Braun Adrien Delahaut Maxime Velge Hadrien

Does getting more alike leads to divorce?

Table of contents:
1. Introduction. 2. Theoretical background. 3. The earning gap matters! 4. Literature review.

1) Nosakas insight on wage gap between spouses.

2) Jonathan Lhost: The market for divorce.

5. The median earnings matters! 6. Peripheral factors influencing the rate of divorce. 7. Conclusion.

Braun Adrien Delahaut Maxime Velge Hadrien

Introduction.
In this paper, we are going to test an essential economic assumption related to the market of divorce: That when earnings between married men and women are getting more and more similar (i.e. when married men and women are getting more alike), the probability that the marriage will end in a divorce will rise significantly. In order to test this hypothesis, we will use the data regarding the divorce rate of each US state. By doing so, we want to aim at depicting a pattern showing that; on the one hand, in the states where married men and women tend to earn the same salary, the divorce rate will be high and on the other hand, in the state where there is a high gender discrimination concerning the wage, the divorce rate will be lower. We will go further in our research and use another test to complement our initial hypothesis. This for, we will use the same data but, instead of measuring the earnings difference (spouses are getting more alike), as we did for the previous test, we will compute the data to test the following hypothesis: the poorer the household is, the greater will be the probability that the marriage ends up in a divorce. Indeed, we do not expect to be able to explain totally a higher divorce rate in a particular state by a low earnings gap between spouses. There might be some castes effect that could bias our hypothesis in the sense that the fact to get poorer or richer might have a significant impact on the divorce rate in parallel with the earnings gap. Thus, by means of this complementary hypothesis, we will try to depict a pattern which will help us to show that in the states where median salary is the higher, the lower is the probability that the marriage will end up in a divorce. This should comfort, give more credit, to our final conclusion.

Braun Adrien Delahaut Maxime Velge Hadrien

Theoretical background.
We are going to proceed as follow: First we will look at each state individually. We will focus on the difference in earnings between spouses and on the rate of divorce in each state. We want our model to show that when this difference is low, the rate of divorce should be high. Indeed, the fact that the difference in earnings is low should imply that the benefits spouses derive from specialization should be low too. Consequently, the attractiveness of being married would diminish in comparison to the attractiveness of being single resulting in a higher rate of divorce. Similarly going through the data for income levels, we will look at the difference of income between spouses and compare it with the rate of divorce. This will provide us another perspective that, we do hope, will give us more insight on our initial hypothesis. Finally, with the concern of being as complete as possible, we will, in the last part of this paper, treat some other peripheral assumptions willing to explain a higher or lower divorce rate such as alcoholism, cohabitation and religion. In conclusion, we hope to manage to corroborate our hypothesis stating that when married men and women are getting more alike, the probability that the marriage will end in a divorce will rise significantly by means of two different set of data, earnings gap between spouses and median income of spouses. This is directly related to the one of the main theories we have seen in class: as people get married they can produce more output than the sum of their individual output due to specialization. Moreover, if the spouses are more alike, there will be less specialization and this extra production will be diminished. Therefore the prospect of being single will look greater with respect to the prospect of being married which would be translated in a higher rate of divorce.

Braun Adrien Delahaut Maxime Velge Hadrien

The earnings gap matters!

As we have explained in our introduction, we are going to test the hypothesis that the smallest the difference in spouses earnings, the greater the probability that their marriage ends up in divorce.

To compute those results, we went on the US Census Bureau. We looked for the tables of marital status and earnings for the US population by states. The two relevant tables were B12001. SEX BY MARITAL STATUS FOR THE POPULATION 15 YEARS AND OVER Universe: POPULATION 15 YEARS AND OVER B20002. MEDIAN EARNINGS IN THE PAST 12 MONTHS (IN 2009 INFLATIONADJUSTED DOLLARS) BY SEX FOR THE POPULATION 16 YEARS AND OVER WITH EARNINGS IN THE PAST 12 MONTHS - Universe: POPULATION 16 YEARS AND OVER WITH EARNINGS These tables were extremely helpful in the context of our research in order to bring out relevant insights. In the B12001 data we found the divorce rate of men and women in the US states and in B20002 we found the median earnings for men and women in all the US states. In order to express the fact that the spouses are more alike, we have subtracted the womens earnings from the mens earnings such that when this difference is close to zero, we can assume that they are more alike according to our initial hypothesis. This number will be showed on the horizontal axe of our chart while the divorce rate will be on the vertical axe.

