Lichter, Graefe, and Brown use data on 7,665 women (ages 25-44) from the National Survey of Family Growth and find that women who are married are much less likely to be below the poverty line or to be receiving food stamps (one marker of welfare benefits in the survey). 1 In their empirical study that accounts for family background, race, age, education, and whether the individual had a teen birth, they find that women who are married have a 68% lower odds of being below the poverty time and 79% lower odds of currently receiving food stamps (see Tables 5 and 6). 14. Thomas and Sawhill analyze data from the 2004 wave of the Current Population Survey to examine how poverty rates among children vary based on the marital status of their parents. Overall, only 7.6% of married parent families with children are below the federal poverty line, compared to 34% for single parent families with children, and 21.5% for cohabitating couples with children.

Daniel Lichter, Deborah Graefe, and J. Brian Brown. "Is Marriage a Panacea? Union Formation Among Economically Disadvantaged Unwed Mothers." Social Problems 50, 2003, 60-86.

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15. While the SNAP/Food Stamp program is federally funded (with the state covering half of the administrative costs), it provides a well-defined measure of public assistance that can be easily compared across married and unmarried couples. As such, it serves as a useful proxy for other types of public assistance that are paid directly by the state of Michigan. Data from 2001-2011 ACS indicate that only 5.8% of married adults receive food stamps compared to 20.3% of the non-married adults. The gap for women is larger (5.7% vs. 23.7%) and including demographic controls reduces the overall gap by about a third (with an adjusted difference of 10.7 percentage points). Even including these additional controls, these results indicate that non-married adults are about three times more likely to receive food stamps. There are three years (2005-2007) for which the total amount of food stamps received during the year was included on the survey. If I average the total food stamp payments across all adults (even those not getting food stamps) then the average amount spent per married adult would be $88 compared to $281 for each unmarried adult (the regression adjusted difference is $120). 16. Another large form of public assistance in Michigan is Medicaid. Information on whether the individual is receiving Medicaid is available during the 2008-2011 waves of the ACS. During these years, I find that 5.9% of married adults received health insurance benefits through the Medicaid program compared to 19.2% of unmarried adults (the regression adjusted difference is 9.8 percentage points). Based on estimates by the Kaiser Family Foundation, the average

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Medicaid payout per adult Medicaid enrollee in 2010 in the state of Michigan was $2,876 of which about 30% was paid directly by the state of Michigan. 2 17. A similar pattern is true for other forms of government welfare assistance including public housing, government rent subsidies, and school food subsidies. Unmarried adults are 6.4 times more likely to be living in public housing (2.8% vs. 0.4%), 8.1 times more likely to be receiving a government rent assistance (3.5% vs. 0.4%), and 1.9 times more likely to have children receiving a subsidized school lunch (9.6% vs. 4.9%). The two housing-related differences decrease by about 20% and the school lunch difference decreases by about 50% once I include controls for the demographic characteristics of the individuals. 18. In each of these comparisons, I have purposefully not controlled for whether the individual has children, even for outcomes that are clearly earmarked for families with children such as the school lunch program. The reason for not including this control is that whether an individual has children is codetermined with their decision to marry, thus including this as a control would bias my estimate of differences by marital status. 19. One program for which children are a major portion of the cost of the program is Medicaid. The cost differences estimated above were all about differences in Medicaid coverage of adults based on their own marital status. In the case of Medicaid, the marital status of the parents of the child can also have a dramatic cost savings by reducing the fraction of children in the state receiving health
Henry J. Kaiser Family Foundation Medicaid Payments per Enrollee, FY2010, http://kff.org/medicaid/state-indicator/medicaid-payments-per-enrollee/
2

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insurance through Medicaid. Based on data from the 2008-2011 ACS, I find that 21.8% of children whose parents are married receive Medicaid benefits compared to 61.3% of children whose parents are not married.

Marriage and income 20. Marriage also has a direct impact on individual wages which in turn increases tax revenues for the state. Korenman and Neumark provide one of the most cited studies in this area. They use longitudinal data on men from both the National Longitudinal Survey of Young Men (NLS) and the personnel records of a large US company to document that marriage leads to larger wage increases for men. Using internal data on performance reports from the second dataset, they are able to show that these increases in wages operate through increases in these mens productivity at work after they marry. They also use their results to note that about half of the observed raw correlation between marriage and income is due to selection into marriage and the other half is due to a causal effect of marriage. 3 21. Using data from the 2001-2008 ACS data for Michigan, I find that married adults earn about $10,000 more income each year ($40,500 vs. $30,470 in total personal income or $33,800 vs. $24,360 in terms of total wages and salary). In addition, married adults are about half as likely to be unemployed (6.3% vs. 12.6%). The marriage gap for men is much larger in terms of both income
Sanders Korenman and David Neumark. Does Marriage Really Make Men More Productive? Journal of Human Resources, 26, 1991, 282-307.
3

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($56,300 vs. $33,000) and unemployment (6.4% vs. 15.1%) while the marriage gap is slightly negative for women in terms of income ($25,400 vs. $28,200) but still positive in terms of unemployment (6.1% vs. 10.2%). While the personal income of married women is lower than non-married women the family income is much larger ($84,300 vs. $39,600) and this is especially true if I just restrict the sample to women who are part of a couple ($85,500 vs. $27,400). Adjusting these differences by demographic characteristics reduces both the income and unemployment gap in half. 22. To translate these income numbers into state income tax revenues I used the Taxsim program developed by the National Bureau of Economic Research. This program takes into account the differential way in which the tax code treats persons filing an individual or joint tax return. I find that the tax revenue for the average income of a single male in the state of Michigan would be $1,265 and the tax revenue average income of a single female would be $1,049. In contrast, a married couple making the average income for this group would jointly be paying a state income tax of $3,331. Marriage and public expenditures on criminal justice and health care 23. Marriage changes the behavior of adults that can produce costs savings to the state of Michigan by reducing the expenditures of various government programs. The most direct impact of marriage is on the costs involved with the criminal justice system. Probably one of the most extensive and rigorous studies on the effects of marriage on criminal behavior was conducted by Sampson, Laub, and

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Wimer. They gather the criminal records of 500 adolescents who were originally part of a study about adolescent delinquency. They combine this with information about each individuals marital history so that they can compare how an individuals likelihood to commit crime changes based on their marital status at the time. They find that marriage reduces the odds of committing a crime by 35%. 4 24. The authors discuss four mechanisms through which marriage reduces criminality. First, marriage creates an interdependent system of obligation, mutual support, and restraint. Second, marriage changes the daily structure and routine of individuals and pulls individuals away from deviant peers. Third, married couples monitor each others behaviors and have a vested interest in exerting control over each others actions. Fourth, marriage creates a psychological transformation in individuals that cause them to be more serious about life and take more responsibility. 25. The Vera Institute of Justice reports that the Michigan Department of Corrections spent $1.3 billion on the state prison system in 2010 making the cost to house one inmate for one year $28,117. In terms of the more broad category for which increased criminality affects state expenditures, the state of Michigan budgets $2.8 billion dollars for public safety and corrections. 5 None of these

Robert Sampson, John Laub, and Christopher Wimer. Does marriage reduce crime? A counterfactual approach to within-individual causal effects. Criminology, 44, 2006, 465-508. 5 Rick Snyder. State Budget Office, (2012). State of Michigan Comprehensive Annual Financial Report. Lansing: State of Michigan.
44

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numbers include the costs borne directly by taxpayers of the state as the result of criminal activity in terms of theft, harm or lower quality of life. 6 26. Marriage also has a direct impact on state expenditures on health care through the Medicaid program. As discussed earlier, individuals who are married are less likely to be on Medicaid in the first place. However, even among married individuals that are eligible for Medicaid benefits the actual expenditures per enrollee are lower since marriage results in higher levels of overall health and lower levels of medical expenditures. 27. Researchers at Mathematica provide a detailed summary of research on the impacts of marriage on health care costs. They report that married individuals experience higher levels of overall health and thus have fewer doctors visits and shorter average hospital stays. This latter effect might operate through the fact that married individuals can rely on their spouse for informal care rather than spending a longer time in the hospital. In addition, marriage increases overall levels of health by reducing smoking, improving ones diet, and increasing the use preventative services. 7 Marriage creates a situation in which individuals have a vested interest to invest in each others health and monitor each others behavior. Given the natural self-control issues inherent in most individuals, this

6 Mark Cohen, Alex Piquero, and Wesley Jennings. Studying the Costs of Crime across Offender Trajectories. Criminology and Public Policy, 2, 2010, 279-305. 7 Robert Wood, Brian Goesling, and Sarah Avellar. The Effects of Marriage and Health: A Synthesis of Recent Research Evidence, Mathematica Policy Research, 2007. Debra Umberson. Family Status and Health Behaviors: Social Control as a Dimension of Social Integration Journal of Health and Social Behavior, 28, 1987, 306-319.

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level of social control from a spouse can have large effects in both the short and long run. V. Costs and benefits affect the decision to marry 28. While marriage is generally believed to be based primarily on love, there are a number of costs and benefits to getting married that influence whether or not a couple decides to marry. Much of the discussion in this section draws on a chapter that I wrote for the Research Handbook of Economics of Family Law about various factors that influence the decision to marry. 8 The general point of this section is that individuals respond to economic incentives when deciding to marry just as they do with almost any other decision in life. 29. The specific question in this case is whether a couple would decide to marry in order to receive employer provided health benefits. While this specific question has not been addressed in the academic literature, there has been considerable research on other benefits and costs to getting married that relate directly to this issue. In particular, I will discuss the impact of various government economic incentives (or disincentives) that have been shown to impact marriage including pension benefits, taxes, and direct costs to getting married. Pension benefits 30. Two of the largest benefits that employers provide to the spouse of their employees are health insurance and pensions. Pension benefits for married
8

Joseph Price. Is it Just about Love?: Factors that Influence Marriage. Research Handbook on the Economics of Family Law, Edward Elgar Publishing, 2011.

