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

Author

Listed:
  • Tara Watson

    (Williams College, University of Michigan, and NBER)

  • Sara McLanahan

    (Princeton University)

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

Suggested Citation

  • Tara Watson & Sara McLanahan, 2009. "Marriage Meets the Joneses: Relative Income, Identity, and Marital Status," Working Papers 1141, Princeton University, School of Public and International Affairs, Center for Research on Child Wellbeing..
    • Handle: RePEc:pri:crcwel:wp09-04-ff.pdf
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    File URL: https://www.nber.org/system/files/working_papers/w14773/w14773.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    marriage; relative income; inequality; identity;
    All these keywords.

    JEL classification:

    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • D10 - Microeconomics - - Household Behavior - - - General
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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