Braun Adrien Delahaut Maxime Velge Hadrien

Furthermore, we proceed like this for every state so that we would be able to depict some kind of pattern where we expect to find a high concentration of states either in the northwest or else in the south-east of our chart. Computing these results together we have the following graph:

Total percentage divorce per state in comparison with the median earning difference between genders per state
0.16 0.14 0.12 0.1 0.08 0.06 0.04 0.02 0 -5 0 5 10 15 20 Total percentage divorce per state Linear (Total percentage divorce per state)

We can see in this chart that the different states are, for the most of them, situated in the same geographical region in the graph. Also we can point out some states that have a different attitude than most of the other ones. Indeed, as already said in previous classes and works, Puerto Rico is not really relevant in our work we can disregard this state that has got a completely different tendency than the rest of the states. (Located at the intersection with the Y-axis point 1)

Braun Adrien Delahaut Maxime Velge Hadrien

Other states can be pointed out; 1. The following states are fully supporting our hypothesis: New Jersey (point 2): with a divorce rate of 0.0811 (8.11%), which is high below the mean (10.81%) and one of the biggest earning difference ($14,992 > $11,045) between men and women. Nevada (point 3): with a relatively high divorce rate of 0.01338 (13.48 %) which is larger than the average (10,81%) and a small difference in earnings ($8,713) 2. The following states seem to go against our hypothesis: Washington DC (point 4): the earning difference between men and women is very small (4,955), but the divorce rate is also small (9.82%). Wyoming (point 5): the earning difference between men and women is big, which means that the people living in Wyoming are expected not to be alike, due to the big earnings difference, while they have one of the biggest divorce rate of all the states (12.31%)

Then we drew a trend line on the graph that correctly approximates the regression. The fact that the slope of the trend line is negative reinforces our hypothesis. As we can see, the biggest the earnings difference between the spouses is (i.e. the more different they are) the lower the divorce rate in the different states will be. However, we have to admit that the slope of the line is not as negative as expected. So, in order to understand better the relation between the earnings gap and the divorce rate, lets write down the regression.

Braun Adrien Delahaut Maxime Velge Hadrien

y = -0.0013x + 0.122 with R = 0.0651

What we had already understood from the chart was that there is a negative correlation between the gap earnings and the rate of divorce. This is materialized by the minus before the variable x. However, we see from the equation that the regression coefficient before is low even though it works in the right direction. Actually, the R is another measure of how well the gap earnings explains the rate of divorce. In our model the R is really low, precisely, 6.51% of the variation in the rate of divorce is explained by a variation in the gap earnings between the spouses. Yet, we shall not be disappointed by the low R value. We never expected to explain fully the change in the divorce rate by only one variable. Indeed, it is obvious that divorce is influenced by various factors and we do not have the pretention to explain it fully.

Braun Adrien Delahaut Maxime Velge Hadrien

Literature review:
1) Hiromi Nosakas insight on wage gap between spouses.
We have come up with one important assumption aiming at explaining why spouses would divorce. However, we have noticed that our assumption did not hold fully which is the reason why we have tried to dig deeper in order to find some theories that could help us to understand why. According to Hiromi Nosaka in his paper named Specialization and Competition in Marriage Models, it is essential to have a close look to premarital investments which are derived from the specialization effect and the competition effect. These two effects are relevant in the context of our study of divorce rate because they can change the outcome of a marriage, possibly leading the household to end up in divorce. On the one hand, the competitive effect is the force that drives the women to compete against each other in order to be able to have a better husband. On the other hand, the specialization effect leads the women to specialize in a certain domain in order to specialize later, after marriage, either household goods or market goods. Nosaka states that those two effects are going to imply wages differential, gender segregation in college majors and statistical discrimination against women. In order to cope with the flaws from our regression, we will focus on wages differential and hope to explain why our regression is not better. As we have discussed and tried to demonstrate with relevant data, previously in this research paper, a higher wages differential between spouses will make marriage stronger and the possibility of having a marriage that ends up in divorce less possible.