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couples provide a likely comparison to restricting health insurance benefits based on marital status. I will describe the empirical results of three studies, all published in top academic journals that provide results based on policy changes in Sweden, the US, and Canada. 31. The most notable example of how a change in benefits attached to marriage can increase marriage rates comes from the response to a change in rules governing a widows pension that occurred in Sweden in 1989. The policy allowed women who married by the end of the year to have access to a widows pension for the rest of their life (the new policy would provide benefits for only 12 months). Bjrklund, Ginther, and Sundstrm find that the number of marriages that occurred in December 1989 jumped from its historic average of 3,000 up to 64,000 marriages (a 21-fold increase). There was no change in marriage rates in the early 1990s, indicating that the policy change actually increased the stock of married couples rather than simply changing the timing of marriages that would have occurred anyways. 9 32. Brien, Dickert-Conlin, and Weaver provide similar evidence in the US regarding eligibility rules for widows to receive Social Security benefits but where the incentives to marry are reversed. Prior to 1979, widows who remarried after age 60 were only eligible for half of their spouses benefits. In 1979, this disincentive

Anders Bjrklund, Donna Ginther, and Marianne Sundstrm. Does Marriage Matter for Children? Assessing the Causal Impact of Legal Marriage. IZA Discussion Paper #3189, 2007.

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to marry was removed. The authors of this study find that the removal of this disincentive increased marriage rates among 60-70 year-olds by 30%. 10 33. Baker, Hanna, and Kantarevic examine the effect of a pension policy change in Canada on marriage decisions. Up until the mid-1980s, widows in Canada would lose their pension when they remarried. Reforms in Quebec in 1984 and in the rest of Canada in 1987 eliminated this marriage penalty, and allowed widows that remarried to keep their pensions. The removal of this marriage penalty increased the incentive to remarry, and widows in Canada responded accordingly. They found that there was a statistically significant increase in remarriage rates across age groups with marriage rates increasing by 24%-100%. For example, a 100% increase in rates for females aged 35-44 in Quebec, and a 24% increase for the same age group in the rest of Canada. The policy change was much larger in Quebec (than in the rest of Canada) where the highest penalties had been in place prior to the reform. 11 34. All three of these studies illustrate that changes tying employer-provided benefits to marital status creates an incentive to marry and increases individuals decisions to marry (or not marry).

Michael Brien, Stacy Dickert-Conlin, and David Weaver. Widows Waiting to Wed? (Re)Marriage and Economic Incentives in Social Security Widow Benefits. Journal of Human Resources, 2004, 585-623. 11 Michael Baker, Emily Hanna, and Jasmin Kantarevic. The married widow: Marriage penalties matter! Journal of the European Economic Association, 2. 2004, 634-664.
10

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Tax penalties (or subsidies) 35. The tax code provides another setting in which economic incentives possibly affect the decision to marry. The marriage disincentives for women who work can be particularly large. Alm and Whittington use earnings data from nevermarried individuals in the Panel Study of Income Dynamics to examine how the effect of marriage penalties embedded in the tax code influences the decision to marry. They find that women in their sample experience an average marriage tax penalty of $2,620 per year, though this amount ranges from -$5,675 (a marriage subsidy) to $14,233 (a large marriage tax). For men, the marriage provides an average tax benefit of $429 though this amount ranges from a benefit of $3,997 to a penalty of $3,565. All of these estimates are based on empirical predictions of what the individuals earnings and spouses earnings would be if they were married (using an approach developed by Ted Schultz). 12 36. Alm and Whittington find that for women the effect of the tax penalty is relatively small when evaluated at the average penalty and has an elasticity of 0.23, which means that a 10% increase in the tax penalty would reduce the probability of marriage by 2.3%. However, when evaluated at the maximum penalty for women in the sample, the elasticity is -1.25 suggesting that for this group, for whom the tax penalty might be particularly salient, a 10% increase in the tax penalty can reduce the probability of the woman marrying by 12.5%. The

T. Paul Shultz. Marital Status and fertility in the United States. Journal of Human Resources, 29, 1994, 637-69.
12

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effect of the marriage penalty on the marriage decisions of men was smaller in magnitude and not statistically significant. 13 Direct costs of getting married 37. There is also evidence that even small one-time costs to marry can be a disincentive for some couples to marry and this is even true for couples who have already had a child together. Historically states have required a blood test to occur prior to issuing a marriage license. These blood tests cost about $30-200 depending on whether the couple has them done at a clinic or a doctors office. Over time these laws have been repealed, lowering the direct cost of getting married. In a paper I coauthored with Kasey Buckles and Melanie Guldi, we find that the repeal of these blood test laws increased marriage licenses by 5.7%. About half of these marriages end up occurring in adjoining states, suggesting the overall increase in the marriage rate is about 3%. 14 Comparison to current case 38. While none of the past research on the incentives to marry has empirically tested the impact of tying employer-provided spousal health insurance to marital status, the evidence based on the closest analog (spousal pension benefits) suggests that removing this particular marriage-connected benefit will change the incentive to marry for many couples. The other studies about the effects of
James Alm and Leslie Whittington. Does the Income Tax Affect Marital Decisions? National Tax Journal, 48, 1995, 565-572. 14 Kasey Buckles, Melanie Guldi, and Joseph Price. Change in the Price of Marriage: Evidence from Blood Test Requirements. Journal of Human Resources, 46, 2011, 539-567.
13

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incentives embedded in the tax code or the direct costs of getting married provide supporting evidence that economic incentives have real impacts on the decision to marry. 39. The exact size of the economic incentive created by this policy will vary across couples based on the other opportunities that are available to the partner of the public employee. However, for many couples the economic incentives of receiving health insurance benefits through a spouse will be rather large and at least as large as the economic incentives discussed in the prior research on this issue. 40. The plaintiffs note that the costs of domestic-partner benefits to public employers are limited because, among other reasons, the pool of lesbian and gay employees usually is very small, and not all employees in same-sex relationships enroll in such coverage. This explanation is faulty for two reasons. First, it ignores that fact that the law change applies to unmarried opposite-sex couples as well and there are 11 times as many unmarried opposite-sex couples as there are same-sex couples in the state of Michigan. Second, it ignores the unintended consequences of undermining marriage and increasing the relative incentive of opposite-sex couples to cohabit instead of marry. The social and economic costs of undermining marriage among opposite-sex couples constitute a much larger economic consideration since there are 150 times as many opposite-sex couples in the state of Michigan as there are same-sex couples. Thus while the arguments provided by the Plaintiffs focus on the effects of the Public Employee

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Domestic Partner Benefit Restriction Act has on same-sex couples. They ignore the beneficial social and economic effects the law has for the state of Michigan. VI. Conclusions 41. Restricting public employer provided health care benefits to married couples has the effect of fostering marriage as defined by Michigans Constitution, that is between one man and one woman. Marriage provides economic benefits to the state of Michigan by reducing welfare payments, increasing tax revenue, and reducing costs incurred by the state related to criminal justice and health care. 42. A couples decision to marry is affected by changes in the benefits of marriage and the benefits afforded to alternative arrangements, such as cohabitation. Restricting partner health benefits to married couples creates an additional incentive for couples to marry and this decision to marry produces economic benefits for the state of Michigan. Extending these benefits to cohabiting couples increases the direct costs to public employers to cover these benefits and increases the relative incentive to cohabit instead of marry. While the plantiffs arguments focus on the direct effects on same-sex couples, they ignore the effects overturning the law would have on the 92% of unmarried couples in Michigan that are opposite-sex and any social and economic benefits to the state itself.

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Dated: December 16, 2013

By:

Joseph Price, PhD

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Exhibit A: Curriculum Vitae


Joseph Price Brigham Young University Department of Economics 162 FOB Provo, UT 84602 Office: (801) 422-5296 Email: joe_price@byu.edu

Positions: Associate Professor, Department of Economics, Brigham Young University, 2013 Assistant Professor, Department of Economics, Brigham Young University, 2007-2013 Faculty Research Fellow, NBER, 2008 Research Fellow, IZA, 2010Education: Ph.D. Economics, Cornell University, August 2007. B.A. Economics, Brigham Young University, August 2003. Publications: Buckles, Kasey and Joseph Price. Selection and the Marriage Premium for Infant Health. Demography, forthcoming. Just, David and Joseph Price. Using Incentives to Encourage Healthy Eating in Children Journal of Human Resources, forthcoming. Platt, Brennan; Joseph Price; and Henry Tappen.Pay-to-Bid Auctions Management Science, forthcoming.

Just, David and Joseph Price. Default options and Food Choices Public Health and Nutrition, forthcoming.
Davis, Michael; Craig Palsson, Joseph Price. Taxing the Opposition: Cactus League Attendance and the Efficiency of the Cubs Tax International Journal of Sports Finance, forthcoming. Parkinson, Kristy; Joseph Price, Kosali Simon, and Sharon Tennyson. Consumer Reactions to Drug Information: Response to FDA Warnings on Antidepressants Review of Economics and the Household, forthcoming. Allen, Douglas; Catherine Pakaluk, and Joseph Price. Nontraditional Families and Childhood Progress through School: A Comment on Rosenfeld. Demography, 50(3): 955-961, 2013.

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Cotton, Christopher; Frank McIntyre; and Joseph Price. Gender Differences in Reaction to Repeated Competition Journal of Economic Behavior and Organization, 86, 52-66, 2013. Palsson, Craig; Joseph Price, and Jared Shores, Ratings and Movie Revenues: Evidence from Movie Ratings Contemporary Economic Policy, 31(1), 13-21, 2013. Dahl, Gordon and Joseph Price. The Economists Approach to Studying the Impact of Media on the Family. Family Relations, 61(3), 363-373, 2012. Lefgren, Lars; Joseph Price, and Henry Tappen. Interracial Workplace Cooperation: Evidence from the NBA. Economic Inquiry, 51(1): 1026-1034, 2013. Patterson, Rich and Joseph Price. Pornography, Religion, and the Happiness Gap: Does Pornography Affect the Actively Religious Differently. Journal of the Scientific Study of Religion, 51(1): 79-89, 2012. Price, Joseph and Justin Wolfers. Biased Referees?: Reconciling Results with the NBAs Analysis Contemporary Economic Policy, 30(3): 320-328, 2012. Price, Joseph; Marc Remer, and Daniel Stone. Sub-Perfect Game: Profitable Biases of NBA Referees. Journal of Economics & Management Strategy, 21(1): 271-300, 2012.

Price, Joseph and Jeffrey Swigert. Within-Family Variation in Obesity. Economics & Human Biology, 10(4): 333-339, 2012. Price, Joseph and Jason Riis. Behavioral Economics and the Psychology of Fruit and Vegetable Consumption. Journal of Food Studies, 1(1), 2012.
Just, David; Jesse Lund, and Joseph Price. The role of variety in increasing the consumption of fruits and vegetables among children Agricultural and Resource Economics Review, 41(1): 72-81, 2012. Price, Joseph; Joshua Price, and Kosali Simon. Educational Gaps in Medical Care and Health Behavior: Evidence from Natality Data. Economics of Education Review, 30(5): 838849, 2011. Price, Joseph. Is it Just about Love?: Factors that Influence Marriage. Handbook of Family Law & Economics, Edward Elgar Publishing, (ed. Lloyd Cohen and Joshua Wright), 2011. Price, Joseph, and Simon, Daniel. High School Sports and Teenage Births. In The Economics of Sport, Health, and Happiness: The Promotion of Well-Being through Sporting Activities Edward Elgar Publishing, (ed. Placido Rodriquez, Stefan Kesenne, and Brad Humphreys), 2011. Cao, Zheng; Joseph Price, and Daniel Stone. Performance under Pressure in the NBA Journal of Sports Economics, 12(3): 231-252, 2011.

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Buckles, Kasey; Melanie Guldi, and Joseph Price. Changing the Price of Marriage Journal of Human Resources, 46(3): 539-567, 2011. Dew, Jeffrey and Joseph Price. Beyond Employment and Income: The Association between Young Adults' Finances and Marital Timing Journal of Family and Economic Issues, 32(2): 424-436, 2011. Price, Joseph and Justin Wolfers. Racial Discrimination Among NBA Referees Quarterly Journal of Economics, 125(4): 1859-1887, 2010. Price, Joseph; Brian Soebbing; David Berri; and Brad Humphreys. Tournament Incentives, League Policy, and NBA Team Performance Revisited Journal of Sports Economics, 11(2): 117-135, 2010. Price, Joseph and Kosali Simon. Education and the Response to Medical Research (with Kosali Simon), Journal of Health Economics, 28(6): 11661174, 2009. Wight, Suzanne; Suzanne Bianchi, Joseph Price, and Bijou Hunt. Teenage Time Use Social Science Research, 38(4): 792-806, 2009. Price, Joseph. Parent-Child Quality Time: Does Birth Order Matter? Journal of Human Resources 43(1): 240265, 2008. Price, Joseph. Gender Differences in the Response to Competition Industrial and Labor Relations Review, 61 (3), 320-333, 2008. Larsen, Timothy; Joseph Price, and Justin Wolfers. Racial Bias in the NBA: Implications in Betting Markets Journal of the Quantitative Analysis of Sports, 4(2), article 7, 2008. Ehrenberg, Ronald; George Jakubson; Jeffrey Groen, Eric So, and Joseph Price. Inside the Black Box of Doctoral Education Educational Evaluation and Policy Analysis, vol. 29(2): 134-150, 2007. Under Review or Revise-Resubmit: The Number of Children Being Raised by Gay or Lesbian Parents (with Ryan Hill* and Corbin Miller*) Sticking with What (Barely) Worked (with Lars Lefgren and Brennan Platt). What Matters in Movie Ratings? Cross-country Differences in which Content Influence Mature Movie Ratings (with Doug Gentile and Craig Palsson*). How Much More XXX is Generation X Using? (with Rich Patterson* and Mark Regnerus) Pornography and Marriage (with Kirk Doran)

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Causes of gender differences in competition: theory and evidence (with Chris Cotton and Frank McIntyre) Lunch, Recess, and Nutrition: Responding to Time Incentives in the Cafeteria (with David Just) Technological change, relative worker productivity, and firm-level substitution: Evidence from the NBA (with Grant Gannaway*, Craig Palsson*, and David Sims) Impact of fruit smoothies on adolescent fruit and milk consumption during school breakfast (with Dylan Bates*) The Effect of Teenage Childbearing on Adult Civic Engagement (with Joseph Sabia, Liz Peters, and Reggie Covington) Grants: Benjamin Miller Research Grant, ILR, Cornell ($2,500), 1/2007 Bronfenbrenner Life Course Center Innovative Research Project Grant (w/ Kosali Simon), Cornell ($3,330), 6/2007 Institute for Social Science Seed Grant (w/ Kosali Simon), Cornell ($6,500), 7/2007 Womens Research Institute, BYU ($3,000), 11/2007 Family Studies Center, BYU ($6,000), 11/2007 Mentored Environment Grant, BYU ($13,000), 4/2008 Small Grants Program in Behavioral Economics (w/ David Just), USDA ERS ($30,000), 8/2008 Gerontology Program, BYU ($3,400), 2/2009 Mentored Environment Grant, BYU ($13,090), 12/2009 Family Studies Center, BYU ($3,400), 12/2009 Food Assistance and Nutrition Research Program (w/ David Just), USDA ERS ($150,000), 8/2010 Cornell Center for Behavioral Economics in Child Nutrition Program (w/ David Just), ($29,000), 7/2011 Food Assistance and Nutrition Research Program (w/ George Lowenstein, Paul Rozin, and Kevin Volpp), USDA ERS ($250,000), 8/2011 Mentored Environment Grant, BYU ($16,200), 12/2011 Family Studies Center (w/ Mike Findley and Dan Nielsen), BYU ($10,000), 1/2012 Education and Social Opportunity Grant (w/ Chris Cotton and Thomas Dee), Spencer Foundation ($28,000), 1/2012 Mentored Environment Grant, BYU ($10,870), 1/2013 Emmaline B. Wells Grant, BYU ($9,300), 1/2013 Professional Activities: Referee for: Agricultural and Resource Economics Review, American Economics Review, American Law and Economics Review, AEJ-Policy; AEJ-Applied; American Journal of Public Health, Biodemography, Demography, Economics and Human Biology, Economic Inquiry, Economica, Economic Journal, Economics Bulletin, Economics of Education Review,

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Econometrics, Educational Finance and Policy, Evaluation and Program Planning, Health Economics, Interfaces, Journal of Applied Econometrics, Journal of Human Resources, Journal of Economic Behavior and Organizations, Journal of Labor Economics, Journal of Marketing Research, Journal of Marriage and Family, Journal of Policy Analysis and Management, Journal of Population Economics, Journal of Public Economics, Journal of Quantitative Analysis in Sports, Journal of the Scientific Study of Religion, Labour Economics, Management Science, Oxford Economic Papers, Pediatrics, Political Research Quarterly, Public Health and Nutrition, Quarterly Journal of Economics, Review of Economic Studies, Sexualities, Social Science Journal, Social Forces, Social Science and Medicine, Social Science Research, Southern Economic Journal Discussant: SEA (2006-2007, 2009-2010, 2012), APPAM (2006), WEA (2007, 2009, 20112013), AEA (2008, 2010-2011), SWEA (2008), PAA (2008), Social Costs of Pornography (2008), WSSA (2011), ASHEcon (2010, 2012)

Conference Presentations: American Society of Health Economists: 2008, 2010, 2012 APPAM research conference: 2005, 2006, 2012 Population Association of America: 2006-2010, 2013 Society of Labor Economics: 2006 (poster), 2007, 2008 (poster) American Economic Association: 2013 Southern Economic Association: 2006-2007, 2009-2010, 2012-2013 Western Economic Association: 2007, 2009, 2010, 2011-2013 NBER summer institute, Childrens workshop: 2005 USDA ERS conference: 2010 SIEPR Policy Forum, Sports Economics and Policy: 2011 Symposium on Behavioral Economics and Health: 2011-2013 Food Marketing Workgroup Conference: 2011 Western Social Science Association: 2011, 2013 American Public Health Association: 2012 Child Development Conference (Norway): 2009 Intl. Association of Agricultural Economists (China): 2009 Quadrilateral Behavioural Economics Workshop: 2011 IZA Conference on Discrimination (Germany): 2011 Gijon Conference on Sports Economics (Spain): 2010 National Poverty Center Conference on Religion: 2007 American Time Use conference: 2005 (poster), 2009 Mellon Foundation Graduate Education Initiative Conference: 2005 Intl. Assoc. of Sports Economists Conference: 2005 Invited Seminars: U. Illinois-Chicago (Feb. 2014); U. South Florida (Nov. 2013); Chicago- Harris School (Nov. 2013); U. Sydney (Aug. 2013); ANU (Aug. 2013); UT Austin (March 2012); Texas A&M (March 2012); Iowa State (Nov. 2011); LSU (March 2011); U. Pennsylvania (Feb. 2011); U. Miami (Feb. 2011); Michigan (Jan 2011); Notre Dame (Nov. 2011); Case Western (Nov 2010); UC Riverside (Oct 2010); UC Denver (April 2010); Washington University (March 2010); Utah Valley University (March 2010); U. British Columbia (Dec. 2009); U. Victoria (Dec. 2009); U. Utah (Dec. 2009); Virginia Tech (Nov. 2009); Florida State (April 2009); U. Washington (Feb 2009); Oregon State (Nov 2008); Baylor (Oct 2008); U. Miami (Oct 2008);

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UT-Arlington (April 2008); RAND (Nov 2007); Wharton (May 2006); Cornell (April 2006); U. of Oregon (August 2005) Brigham Young University: Sociology: (Oct 2007); Statistics (March 2008); Family Studies: (April 2008); Womens Research Institute: (Jan 2009); EIME (March 2010), Nutrition (Oct 2010), Communications (Oct 2013).