Braun Adrien Delahaut Maxime Velge Hadrien

According to Nosaka, originally, as men were more eager to choose a woman who took a non-productive major, such as a literature major, most of the women will go to Literature College which is going to create a wage gap between spouses since men will choose for productivity majors, such as engineering, and will have a better return in terms of wages. But as we can see, more and more women are choosing for productivity majors. This is mainly because of the increase of household goods productivity due to the invention of new machines like the laundry machine or dish washer. Thus, this means that the wage difference between spouses is decreasing gradually (since more women are choosing for the same majors as men) which explains why our results were not as consistent as expected. Due to diminishing wage difference between spouses, our hypothesis (=the fact that when spouses are getting more alike, their marriage has more chance to end up in divorce) tends to be less consistent than in the previous decades when wage difference (=specialization effect) was playing a big role in the selection of the spouse. Thus, our hypothesis is slightly biased because of the disappearance of the specialization effect and the appearance of spouses that are much more alike coming from the same background. Actually, if we pay attention to our chart, we notice that our estimations (the dotes on the chart) are concentrated in the middle of the chart such that the regression is quite noisy and the trend is not clearly marked. On the contrary, when the earnings gap is higher, as it was some decades ago, our estimations per states would be less concentrated in the middle of the chart and we would have found a clearer trend which would have been less biased.

Braun Adrien Delahaut Maxime Velge Hadrien

2) Jonathan Lhost: The market for divorce.

In this article Jonathan Lhost used a fairly simple model to analyze the divorce. He created a market model for divorce. The most important variable of his model is the divorce rate that he puts on the x-axis. According to economic convention, the price of divorce should then go on the y-axis. In this model, the price of divorce can be thought of as the utility of marriage. The utility of a marriage corresponds to the price of divorce in the sense that it tells us how bad a marriage must be before it ends in a divorce. The higher the utility of marriage is, the higher the price of a divorce will be. After that, Jonathan Lhost draws a demand function for divorce, which is determined by the number of married couples who wish to get a divorce. The demand for divorce at any given level of utility comes as a result of utility comparisons made by each spouse in a married couple: comparisons between the utility of marriage and the utility of divorce. The higher the utility of a marriage, the less likely it is that a couple will seek a divorce. This translates into a downward sloping demand curve with a lower demand for divorce at higher levels of utility. Jonathan Lhost found out that some aspects of the legal status regulating divorce affect the position of the divorce demand curve. Legal standards in regards to these issues affect the utility comparisons made in determining the gains of divorce. For example the distribution of current and future wealth after divorce affects the utility of divorce for each party. This model is very interesting in the light of our hypothesis. Indeed we believe that a higher level of specialization inside the marriage will lead to greater benefits due to a trade in goods between partners with different comparative advantages. In the states where the earnings gap is better, the benefits from marriage are presumably bigger and therefore the utility of marriage is higher. This also means that the price of divorce will be higher and thus the rate of divorce will be lower as we can see on Lhosts model.

Braun Adrien Delahaut Maxime Velge Hadrien

The median earnings matters!

Why would people want to remain married or to get a divorce? This can be explained once again by comparing utilities. If the utility of being married for a spouse is superior to the utility of being single, the spouse will remain married while in the opposite case he/she will get a divorce. Now with our specialization hypothesis we believe that as members of the couples are getting more similar, the utility of being married is lower due the diminished benefits of specialization. But as we could see on our graphs, our results were not completely clear. This means that there must be other factors influencing the utility of being married and the utility of being single. We started working the other way around. On the previous analysis we took data to support our hypothesis. But we found out that other variables have to be taken into account. Through different try-outs we realized that there was a correlation between the mean earnings of the population and the rate of divorce. We plugged in a graph the mean earning of individuals per state and the divorce rate.