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IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION

THERESA BASSETT and CAROL KENNEDY, PETER WAYS and JOE BREAKEY, JOLINDAJACH and BARBARA RAMBER, DOAKBLOSS and GERARDO ASCHERI, DENISE MILLER and MICHELLE JOHNSON, Plaintiffs, vs. Case No. 2:12-cv-10038 Hon. David M. Lawson RICHARD SNYDER, in his official capacity as Governor of the state of Michigan, Defendant.

The Deposition of JOSEPH PRICE, Ph.D., Taken at 525 West Ottawa Street, 2nd Floor, Lansing, Michigan, Commencing at 8:03 a.m., Monday, February 3, 2014, Before Deana M. Ryan, CSR-3715.

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APPEARANCES:

BRADLEY H. WEIDENHAMMER Kirkland & Ellis, L.L.P. 300 North Lasalle Drive Chicago, Illinois 60654 312.862.2649 Appearing on behalf of the Plaintiffs.

ROCK WOOD State of Michigan State Operations Division 525 West Ottawa, 2nd Floor Lansing, Michigan 48933 517.373.1162 Appearing on behalf of the Defendant.

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Page 32 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Veritext Legal Solutions Midwest www.veritext.com 888-391-3376 A. A.


Q. Q.

A.

So I wouldn't know that number offhand. Preparing the expert witness report it was about 15 to 18 hours for each of those cases.

Q. A. Q. A.

Plus deposition time? Plus the deposition time. Is that all? There might have been some other time just preparing for the deposition. The bulk of it was writing the expert witness report. Are you being compensated at $300 an hour in those cases as well? Yes. Let me refer you back to Exhibit 1, please, which is your report. Again, in the first sentence of paragraph one it says the purpose of this report is to assess the economic impact of restricting public employee health benefits to couples who are married. When you say assess the economic impact does that mean assess the costs and benefits basically, economic costs and benefits, I should say? I mean as an economist we would use the phrase economic impact more broadly as the effects on health, crime, government revenues, et cetera. I guess my question is a little more fundamental.

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Q.

However you define costs and benefits -- I understand you would define them broadly -- but however defined it was your task and mission in this case to assess both the costs and the benefits of the Benefit Restriction Act, correct? A.
Q.

Yes. So when you say the economic impact you're talking about the net economic impact, right?

A.
Q.

That is correct. Benefits less cost, right? Yes. As an economist when you assess the economic impact of something it's common to assess both the benefits and the costs, correct?

A.
Q.

A.

That would be true if you needed to come up with a specific number, but, yeah, you would evaluate both the costs and benefits of the policy change. But even if your task weren't to come up with a specific number, if your task is to analyze the net outcome or the net impact of something you need to consider both the costs and the benefits, correct?

A. Again, if you didn't -- if you weren't getting an exact number you wouldn't be able to quantify all those pieces so if you left a piece out it wouldn't

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Page 34 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Veritext Legal Solutions Midwest www.veritext.com 888-391-3376 Q. A. A. Q. A. Q. A. Q. Q. affect the whole picture. No, your job would be to look at both costs and benefits. Right. So to be clear, as an economist examining economic impact of something you would look at both costs and benefits, correct? Yes. Now, let me refer to paragraph nine of your report, please. Just for the record, as I'm referring to your report throughout the day you'll understand I'm referring to Exhibit 1, correct? Yes. Look at paragraph nine, please. In paragraph nine, first sentence, you say marriage provides economic benefits to the State of Michigan by reducing welfare benefits, increasing tax revenue, and reducing costs incurred by the State related to criminal justice and health care. Do you see that? Yes. The first part of that sentence you say marriage provides economic benefits to the State of Michigan. You mean net economic benefits? Actually the way I phrased this sentence is economic benefits. As part of your analysis in this case did you actually

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Page 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Veritext Legal Solutions Midwest www.veritext.com 888-391-3376 A. Q. A. Q. Q. A. Q. A. I'm generally referring to the broader impact on the State of Michigan via welfare payments, tax revenues, criminal justice, health care. BY MR. WEIDENHAMMER: Q. But my question is even within the economic framework as opposed to an accounting framework did you make it your business to assess both the costs and the benefits from an economic perspective of the Benefit Restriction Act? Within those areas that I have access to data and expertise. Yes. Yes. Again, in paragraph nine of your report you say that restricting partner health benefits to married couples creates an additional incentive for couples to marry and this decision to marry produces economic benefits for the State of Michigan. Do you see that? Yes. Is it your opinion that restricting partner health benefits to married couples produces economic benefits to the State of Michigan? Can you restate your question? Is it your opinion that restricting partner health

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Page 37 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Veritext Legal Solutions Midwest www.veritext.com 888-391-3376 A. Q. A. Q. Q A. Q A. benefits to married couples produces economic benefits for the State of Michigan? Again, the way I've kind of stated it here in the report is by restricting health benefits to married couples it creates an incentive for couples to marry and marriage produces economic benefits for the State of Michigan. Do you agree that it's also important to consider whether restricting partner health benefits to married couples creates any economic costs or detriments to the State of Michigan? That would be helpful. I wasn't aware of any while writing this report. Aside from whether you were aware of any you said it would be helpful. It would be important, wouldn't it? Correct. In fact, without understanding any costs associated with restricting partner health benefits to married couples it wouldn't be possible to opine on whether it creates a net economic benefit, correct? Yes. Now, further down in paragraph nine you say allowing partner health benefits to extend to cohabiting couples increases the relative incentive to cohabit

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Q.

instead of marry. Do you see that? A. Q. Yes. Now, when you say increases the relative incentive to cohabit instead of marry are you talking about the net relative incentive? A. I'm not sure what you mean by net incentive, but it would change the incentive on the margin. Whatever information they were using to make a decision this would affect the decision. Q. And you go on to say that this shift away from marriage among heterosexual couples will result in higher costs borne by the State of Michigan, right? That is correct. And when you say will result in higher costs, you're referring to net costs? I'm referring to the costs the State bears when there's less marriage via health care, education, criminal justice, tax returns. But to the extent that allowing cohabiting couples to receive benefits creates benefits for the State, would that be included in this analysis of the shift away from marriage among heterosexual couples? If you could rephrase that it will be helpful. You say the shift away from marriage from heterosexual

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Q. Q Q.

couples will result in higher costs borne by the State of Michigan. To the extent that the shift toward marriage imposes certain costs are you balancing those out in your statement that the shift toward marriage will result in higher costs; in other words, are you including avoided costs in that? A. Again, as an economist I was focusing primarily on these broader economic costs via education, health, criminal justice. Based on my reading of the literature I didn't see any evidence that marriage would raise the cost in those areas. Well, my question wasn't limited to marriage but we'll get back to that. Do you have any opinion in this case about whether the Benefit Restriction Act is rational from an economic perspective? A. Yes. The State of Michigan defines marriage as between a man and a woman and I think a state has a rational interest in promoting marriage. Now, do you say it's got a rational interest in promoting marriage from an economic sense or from some other context? From an economic sense. To the extent you're offering any opinion about the

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Page 40 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Veritext Legal Solutions Midwest www.veritext.com 888-391-3376 A. question. You can answer. Again, I don't know if I would phrase it quite that way, but as an economist I would say one rationale for A. Q. A. Q. A. Q. A. Q. rationale or whether the law is rational you're offering that opinion in the economic sense, correct? That's correct. You're not here to offer opinions about broader moral or societal rationales for the Benefit Restriction Act, correct? That's correct. Now, in an economic sense do you agree that a law is rational if its benefits outweigh its costs? I don't know how to legally answer that question. Well, from the perspective -- you said that you have an opinion that this particular law, the Benefit Restriction Law, is rational from an economic sense, right? Yes. And when you say the law is rational in an economic sense what you're saying is that it's your opinion that its benefits outweigh its cost in an economic sense, correct? MR. WOOD: Object to the form of the

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Page 41 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Veritext Legal Solutions Midwest www.veritext.com 888-391-3376 A. question. If you could rephrase that, that would helpful. Q A. passing a law would be that it promotes economic benefits. Ideally you'd want to promote -- you'd want to weigh the benefits against the costs and promote those measures that would create the largest benefit. BY MR. WEIDENHAMMER: Q. But as an economist would you say that a law is economically rational if its costs outweigh its benefits? Again, that's not the language that I would use as an economist, but I would say a rational reasoning for passing a law would be to promote economic benefits. But if the rationale for a law were to promote economic benefits and your assessment as an economist suggested that it would actually result in economic costs greater than the benefits you wouldn't regard that as rational, would you? MR. WOOD: Object to the form of the

BY MR. WEIDENHAMMER: Q. If the purpose of a law were to advance economic benefits or to capture economic benefits, and if your analysis as an economist of that law showed that the costs outweighed the benefits, then you wouldn't

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Q. Q

regard that law as a rational law, would you? A. Well, again, as an economist there's lots of reasons why laws would be passed. If you are asking me for an economic rationale for a law then I would use the metric that the benefits exceed the costs. Right. Just to be clear, my question is in the context of the opinions you say you have about the economic rationale for this law, right? A.
Q.

That's right. And you said you believe that the Benefit Restriction Act is an economically rational law, right? That's correct. So within the context of your opinion as an economist the law's benefits would have to outweigh its costs in order for you to say it's rational, correct? Yes. MARKED FOR IDENTIFICATION: DEPOSITION EXHIBIT 4 8:45 a.m.

BY MR. WEIDENHAMMER: Q. I'm handing you what I'm marking as Exhibit 4. Take a moment to review Exhibit 4, please. MR. WOOD: Just for the record it looks like this is a Supreme Court brief. To the extent

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Page 104 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Veritext Legal Solutions Midwest www.veritext.com 888-391-3376 Q A. Q. A. Q A. Q lower the expenditures of his employer. In the context of public employees and public employers do you have any understanding to the extent to which public employers are free to sort of add or subtract jobs based on productivity? I don't know specifically but I do know if workers are more productive they lower the expenditures of the firms they work for. As a general matter that may be true but would you agree with me that if workers are subject, for instance, to a collective bargaining agreement then there may be set numbers of jobs and productivity may not be a factor in lowering other expenditures, fair? Again, but if a -Is that fair, before you go on? As a broad statement you're right. That expenditures might not operate through salaries, but if a worker is more productive then it's quite possible the city might be less likely to be sued or the workers are less likely to engage in costly mistakes. I mean, there's a number of ways in which worker productivity can affect the municipal -- the public employer's expenditures. Fair enough. In paragraph 22 of your report you try

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Page 105 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Veritext Legal Solutions Midwest www.veritext.com 888-391-3376 A. Q. A. A. Q. to quantify the expected benefit from the marriage premium that you identified in paragraph 21, right? That's correct. But in your report you never try to quantify the potential effect of increased municipal or state salaries that might result from the marriage premium you identified, correct? I did not because, again, the marriage premium can operate by taking on a new employer. That's my rationale for not including that particular expenditure in the report. My question wasn't about your rationale. My question was in your report do you attempt to quantify the effect of your marriage premium that you discuss in paragraph 21 in terms of additional expenditures and employee salaries? No. In your report do you attempt to quantify at all the decreases in tax revenues from same sex couples who might relocate to a different state because of the Benefit Restriction Act? I do not. Do you have any empirical basis to say one way or the other same tax couples might leave the state as a

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Q. Q.

consequence of the Benefit Restriction Act? A. Q. I do not. That's just not something you considered at all, right? A.
Q.

No. No, you didn't consider it? I did not consider that. In your report do you consider at all or calculate the cost of increasing -- the State increasing the ranks of the uninsured as a result of the Benefit Restriction Act?

A.
Q.

A.

Just the issue of Medicaid, and so when marriage rates go up you have less people receiving Medicaid. I would imagine that would also mean that you'd have less people that are uninsured as well. But the effect of the Benefit Restriction Act -- one of the effects is to take away benefits from some people that might otherwise have them, right? Yes. Do you consider in your report or forming your opinions at all the cost to the State of people who were previously covered by health insurance no longer being covered by health insurance? I don't.

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Page 107 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Veritext Legal Solutions Midwest www.veritext.com 888-391-3376 A. A. Q. A. Q. A. Q. A. Q. A. Q. Q. Have you made any effort in your report to quantify or estimate the likelihood that the Benefit Restriction Act would more likely motivate some couples to marry than it would motivate other couples to leave the state? I don't. Do you know whether any neighboring states around Michigan have similar employee benefit restrictions? I don't. That's not something you tried to find out? No. Did you consider or quantify at all for purposes of your report the lost tax revenue from the domestic partner benefits that have been prohibited by the Benefit Restriction Act? Repeat that again. Were you aware that benefits are taxed, right? I wasn't aware of that. So fair to say that you didn't calculate any lost tax revenue from the loss of other qualified adult benefits; is that fair? That's fair. MR. WEIDENHAMMER: Do you mind if we take a short break?

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Page 124 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Veritext Legal Solutions Midwest www.veritext.com 888-391-3376 A. Q. Q. A. Q. A. A. Q. A. Q. Q So Sampson doesn't offer an opinion other than to say other relationships between besides marriage might capture the crime suppressing benefits, right? Sure. Fair to say Sampson doesn't support the proposition that moving couples from cohabitation to marriage will have any effect on crime, right? His data wouldn't allow him to say that, yes. So as you sit here you wouldn't say that Sampson gives you sufficient data to opine that moving couples from cohabitation to marriage will reduce crime, right? Again, since cohabiting couples are rather unstable they kind of move in and out of singlehood, so, yeah, this paper would not provide the clearest comparison between cohabitation and married couples. Well, it doesn't provide any comparison, does it? That's correct. So as you sit here today can you point to any data that you cite in your paper for the proposition that moving cohabiting couples from cohabitation to marriage will have any effect on crime, right? Nothing that I cite here in my report. You didn't re-analyze Sampson's data to get at that question, did you?

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A.
Q.

I do not. Going back for a moment to a couple of things you said earlier, you noted that cohabitation is generally in your view less stable and committed than marriage, right?

A.
Q.

That's correct. Do you have any idea what the divorce rate was amongst the Sampson cohorts?

A.
Q.

I don't know. So you don't know as you sit here today whether the divorce rate amongst the Sampson cohort is lower or higher than the dissolution rate of cohabiting couples generally today, right?

A.
Q.

Yeah, I don't know. You just don't know that? No. You don't know that? Right. As you sit here, with regard to the Sampson study itself and the results you cite, you can't say confidently that the married relationships to the Sampson cohort were more or less stable than cohabiting couples, right?

A.
Q.

A.
Q.

A.

That's right.

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Page 126 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Veritext Legal Solutions Midwest www.veritext.com 888-391-3376 A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. Q And so with regard to evaluating the mechanisms that Sampson hypothesizes and that you discuss in your report you can't confidently say that those mechanisms with regard to the Sampson cohort wouldn't be the same or even greater with regard to cohabiting couples today, right? That's true. In your report, paragraph 25, you note that the state spends money to capture and incarcerate criminals, right? Yes. Do you have any idea how many municipal employees have committed crimes in the past year in Michigan? I don't know. Do you have any idea how many public employees have committed crimes in Michigan in the last ten years? I don't know. For any time period? No. Do you have any data about the propensity of partners of public employees in Michigan to commit crimes? I don't know. You don't have any idea about what the crime rate is for the public employees or their partners?

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Q.

A.
Q.

Yes. Now, if you look again at your report for a moment, paragraph 27. Second sentence of paragraph 27 you say that Wood reports that married individuals experience higher levels of overall health and thus have fewer doctor visits and shorter average hospital stays?

A.
Q.

That's correct. You don't identify a comparator in that sentence, do you?

A.
Q.

I don't. But the comparator is single people, right? I'd have to check. As you sit here today you can't remember whether Wood is comparing single people to married people versus cohabiting people to married people?

A.
Q.

A.
Q.

Again, I'd have to check it. Before you do that let me ask you, when you were preparing your report and forming your opinions in this case did you make any effort to concentrate on studies that compared cohabiting couples to married couples? I don't remember. I don't know. So you couldn't say that was a priority of yours in forming your opinions and doing research that

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Page 134 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Veritext Legal Solutions Midwest www.veritext.com 888-391-3376 Q. A. Q. Q. A. A. A. Q. underlies them? Yeah, I don't remember if that was a priority of mine. Do you agree with me that the population whose behavior you say the Benefit Restriction Act might influence would be cohabiting people who would otherwise get cohabiting benefits but instead are incentivized to marry, right? Well, it would be anyone that is considering marriage and this would be an added benefit of marriage and so, I mean, it doesn't necessarily have to be cohabiting couples making that decision to marry. That's a fair clarification. There are some people that don't cohabit before marriage. Fewer all the time, though, right? Well, that's a fair clarification. The two states of being that you're primarily concerned with comparing in your report are cohabitation versus marriage, right? Those would be the -- yeah, that's probably a fair comparison, yeah. Because what you're saying in your report is that by denying cohabiting couples these health benefits you are dis-incentivizing people to cohabit versus marriage?

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Q.

A. Q.

Yes. And the whole point of your report is that in your view marriage versus cohabitation has economic benefits for the state, right?

A.

I think I was actually making a broader statement about marriage versus other relationships.

Q.

Well, you make some broader statements in your report certainly, but my question is more for purposes of evaluating the economic impact of the Benefit Restriction Act, the relevant comparator is cohabitation versus marriage, right? I'm not sure that's exactly true.
Is it generally true?

A.

Well, cohabiting unions are rather unstable and so if I were to compare the benefits of marriage to cohabitation I've have to take into account that cohabiting couples are going to move in and out of a single status. Right, but, again, the point is the economic incentives that you're creating -- that the legislature is creating in your view are incentives not to cohabit but instead to marry, right? My understanding is they're creating an incentive to marry. You can only have these benefits when you're

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Page 136 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Veritext Legal Solutions Midwest www.veritext.com 888-391-3376 A. A. Q. Q. A. Q. A. Q. married. And not if you're cohabiting, right? Or if you're single. But if you're single there's no one you would be covering anyway, right? Again, this line between cohabiting and singlehood is rather fluid and so I could imagine a single person considering should I marry or should I cohabit, I think in that case or -- yeah, I just don't know if the comparison is super clear between cohabiting and married because people move in and out of cohabitation. The question is not about whether people move directly from singlehood to marriage or through cohabitation and then to marry or cohabitation and never marry. The point is even if you're single and you're evaluating what kind of relationship do I want to have with my partner the two alternatives are cohabitation and marriage or remaining single, right? Yes. And your point is that there are economic benefits to the state for influencing people to choose marriage versus cohabitation, right? That's correct.

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Page 137 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Veritext Legal Solutions Midwest www.veritext.com 888-391-3376 A. Q. A. Q. A. Q. Q. A. Q. A. Q Is it fair to characterize that as the thrust of your report? Again, the Benefit Restriction Act is going to create an incentive for people to marry and then once they enter that marital union then the state gets to reap the benefits of marriage. If they enter a cohabiting union then there's actually -- I mean, the evidence is such that it might not last that long so they would be back into the single state. But also marriage might not last? That's true. Whether people move in or out of the relationship is kind of -- let's put that to one side. Sure. The Benefit Restriction Act in your view changes the incentive between cohabitation and marriage, right? Yes. And before the Benefits Restriction Act in some locations for some public employees they had the option of either cohabiting or marrying and getting the same sort of other qualifying adult benefits, right? Yes. The variable here is taking away -- making unequal the

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Page 138 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Veritext Legal Solutions Midwest www.veritext.com 888-391-3376 A. Q. A. Q A. Q A. A. Q. benefits between cohabitation and marriage, right? Yes. So it's that inequality between cohabitation and marriage that you're studying the economic impact of in your report, right? With the caveat that -- you need to be careful because people don't stay in cohabiting unions. Well, they don't stay in marriages either all the time, right? That's right, but the cohabitation dissolution rates are much higher than marriage rates. And that's one of the reasons that you believe that marriage creates greater sort of economic benefits to the state than cohabitation? That's right. So that's built into the analysis? Yeah. I mean, you would say, hey, there's married people, there's people who aren't married, and some of those people are going to be single or cohabiting and you're saying what's the economic benefit of encouraging more people to enter the married group. So then you would want to compare it to people who aren't married. Some of them are going to be cohabiting and some are going to be single.