Total percentage divorce per state in comparison with the median earnings per state
0.16 0.14 0.12 0.1 0.08 0.06 0.04 0.02 0 0 10 20 30 40 50 Total percentage divorce per state Linear (Total percentage divorce per state)

Braun Adrien Delahaut Maxime Velge Hadrien

As done in the previous graph, we can disregard point number 1 which is Puerto Rico. As we can see in the graph above some states will confirm our hypothesis while other seems to go against our hypothesis. 1. The following states can be used to confirm our hypothesis: New Jersey (point 2): with a state median earning of $37,801 which is very larger than the average total earnings of all the states $28,322, the divorce rate in this state is really low 8.11 % Washington DC (point 3): again, this state has got a high state median earning per person ($39,852) and the divorce rate is relatively low 9.82% This means that the richer the people are in the state, the less alike they are to divorce. 2. The following states seems not to support our hypothesis: Nevada (point 4): With a relatively high median earning per person in the state 31,015 (average = 28,322) they have one of the biggest divorce rate of 13.48%

And as you can see above, we notice that there is a downward trend between the mean earnings of people and the rate of divorce. So, in general, the poorer the mean earnings in the states are, the higher the divorce rate will be. This can be seen more clearly by means of the following regression which is the equation of the trend line we depicted in the chart above.

Braun Adrien Delahaut Maxime Velge Hadrien

y = -0.0014x + 0.1481 with R = 0.21

From this regression we see that there is a negative correlation between the rate of divorce and the median earnings across states. Furthermore, a striking insight we get from the regression is the fact that the R is much higher than the one of our previous regression where we used the earnings gap between spouses as the x variable. Basically, this means that our new regression is less noisy than the first one and that the variable alone explains 21% of the variation in the rate of divorce. This result is interesting since the regression is pretty clear with less noise than the first one. Now how could we explain this phenomenon? We thought we had to look at the law concerning marriage and divorce. When a couple cannot agree about the terms and conditions of their property division, the court does it for them guided by either the regime of equitable distribution or a lawful division of community property. On the terms of equitable distribution all the properties acquired from the date of marriage to the date of separation is presumed to be marital property, unless it falls into one of the nine exceptions accepted by law. When separation occurs, the court has to divide the marital assets fairly. The court doesnt divide it 50-50 but this will depend on different factors like the parties income, their ability to rebuild their assets and income in the future. Let us not got too far in legal details but let us assume reasonably that the richer you are the more marital assets you jointly own. In the case of a divorce the marital assets will be divided fairly. If you created a lot of wealth, a bigger amount of that wealth will go to your ex-partner and thus, in a way, taken from you. Thus richer people will lose more after a divorce. That might be one aspect of the explanation.

Braun Adrien Delahaut Maxime Velge Hadrien

Another relevant explanation of why a higher income leads to a lower divorce rate is the fact that people with a lower income faces a more hostile economic environment. Marriages among poorer people are more prone to negative shocks and changes. These marriages are more fragile and thus less able to withstand bad times. Indeed, poorer people usually have less stable jobs and suffer much more from economic shocks than richer people. This can destabilize the nature of the marriage, where the allocation of resources between the spouses are not maximizing the overall gains anymore, leading to higher rates of divorces.

Braun Adrien Delahaut Maxime Velge Hadrien

Peripheral factors influencing the rate of divorce:

Our analysis can be biased by excluding psychological and sociological factors from our research. Indeed we found a few articles that may explain this bias. Therefore we will enumerate different factors that can influence the results of our model.

Religion:
Couples were asked to fill out questionnaires about their involvement in religious activities and their perceptions regarding the sanctification of marriage. They found out that people with strong religious believes had more perceived benefits from marriage, decreased marital conflict, more verbal collaboration, and so on. As they add a religious dimension to their wedding, they find extra utility in marriage. As we have seen with Jonathan Lhosts model, the extra utility of marriage will result in a higher price of divorce. With a higher price of divorce we will find lower rates of divorce, and this will thus influence our model.