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Q.

Right, but you're sort of identifying differences that you believe exist between marriage and cohabitation, right, like length of the relationship, for instance, right? You said that was an important caveat between marriage and cohabitation, right? A. Q. That's right. But my question was more fundamental. At heart what you're opining on in your report is the economic impact of the state passing this law, the Benefit Restriction law, which makes unequal the economic incentive to marry versus cohabit, right? A.
Q.

That's right. Let me ask you to look at Wood, which is Exhibit 8, at page five, footnote one. Do you have that?

A.
Q.

Yes. What Wood says in footnote one is this review does not examine the effect of cohabitation on health or the differing health effects of marriage and cohabitation. Do you see that? Yes. Do you agree with me Wood doesn't provide any empirical or even qualitative basis to distinguish between health outcomes and cohabitation of marriage? Yes.

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Page 156 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Veritext Legal Solutions Midwest www.veritext.com 888-391-3376 A. Q A. A. Q Umberson is saying in the final sentence that I just read is she believes a future study is required to better get at the question or whether preexisting factors are responsible for health behaviors. MR. WOOD: Object to form and characterization of the study. If I read exactly what she says, she says if pre-existing factors are responsible then -- so like if that were true then it would also be true that family role transitions should not contribute to change in health behavior over time. BY MR. WEIDENHAMMER: Q. She phrases it in the conditional if, because her current study doesn't answer that question, right? I think she's phrasing it in the if because she doesn't know if that's -- she doesn't know if pre-existing factors are responsible for health behaviors. And she's writing that in her currently study. So she's done her current study and in her conclusion she says she still doesn't know whether pre-existing factors are responsible for health behaviors, right? I mean, I would view it as a natural hedge that most scholars would put into their research.

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Page 157 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Veritext Legal Solutions Midwest www.veritext.com 888-391-3376 A. Q. A. Q. A. Q. A. Q. A. Q. I'm not asking about other studies. I'm asking you what this sentence in Umberson communicates to you. MR. WOOD: Asked and answered. Again, I have no idea what Umberson was personally trying to communicate but this language she's using is very common in scholarly work to hedge against the possibility that there's just things we don't know. BY MR. WEIDENHAMMER: Q. Now, you haven't re-analyzed Umberson's data in any way, have you? No. Umberson doesn't provide empirical support for the proposition that moving couples from cohabitation to marriage will improve their health, does it? I don't know. You don't know? No, I don't. Do you know whether Umberson provides empirical support for the proposition that marriage versus cohabitation has any health premium? I don't know. Is it something that you looked at when you were reviewing Umberson to try to determine whether Umberson provided empirical support for those

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propositions? I don't know. It's not something you discuss in your report? It's not something I discuss in the report. In the context of the opinions you're prepared to offer in this case you don't have any opinion on whether Umberson provides empirical support for the proposition that marriage causes positive health outcomes versus cohabitation; is that right? A.
Q.

A.
Q.

6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A.
Q. Q.

That's correct. Did Umberson even study cohabitation; do you know? I don't know. Is that something you ever concerned yourself with as you were preparing your report?

A.
Q.

A.

Again, the perspective I'm taking is what are the effects of marriage versus other kinds of structured arrangements. Now I'd like you to answer my question. Sure. Is that something you considered as you were preparing your reports? Not in this specific paragraph. Did you consider whether Umberson evaluated cohabitation as part of preparing your report?

A.
Q.

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A. Q.

I did not. Now, let me ask you to look at page 310 of Umberson, please. If you look at the heading data, hypotheses, and analysis, do you see that?

A. Q.

Yes. The first paragraph under that heading begins the subsequent analyses, right?

A. Q.

Yes. If you look at the third sentence in that paragraph, it's about six or seven lines down and begins never married. Do you see that?

A. Q.

Yes. The never married are excluded from the analyses of this study because parenting information was not collected from them in the original study. Do you see that?

A.
Q.

I see that. Does that provide any insight to you whether cohabitation was compared in this study versus marriage? It doesn't. People who cohabit but never married would not be part of this study, right? That's true.

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Page 160 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Veritext Legal Solutions Midwest www.veritext.com 888-391-3376 Q A. A. Q. Q. A. A. Q. A. Q. Q And you're just not sure whether people who had previously been married but were presently cohabited were part of the study? I don't know. Again, that's just not something you concerned yourself with as part of preparing your opinions in this case, right? For this particular article, yes. Do you know whether the word cohabitation even appears in Umberson? I don't know. The article was written in 1987. Research on cohabitation has been a little more recent than that. To be clear, you cite two studies for the proposition that marriage is associated with positive health outcomes, right? Yes. Do you cite any empirical basis in your report that marriage provides positive health outcomes versus cohabitation? Again, that wasn't the comparison that I considered. So, no, I don't -- in that section I don't compare marriage and cohabitation specifically. But my question is a little broader than that. In

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your report do you cite any empirical basis for the proposition that marriage creates positive health outcomes versus cohabitation? A. Q. No. Let me ask you to look at Exhibit 6 again, please. Let me know when you have that. Okay. Do you have it? Yes. Let me refer you to page ten, please, of Exhibit 6. In the last paragraph before the heading conclusion on page ten it says one of the primary difficulties that can arise in these second-stage analyses is interpreting the results in light of the fact that these estimates only capture the causal impact of marriage on the individuals whose decision to marry is influenced by the particular instrument? That's right. And then you go on to cite Stevenson's study in 2007, which notes that it's important to differentiate between the average marriage, which is likely to be a happy one, and the marginal marriage that may be created or spared by government policy, which may be quite different. Do you see that?

A.
Q.

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Yes, I do. First of all, Stevenson's study, and you here in Exhibit 6 use the term marginal marriages to indicate marriages that wouldn't have occurred but for some government policy, right? That's correct. So if we use the term marginal marriage as we go forward you'll understand that that's what I'm referring to; is that right? Yes. In fact, in the preceding sentence, the first sentence of that paragraph you say -- you refer to individuals whose decision to marry is influenced by a particular instrument, right? That's right. Again, what you're getting at is this concept of marginal marriages, right? Yeah. The key distinction is the marginal marriage will differ based on which policy you're looking at. For example, if your instrument is incarceration rates then the marginal marriage is a woman who otherwise would have been married to a man who is now in prison. If your instrument is something like health insurance benefits then the marginal marriage is the

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couple who chose to marry because of those benefits. Understanding that marginal marriages -- the exact sort of population that fits the category of marginal marriages will differ depending on the policy in question -A.
Q.

That's correct.
-- that's generating the margin, basically?

A.
Q.

That's correct. But the concept will remain the same, which is that marginal marriages refer to marriages that would not have occurred but for the policy, fair?

A.
Q.

Yep. So with regard to the Benefit Restriction Act marginal marriages would refer to couples who would not have gotten married but for the Benefit Restriction Act, right?

A.

Yeah. They might not realize that's the reason they married but as an empiricist looking at it these are the marriages that occurred that otherwise wouldn't have. They wouldn't say as part of their vows, thank you, Benefit Restriction Act. But as an empiricist when you're evaluating the population you would characterize the marginal marriages in the context of

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the Benefit Restriction Act as marriages that would not have occurred but for the Act? A. Yeah. I wouldn't actually be able to identify which marriages are the marginal ones. All I would see is the change in the marriage rate and I could attribute that change to the change in the policy. Regardless of whether you can actually identify the specific individuals conceptually the marginal marriages represent the increase in the marriage rate that you believe would happen as a result of the Benefit Restriction Act, right? A.
Q.

That's correct. So in the context of the Benefit Restriction Act if I say the marginal marriages you'll understand that I'm referring to your conception of marriages that would occur because of the Benefit Restriction Act that wouldn't have otherwise occurred, right?

A.
Q.

That's correct. And you'll understand that as we go forward, right? Right. If you're ever confused about what I'm referring to let me know right away, okay? That's fine. Do you want to take a break?

A. Q.

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Q.

A.
Q.

That's correct. And that's the whole point of what Stevenson is saying there, right?

A. Q.

Yes. And then in the final sentence in that same paragraph in Exhibit 6 you go on to say that thus while these particular results will not provide insight needed into the public value created by the institution of marriage, they provide the insight needed to consider the consequences of policies designed to influence marriage decisions; is that right? That's correct. So there what you're saying basically is kind of the converse, which is that outcomes that you see in studies of marginal marriages tell you a lot about those marginal marriages, right? That's right. But they don't tell you much about the institution of marriage generally? That's true. And the converse is also true that studies showing outcomes for average marriages don't tell you about the outcomes you can expect from marginal marriages necessarily, correct?

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Page 167 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Veritext Legal Solutions Midwest www.veritext.com 888-391-3376 A. A. Q. A. Q. A. Q. A. Q. A. Q. That's right. So as an empirical matter you need to understand what these marginal marriages are like in order to determine whether average outcomes for marriage will be manifested in those marginal marriages, right? That' correct. Let me ask you to take a look at Exhibit 6, please, and in particular the final sentence of the preceding paragraph, so the paragraph on page ten where it begins there have been a few articles. Do you see that? Yes. Actually before we get into that let me ask you a couple more general questions. First of all, it's possible that marginal marriages might be less stable than non-marginal marriages, right? It's possible. It's possible that marginal marriages might be less happy than average marriages; is that fair? Yes. It's possible that marginal marriages might involve a greater rate of spousal abuse than average marriages? It's possible.

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Q. Q.

It's possible that marginal marriages might have a higher divorce rate than average marriages?

A. Q.

Yes. It's possible that marginal marriages might exhibit a lower extent of commitment between the two partners than average marriages; is that fair?

A. Q.

That's true. It's possible that partners in a marginal marriage might invest less in child rearing than average partners in a marriage, fair? It's possible. It's possible that marginal marriages might show worse outcome for children than average marriages, right? It's possible. It's possible that marginal marriages may differ from non-marginal in any number of ways, right? Yes. All of those are actually the wrong comparison, just to make that point clear. What do you mean by that? Well, so if you're thinking about the effect of a marginal marriage you actually don't want to compare the outcome of the marginal marriage with the average marriage. You want to compare the outcome of the marginal marriages with the outcome they would have

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Page 169 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Veritext Legal Solutions Midwest www.veritext.com 888-391-3376 A. Q. A. Q. A. Q. experienced if they hadn't married. In that case all of the outcomes you just asked me about are likely to be higher if they married than if they don't marry. Well, in order to know that you would need to know about the outcomes in the marginal marriages, right? That's true. So if your empirical basis for saying marginal marriage outcomes would be better than not marrying, then you need to know whether marginal marriages exhibit the outcomes that average marriages exhibit, right? If you could say that again. If your empirical basis for assuming that marginal marriages will create better outcomes than if those marginal marriages didn't exist, they stayed cohabiting or single or whatever, and your basis for that statement is just those are outcomes you see in average marriages, right? Yes. Then before you can make that assumption that marginal marriages will create better outcomes than not you have to know whether those marginal marriages will, in fact, produce the outcomes you observed in average marriages, right?

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Page 170 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Veritext Legal Solutions Midwest www.veritext.com 888-391-3376 A. Q. Q A. Q. A. Again, that comparison between the marginal marriages and average marriages doesn't help you know whether the average -- the marginal marriage, how much better off it is than if they hadn't married. But if you don't know what outcomes you can see for a marginal marriage, in other words, if you can't assume that marginal marriages exhibit the same outcomes as average marriages, then you don't have any empirical basis to say that marginal marriages produce better or worse or the same outcomes as some other condition, fair? Again, you have to simplify that a little bit. I just want to make sure that I am agreeing to something that I know is true. If your basis for making a prediction about marginal marriages is based on average marriages you need to know the extent to which those marginal marriages will actually manifest those benefits or those outcomes, right? That's true. And if you don't know the extent to which marginal marriages actually demonstrate the outcomes that average marriages do you just don't know anything about those marginal marriage outcomes, right?

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Page 171 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Veritext Legal Solutions Midwest www.veritext.com 888-391-3376 Q method. Well, no. Actually my questions are restricted to a particular type of marriage, which is to say marginal A. A. Q. That's true. So you can't compare those marginal marriages to any state of being if you don't know anything about the outcomes, right? Again, this is a rather technical empirical issue that one of the ways that we try to get at a causal estimate of marriage is by using an instrument of variable. One of the limitations of that approach is that it only estimates the effect of marginal marriage. There's other empirical approaches that try to answer the same question. One of the studies I cite is Korenman and Neumark. They use a fixed effect approach which is you're comparing people before and after they get married. That's an alternative approach to doing that. Another way is maybe to control for the section effect into marriage and try to adjust for those section factors and see if there's a causal effect that's left over. Your questions are related to one empirical

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Page 172 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Veritext Legal Solutions Midwest www.veritext.com 888-391-3376 break? MR. WEIDENHAMMER: Why don't we finish up with this publication. Let's go off the record. (Discussion off the record at 11:35 a.m.) A. Q A. A. Q. A. Q. marriage. Marginal marriage we said before is a marriage that is motivated or would not exist but for some change in public policy, right? That's right. So I'm getting at that particular type of marriage. That's a distinct characteristic, right, between marginal marriage and average marriage, right? Yes. And we discussed a moment ago that's why in Exhibit 6 you specifically differentiate between average marriages and marginal marriage, right? Yes, where that's possible with the data that you have. The reason it's important to differentiate is because one cannot assume as an empirical matter that marginal marriages demonstrate the same outcomes as average marriages, right? That's true. MR. WOOD: Is this a good time to take a

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causal relationship? A. Q. For teenage marriages, yes. Meaning early marriage amongst those women caused them to be 31 percent more likely to live in poverty, right? A.
Q.

Yes, though this is very early marriage. In your report do you cite any study showing that marriage promotion policies caused positive outcomes among the marginal marriages?

A.

Could you clarify what you mean by marriage promotion policies? Any of the policies you discussed in your paper on infant health. You talked about welfare reform, reducing requirements for a marriage license, changing the way taxes penalize marriage. So those are what you mean by marriage promotions? Anything like that. You were using those as example and we also agreed that the Benefit Restriction Act is also an example of a policy that you would expect would influence marriage decisions, right? I was confused with you thinking of the policies that are designed to promote the quality of marriage, so we're talking about policies that promote getting married or staying married.

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Fair clarification. I'm focusing on policies that -regardless of whether they're intended to marry, policies that you believe have the effect of incentivizing people to marry.

A.

Incentivizing people to marry. That's a great way to put it. So to ask the question again, in your report do you cite any study showing that a policy that creates an incentive to marry caused positive outcomes among the marginal marriages?

A.
Q.

I don't. Can you identify a study anywhere in the literature that shows marginal marriages induced by policies and incentivized marriage caused better outcomes than cohabitation?

A.
Q.

No. Can you identify any study anywhere in the literature that shows that marginal marriage induced by marriage incentive policies caused better outcome than cohabitation with regard to receiving public assistance? No. With regard to Medicaid use? Not aware of any.

A.

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With regard to public housing? No. With regard to criminal behavior? I don't know. With regard to household income? I'm not sure on that one. Just to be clear, can you identify any study? I cannot. Can you identify any study anywhere in the literature that shows marginal marriages induced by incentive to marry policies caused better outcomes than cohabitation with regard to household income?

A.
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A.
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No. What about with regard to employment? No. What about with regard to health outcomes? Again, all of these I don't have anything coming to mind but I don't know any offhand. And you don't identify any in your report, right? That's correct. Have you yourself ever conducted a study showing that marginal marriages result in better outcomes than cohabitation?

A.
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A.

A.
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I've conducted research on this topic but I don't have

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Page 205 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Veritext Legal Solutions Midwest www.veritext.com 888-391-3376 A. Q. A. Q. Q A. Q A. Q any published or working papers on that topic. What research have you done that you haven't published or -The paper with Kasey Buckles and Melanie Goaly about blood test laws, we attempted to use that as a potential instrument for marriage. It turns out it has an effect on marriage but it's not a strong enough first stage relationship to use as a second stage paper. To the extent you've done any research on the topic of whether marginal marriages show better outcome than cohabitation your results have been inconclusive? Again, it didn't have the power to make definitive statements. Didn't have the power to say yes or no whether marginal marriages show better outcomes than cohabitation, right? Yes. Can you point to any studies anywhere showing that marginal marriages induced by marriage incentive policies produced outcomes comparable to non-marginal marriage, average marriages? I don't know of any. And you don't cite any in your report?

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A.
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I don't cite any in my report. Let me ask you to look again at your report, please, paragraph 14. Do you see that?

A.
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Yes. In paragraph 14 you're citing a study by Thomas and Sawhill, correct?

A.
Q.

Yes. Thomas and Sawhill studied the way in which poverty rates among children may vary by marital status of their parents?

A.

Yes. MARKED FOR IDENTIFICATION: DEPOSITION EXHIBIT 12 12:27 p.m.

BY MR. WEIDENHAMMER:
Q.

Sir, I'm handing you what I'm marking as Exhibit 12. Do you recognize Exhibit 12 as the study that you cite in paragraph 14 of your report? Yes. You cite Thomas and Sawhill for the proposition that only 7.6 percent of married parent families with children are below the federal poverty line compared with 34 percent for single parent families with children and 21.5 percent for cohabiting couples with

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Page 208 In fact, on page 66 of Exhibit 12, the final partial paragraph says discussing Lerman's simulation and their initial analysis -- by their I mean Thomas and Sawhill, right? A. Q. Uh-huh. They say that neither of those two things dealt with the issue of cohabitation, right? A. Sorry, you're going to have to point out where you are. 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Veritext Legal Solutions Midwest www.veritext.com 888-391-3376 A. Q. A. Q. Q. A. Q. A. Q. Are you on page 66? I am. Look at the right-hand column of 66. Yes. It says neither Lerman's simulation nor our initial analysis dealt with the issue of cohabitation, correct? Yes. So what they say is neither Lerman's simulation nor our initial analysis dealt with the issue of cohabitation, correct? That's correct. And they conducted a sensitivity analysis that assumes that income and poverty rates of all cohabiting families participating in the simulation would remain

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unchanged after marrying, right? I can see where they write that. To the extent that Thomas and Sawhill considered cohabitation at all they simply assume in their analysis that the income of cohabiting partners would not change if they married, right? Yes, with the assumption that those cohabiting couples stay together. Right. I'm saying that might not be the best assumption. But that aside, what Thomas and Sawhill do is assume that cohabiting couples if they move from cohabitation to marriage their income will remain the same, right? What they're saying is they're simulating the incomes of people who move into cohabitation or move into marriage. So, again, they're making the assumption that once you move into cohabitation your stability rates are the same as marriage. They're saying then the poverty rates would drop by similar amounts if you move single couples into either cohabiting or married. All I'm saying is when you move single people into cohabitation they're not going to stay in those unions as long as if they get moved into marriage. Well, my question is just about Thomas and Sawhill.