Effects of alcoholism:
Some researchers have proven that married spouses will have a tendency to divorce if one of the spouses has been raised in an alcoholic climate. This means that adults who grew up with an alcoholic parent are a third more likely to end up divorced." (The Smart Marriages Listserv, Aug 11, 2004 - http://www.divorcereform.org)

Pre-marital cohabitation:
Researches showed that unmarried cohabiting couples are four times more likely to break up than married couples are. (Profiling Canada's Families III"- http://www.divorcereform.org)

Braun Adrien Delahaut Maxime Velge Hadrien

Smokers:
Some studies try to prove that marriage in which at least one of the spouses is a smoker will tend to end up to divorce more than if both were non-smokers. New research shows that adults who smoke are 53% more likely to have been divorced than those who don't smoke. The study reinforces prestigious 1997 research that says flatly that smoking is a predictor for divorce. (http://www.divorcereform.org/mel/rsmokers.html) Many more elements can be taken into account. All these elements influence our analysis and therefore should be considered to explain the rate of divorce. Unfortunately these psychological and sociological factors were too hard to be integrated in our model and it is thus a reason why it is less consistent than expected.

Braun Adrien Delahaut Maxime Velge Hadrien

Conclusion
We have been looking through the data from the US Census Bureau to test our hypothesis which is that when spouses are getting more alike in terms of wages, they will have a higher incentive to divorce. What we found out is that the data confirmed it but not as much as we expected. Indeed the chart depicting the relation between the earnings gap and the rate of divorce in the different states of the US shows a downward trend. This means that overall in the States where the earnings gap are smaller we noticed a higher rate of divorce which confirmed our hypothesis. But this trend was not as strong as we wanted it to be. This led us to realize that there must be biases influencing the rate of divorce. According to Hiromi Osaka, the wages gap between women and men is getting closer to zero since men and women are studying the same majors thus having, much more than in the past, the same expected wage. This should explain why our estimations are gathering in the middle of graph, therefore blurring the trend which biases our hypothesis. Also throughout our analysis the work of Jonathan Lhost gave us very interesting insights on how to proceed and to understand the additional factors influencing the rate of divorce. Furthermore, we found out that there was a relationship between the median earning and the rate of divorce. By means of a chart we drew a downward trend between these two variables that appeared to have a higher slope than the ones we drew from the earnings gap. Basically, our results indicate that the wealthier people are, the less likely their marriage will result in a divorce. We thought of a few elements that could explain these findings. The legal aspects linked with the division of the marital assets after a divorce can be one of the explanations. Others elements might have a psychological nature. In the final part, we expand the scope of our research to other variables that influence the rate of divorce. These variables remind us that parallel to economic variables, one needs to take into account other aspects such as psychological and sociological in order to be able to construct a regression that will be the most accurate.

Braun Adrien Delahaut Maxime Velge Hadrien

Bibliography
1. US Census Bureau: American community survey: o B12001. SEX BY MARITAL STATUS FOR THE POPULATION 15 YEARS AND OVER Universe: POPULATION 15 YEARS AND OVER o B20002. MEDIAN EARNINGS IN THE PAST 12 MONTHS (IN 2009 INFLATIONADJUSTED DOLLARS) BY SEX FOR THE POPULATION 16 YEARS AND OVER WITH EARNINGS IN THE PAST 12 MONTHS - Universe: POPULATION 16 YEARS AND OVER WITH EARNINGS 2. Hiromi Nosaka: Specialization and Competition in Marriage Models 3. Mahoney, A., Pargament, K.I., Jewell, T., Swank, A.B., Scott, E., Emery, E.,& Rye, M. (1999), Marriage and the spiritual realm: The role of proximal and distal religious constructs in marital functioning. Journal of Family Psychology, 13 (3), 321-338. 4. Jonathan Lhost: The market for divorce. o http://economics.about.com/cs/moffattentries/a/divorce.htm 5. Profiling Canada's Families III"- http://www.divorcereform.org o The Smart Marriages Listserv, Aug 11, 2004 "- http://www.divorcereform.org http://www.divorcereform.org/mel/rsmokers.html