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Page 216 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Veritext Legal Solutions Midwest www.veritext.com 888-391-3376 A. Q. A. Q. A. Q. A. Q. Act might opt to remain single parent families as opposed to married parent families? No, I did not look at that. So you didn't consider as part of forming your opinions in this case the extent to which families may remain single parent families rather than cohabiting families as a consequence of the Benefit Restriction Act? I did not look at that. Now, do you agree with me that there are at least observable differences in outcomes for cohabiting families versus single parent families? Yes. So to the extent the Benefit Restriction Act removes an incentive to move from single parent family to cohabiting family the difference in the outcomes between those two states has to be considered like an opportunity cost of the Benefit Restriction Act, right? Do you want clarify that? Well, in other words you're removing an incentive that would have otherwise moved some people you believe from single parent status to cohabiting status, right? You agree that's possible?

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It's possible, I mean, unless they choose to marry instead of cohabit. But you don't know? I don't know. Do you agree it's possible some people would have been motivated by the domestic partner benefits to move from single to cohabiting, right? That may not be enough to move them into further step into marriage?

A.
Q.

A.
Q.

That's possible. And you haven't attempted to quantify how many people fall into that first category of they might have been incentivized not to marry, right? That's right. But even aside from quantifying the number of people in that condition would you agree with me at least that by taking that incentive to cohabit away you're increasing the likelihood that some subset will remain single parent families instead of cohabiting families, right? Again, it depends on whether they choose to stay single or whether they choose to marry. You acknowledge the possibility that some might choose to stay single, right? Relative to marriage, yes.

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Page 218 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Veritext Legal Solutions Midwest www.veritext.com 888-391-3376 A. Q. A. A. Q. A. Q. And relative to cohabit, right? That's right. So to the extent you've removed that incentive to cohabit the difference in the observed outcome between single parent families and cohabiting families for that subset of the population is a loss associated with the Benefit Restriction Act, right? That's true to the extent that those transitions occur. So whatever the magnitude of that loss would be needs to be factored in against the expected benefits of the Benefit Restriction Act, right? That's correct, with the caveat that -- yeah, that's right. And so that's one of the sort of costs or losses or however you want to characterize it that you need to take into account or you would have to take into account in order to determine whether the Benefit Restriction Act is expected to have a net economic benefit or a net economic loss or cost, right? That's correct. Just to be clear, you haven't attempted to quantify sort of the gross economic benefits you would expect from the Benefit Restriction Act, right?

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A. Q.

That's correct. And you haven't attempted to quantify sort of the gross economic costs to the Benefit Restriction Act? That's correct. So you don't have an opinion specifically about whether the Benefit Restriction Act creates a net economic benefit or net economic loss, right? I wouldn't be able to pin down a specific. But even qualitatively do you have an empirical basis to say that it creates a net economic benefit versus a loss? I think what we could say is that -Sorry, who is we? What I would have to claim as an expert is that I believe that incentives change -- incentives change the number of people who would marry and that marriage has broad economic benefits for the State of Michigan. I would be hard pressed to find counteracting benefits that could outweigh that potential benefit. So for example, the hypothetical that you provided recently, I would be hard pressed to think that it could generate enough benefits to offset the losses the State of Michigan would incur by, you know, removing an incentive for people to marry.

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Page 220 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Veritext Legal Solutions Midwest www.veritext.com 888-391-3376 A. A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. But you don't know how many employees affected by the Benefit Restriction Act are single parent families, right? That's right. Or single generally, right? That's correct. And you don't know how many employees affected by the Benefit Restriction Act are cohabiting, right? That's right. And you don't know how many are married, right? That's right. And you don't know and can't say as you sit here today how many of the single employees affected by the Benefit Restriction Act could be motivated to cohabit as a result of what was previously available to domestic partner benefits, right? That's right. And you don't have any empirical basis to estimate the number that would be motivated to marry as a consequence of the Benefit Reduction Act, right? That's correct. So you have no empirical basis to even compare those two numbers, right? That's correct.

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Page 229 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Veritext Legal Solutions Midwest www.veritext.com 888-391-3376 A. Q. A. A. Q. A. Q. But you don't have any empirical basis to say what outcomes that might generate if cohabitation became more acceptable, right? That's correct. Also in that same paragraph in your report you say the social and economic costs of undermining marriage among opposite sex couples constitute a much larger economic consideration than the law's effect on same sex couples, right? That's correct. What are the social costs of undermining marriage that you're referring to in that sentence? I view that more broadly in terms of outcomes such as crime, education, health, so there would be the economic consensus of those things changing, but then we also just think of the social consequence, which would be effects on our way of life and things that might be hard to quantify. At the outset of your report in paragraph one you say that your project is to assess the economic impact of restricting public employee health benefits, right? Yes. So you didn't perform any analysis to assess the social impact of restricting domestic partner benefits

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Page 230 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Veritext Legal Solutions Midwest www.veritext.com 888-391-3376 A. A. Q. A. Q. A. Q. A. Q. A. Q. right? That's right. I focused on economic. Nowhere in your report is there any empirical analysis or data or anything else that allows you to opine on the social costs of restricting domestic partner benefits, right? That's correct. Referring again to your report on paragraph 13, please, here again you're discussing marriage and welfare benefits, correct? That's correct. And in paragraph 13 you cite the Lichter study? That's correct. You cite the Lichter study says that women who are married have a 68 percent lower odds of being below the poverty line and 79 percent chance of receiving food stamps? Yes. Those numbers that you discuss in paragraph 13 are comparing married women to single women? Right, I believe so. I don't know how they handle cohabiting couples in that. But you know that the comparison is not between cohabiting couples and married couples, right?

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Page 231 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Veritext Legal Solutions Midwest www.veritext.com 888-391-3376 A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. That's right. It's between married and unmarried. Just to be clear, the numbers that you quote in paragraph 13 is coming from Lichter comparing married to unmarried, right? That's what I believe to be true. As part of support for your opinions in this case you don't draw any data from Lichter that would allow you to compare cohabiting couples to married couples, right? I don't use their data. And you don't have any other empirical basis to support the concept or the proposition that you state in paragraph 13 as between married and cohabiting couples, right? I don't. You do not? I do not. And Lichter also doesn't provided any comparison data showing outcomes for cohabiting couples who are induced to marry by government benefit or incentive, right? That's right. So in other words, Lichter doesn't show any outcome for marginal marriages as we defined that term

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controls that we used earlier? A. Q. Yes. As part of the analysis you didn't compare cohabiting partners to married couples? I did not. Do you know whether it would be possible based on ACS data to do that? Yes. And you chose not to? Yeah. I was making a comparison between married and unmarried. So as you sit here you don't have any idea what results you would have seen had you compared cohabiting to married couples, right? I don't know offhand. You don't know at all because you didn't run an analysis? If I had to make a guess no, but you don't want me to make a guess. No, because I'm interested in your expert opinion and the analysis you ran to support your expert opinion. The analysis I ran was married versus unmarried. The same question with regard to the analysis that you discuss in paragraph 16 and 17. There as well you're

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Page 239 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Veritext Legal Solutions Midwest www.veritext.com 888-391-3376 A. A. Q. A. Q. A. Q. Q. A. Q. A. A. Q. comparing single to married, right? That's correct. And at no point in the work that you've done on this case did you run an analysis of ACS data comparing cohabiting couples to married couples? Yeah. Let's be clear, it's comparing married individuals to unmarried individuals, so the unmarried would include be single and cohabiting people. I did not compare cohabiting and married. For any purpose in your report, right? That's correct. And so all of the analyses that you ran of the ACS data compared non-married to married, correct? Correct. And you uniformly ignored cohabiting versus married as a comparison? Yes. Now, your analysis of the ACS number showed that marriage was positively associated with reduced food stamp use, right? Yes. But your analysis didn't attempt to demonstrate causation? No, that would not be possible.

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Page 247 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Veritext Legal Solutions Midwest www.veritext.com 888-391-3376 A. Q. A. Q. Q. A. Q. A. moving couples from cohabiting to marriage would increase their wages? That's correct. Let me answer that with a slight caveat. He is comparing people who are moving from something that's not married into something that is married, and so part of the group that's not married are going to be cohabiting or single people. Even though he didn't distinguish between those two it wouldn't be inconsistent with the fact that married have higher wage groups than the other two groups combined. Well, you can't rule that out is what you're saying? That's right. But aside from saying that you can't rule that possibility out my question was a little different. My question was whether Korenman's study provided an empirical basis to say that moving couples from cohabitation to marriage will increase wages. Not that specific transition. When you say that specific transition you mean transition from cohabiting to marriage, right? That's correct. You don't have any empirical basis from your ACS analysis to say that moving cohabiting couples to

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Page 248 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Veritext Legal Solutions Midwest www.veritext.com 888-391-3376 A. A. A. Q. A. marriage would cause their household income to increase, would you? Not in the stuff I reported in the report. The report was all about married and unmarried. But you never did any analysis of cohabiting versus married couples? I didn't do that analysis. So the point remains that you have no empirical basis as you sit here today to say that moving cohabiting couples to marriage would cause their household income to increase, fair? I wouldn't be able to make a statement based upon ACS data that I used. Do you cite other data in your report that you believe support the proposition that moving cohabiting couples to marry would cause their household income to increase? I imagine there's studies that exist but I haven't cited any of those in my report. My report focused primarily on married versus unmarried. Aside from what might be out in the literature I'm focused on what you said in your report and what you reviewed in the process of forming your opinions. As you sit here you don't have an empirical basis to say

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Page 249 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Veritext Legal Solutions Midwest www.veritext.com 888-391-3376 A. A. Q. A. Q. A. Q. A. Q. A. Q. that moving cohabiting couples to marriage would increase their household income, fair? What do you mean by empirical basis? Data or publishing study or any other empirical basis. None that I've cited in my report. And you can't identify one as you sit here, can you? I can't identify one as I sit here. You cannot? Not right in this moment. Same question with regard to your analysis in paragraph 22. You don't compare tax revenue from cohabiting couples to potential tax revenue from married couples, correct? That's correct. So you don't have an empirical basis to say that cohabiting couples to married would cause an increase in tax revenue for the State of Michigan; is that fair? That's fair. MR. WEIDENHAMMER: Why don't we take a short break. (Recess taken at 1:3 p.m.) (Back on the record at 1:35 p.m.) BY MR. WEIDENHAMMER: