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CHAPTER 5

HOW CAN ECONOMICS INFLUENCE YOUR CHOICE OF A SPOUSE?

Supply, Demand, and Price Signals in the Marriage Market

It’s an age-old story, as sung by Emile in Richard Rodgers and Oscar Hammerstein’s musical South Pacific:

Some enchanted evening you may see a stranger . . . and somehow you know, you know even then, that somewhere you’ll see her again and again. Who can explain it?

Marcellus in Meredith Willson’s The Music Man thinks he can explain a thing or two about attraction. He sees kissing on a first or second date as a signal of low standards,

But a woman who waits ‘til the third time around . . . She’s the girl he’s glad he’s found. . . . The girl who’s hard to get!

Marcellus has a point, and it applies equally to men and women. As in markets for goods and services in which rare stuffed animals and exclusive doctors are prized, judgments about whom to pursue may rest on signals of quality, such as how hard people are to attract. That is the crux of the social price theory, as explained in this chapter, which considers marriage through an economic (but human) lens.

It may surprise you to learn that marriage is the topic of dozens of important economics articles. However, economics isn’t only about money; economics is also about scarcity, choice, and utility maximization, and marriage has much to do with all of these concerns. Nobel Prize–winning economist Gary Becker wrote an entire book, A Treatise on the Family (1981), about the economics of marriage and families. Remember that economists model markets, and a market is any mechanism or institution that brings buyers together with sellers. Ninety-five percent of Americans marry, so most of us become buyers and sellers of marital partners at some point. The marriage market is simply the mechanism that brings us together.

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The marriage market is a valuable case study because it exemplifies three seldom-recognized characteristics of markets. First, not all markets have a fixed location. Many products, from Girl Scout cookies to illegal drugs, are bought and sold far from “bricks-and-mortar” stores, and the Internet brings markets for virtually everything right into your home. Likewise, the marriage market is alive and well in residence halls, nightclubs, churches, and workplaces.

Second, markets don’t necessarily involve money. Tickets for a taping of The Tonight Show have no monetary cost, but successful consumers pay the high price of waiting in long lines early in the morning. The price of dining at all-you-can-eat buffets can include indigestion in addition to dollars, and the price of a stolen car can include prison time. When making decisions, it is perfectly rational for consumers to consider such factors as risk, health effects, time spent, and opportunities lost in addition to monetary prices. In the game of love, some potential partners are easier to attract than others, and the time and effort that go into relationships are relevant parts of the price paid by participants in the market for companionship.

Third, markets assist consumers in dealing with uncertainty. When you’re shopping for items such as scarves, paintings, and dictionaries, what you see is what you get. Uncertainty creeps in, however, when you’re looking for a quart of ice cream, a physician, or a bottle of wine. From the outside, consumers may not know the inner qualities of the products and services: Is the ice cream made with high-quality ingredients? How skilled is the doctor? How superb is the wine? In a market economy, prices can be critical indicators of information that is otherwise unavailable. Decisions to buy and sell products are guided by prices, which reflect both the value of goods to society and the cost of providing those goods. High prices spur producers to make what society most wants. This chapter focuses on how prices can signal quality in the absence of better information.

Consider the pairing of an employer and an employee in the labor market. Some aspects of a potential work relationship are clear from the beginning. Job candidates can usually find out about salary, working conditions, and the prospects for promotion. For employers, a résumé and an interview typically provide glimpses into the suitability of a prospective employee. Both sides must wonder whether a more suitable match could be made with further searching, and each must grapple with uncertainty about commitment from, and compatibility with, the other.

Participants in the marriage market face the same ambiguity about the marginal benefit of additional search efforts. Uncertainty regarding commitment and compatibility is of even greater concern in the marriage market than in the labor market because, if a better candidate comes along after a spouse is chosen, the situation cannot be remedied simply by saying, “I quit” or “You’re fired.” Further, the gains from marriage depend on offerings that are less certain than a salary offer, such as affection, parenting skills, fidelity, ambition, patience, and other things that are difficult to predict on the basis of promises or appearance. For these reasons, the estimation of unknown qualities is central to the search for a spouse.

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This is the information age, and we don’t like to be uninformed, particularly about someone we might hire or wed. A majority of employers now require drug tests, and a growing number are performing criminal background checks on job applicants. In extreme cases, people hire detectives to track a prospective spouse’s history and current behavior. A matchmaking service in Boca Raton, Florida, advertised that a client’s potential spouse would be scrutinized by an “independent worldwide investigation company,” by psychologists, by an astrologer, and by a handwriting analyst to boot. Such information seeking isn’t usually so intense, but some degree of inquiry is a natural part of the market process for goods with high prices and uncertain value.

Searching for a marriage partner involves making a decision about whether to pursue a relationship on the basis of an initially meager number of signals. As in the choice of a doctor, a college, or a bottle of wine under uncertainty, consumers seek indicators of the relative value of the available alternatives. Suppose your boss asked you to buy an outstanding bottle of wine to impress a new client, and you didn’t know much about the choices. To pick a winner, you might look at the bottles, survey the knowledge and opinions of friends, look into the reputations of various vineyards, and sample a few vintages. You would probably also use price as a guide.

Prices embody information about the value of goods to unseen individuals in the market, they reflect expected returns on investments, and they lead individuals toward optimal choices regarding resource allocation. Chapter 3 explained how price is determined by the intersection of supply and demand. A high price indicates that demand for the product is high, supply is low, or both.

If substitute goods have similar supply curves¹ and differing prices, these price differences indicate different levels of demand. Relatively high demand and correspondingly high prices reflect interest from informed consumers and provide a valuable basis for judging quality. If the demand for one doctor allows her to successfully charge $80 per physical, whereas another can charge only $50, other things being equal, the doctor with the higher demand is probably doing a better job of satisfying her patients. Differences in demand also help explain why some universities can charge more than $40,000 in tuition, whereas others cannot.

¹ Chapter 3 explained that supply curves indicate the additional cost of providing more of a good or service, so goods with similar supply curves require similar costs of production.

When it is impossible to learn everything about a good or service before making a commitment to buy it, the price may serve as the best possible, and sometimes the only, gauge of quality. This is the case even when the price involves more than money. For example, the price of a school, a doctor, and a bottle of wine includes admissions standards, the length of the waiting list, and the availability of a particular wine, respectively, in addition to the monetary price. A good student can satisfy higher admissions standards and thus gain admission into better schools. If a student is accepted immediately into 1 school and placed on a waiting list for admission to another school of similar size, the student is getting an important signal regarding the quality of the 2 schools.

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Before we plunge into the marriage market, please understand that the economic analysis of marriage need not be dehumanizing. The benefits that economists assume we seek from marriage have little to do with cold, hard cash. Instead, they consist of love, compassion, self-esteem, companionship, and other genuine reasons for marriage. Subjecting the institution of marriage to market analysis simply permits a better understanding of typical human behavior.

What does it take to win someone’s heart? For some people the answer may involve money, but for many, successful courtship has more to do with things such as kindness, intellect, humor, romantic gestures, appearance, and the ability to contribute to a happy marriage. People being courted must decide what efforts and qualities will win them over; such a standard for successful courtship has been called a social price. As extremes, someone with high standards has a high social price; someone who acts desperate has a low social price.

When the supply of a good is fixed, as is the case for a college with fixed enrollment, an actor such as Johnny Depp, an athlete such as Mia Hamm, or a marital prospect, the supply curve is vertical at the quantity available. No matter how many directors want Johnny Depp to act for them today, only 1 day’s performance can be supplied, so his supply curve is a vertical line at the quantity of 1. When the supply curve is vertical, supply is the same regardless of price, so the level of demand determines the price that can be charged. When it comes time to charge tuition or negotiate salary, colleges, actors, and athletes use information on their value to consumers to anticipate demand and establish the appropriate price. The trick is to receive the highest payment possible without asking too much, which would put a damper on interest. Likewise, individuals use knowledge of their own abilities and potential to set the social prices they expect from suitors.

Sometimes another person, such as a parent, does know an individual’s prospects better than the individual does. That person is likely to set a price floor (a minimum price) for the individual until age and maturity allow a better personal assessment. Imagine teenager Terri announcing to her parents that she intends to begin a relationship with inferior Ivan. Terri’s parents are likely to forbid her to see Ivan because, they decide, she has set her social price too low by hanging out with an unworthy suitor.

As with the prices of goods and the salaries of workers, the social prices of individuals are bid up or down by high or low demand. In other words, the social prices of individuals will rise and fall with their popularity, as determined by friends who know the individuals well and by the relative scarcity of other individuals with comparable qualities.

Economists use the term marital income to describe the gains from marriage. Marital income encompasses all the real-world reasons for getting married, such as opportunities for laughter, home-cooked meals, children, cozy late-night conversations, and help taking the dog out on cold winter mornings. An individual’s contribution to marital income is determined by such things as his or her self-discipline, intentions, moral standards, prospects, plans, inner strength, experience, and prior successes. Potential mates pay the resulting social price via courting efforts and, in some cases, prenuptial agreements. As part of her social price and as a means of reducing uncertainty associated with her third selection of a spouse, superstar Jennifer Lopez required actor Ben Affleck to sign a contract indicating he would receive none of her wealth on divorce, and if a divorce involved cheating on his part, she would receive one-half of his wealth.

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As with doctors, schools, and wines, potential mates exhibit only a fraction of their promise through observable traits. Social prices provide additional clues to the marital income that would follow from prospective pairings. Social prices are not monetary in most societies.² Instead, an individual’s social price is reflected in the ease with which he or she can be courted. Depending on the context, social price could be conveyed by the amount of eye contact made, the receptiveness to initial dating propositions, popularity in desirable social circles, or the interval of time before sexual intimacy is accorded. Among individuals with similar outward traits, a marriage market participant with imperfect information is likely to expect greater marital income from prospects with higher social prices. In other words, Marcellus of The Music Man was right about us prizing those who are hard to get.

² Bride payments called dowries are still common in some parts of the world. See http://www.infoplease.com/spot/dowries1.html.

Skeptical about the workings of the marriage market as expressed here? Consider some of the rationality behind the use of social prices:

It would be an understatement to say that uncertainties inherent in the marriage market lead to considerable frustration. Some discouraged searchers resort to the strategies of traditional markets, including newspaper advertising and large expenditures of money. Marriage brokers make fortunes with promises to facilitate the search process, sometimes with tragic consequences. In 2003, U.S. Senator Maria Cantwell introduced the International Marriage Broker Regulation Act to oversee the many brokers operating in the United States and to prevent the trafficking and abuse of vulnerable women.³

³ This act was approved by the Senate Judiciary Committee in September 2005. At this writing it had not yet been voted on by the full Senate. See http://www.capaa.wa.gov/IMBR_act.html.

Thousands of marital searchers have turned to classified ads, or “personals,” to seek spouses. Experimentation with personal messages in mock ads supports the social price theory. When about 100 students at Centre College were shown personal ads and asked with whom they would most like to pursue a marital relationship, the most alluring ads were those that expressed high social prices with statements such as “I only go out with people who treat me well.” Those exhibiting a low social price with lines such as “I’m having a hard time finding a date” received less interest.

Fee-based matchmaking services are exploding on the Internet, and some consumers are willing to pay $50,000 or more to matchmakers, one of whom was accused in 2004 of defrauding single women out of $2.8 million. Given the economics of the marriage market, searchers themselves may be tempted into fraud as well. Knowing that social prices are important in the evaluation of potential mates, some individuals appear to have incentives to overstate their social prices. This might work initially, but it is not a successful long-term approach. As in the search for doctors, colleges, and wine, in time, each participant in a relationship begins to see the same predictors of unseen traits—signs of initiative, inner strength, aspirations, and success rates in achieving goals—that the other has used to set a social price. Personal appraisal gradually replaces the importance of price signals and corrects for misrepresentation of social price. The inevitability of the truth coming out, the availability of divorce, and the costs of repeated searches make deception an unwise and inefficient strategy.⁴

⁴ For supporting theoretical arguments, see David A. Anderson and Shigeyuki Hamori (2000), “A Theory of Quality Signaling in the Marriage Market,” Japan and the World Economy, 12:3, 229–242.

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Markets can exist virtually anywhere and, although money may not be involved, almost everything has a price. Uncertainty rears its ugly head when looks can be deceiving, as with schools, workers, and bottled spirits, and markets offer assistance. For a given supply, a relatively high price indicates a high demand from those who know the product. High prices provide a signal for suppliers to produce more when possible, and a supplier’s ability to charge high prices is an indication of quality to consumers.

Related uncertainty exists in the market for spouses. Marital searchers, as if choosing a fine wine, look to the wealth of information that is embodied in prices. Although marital searchers have imperfect information about themselves as well as their suitors, they are the best assessors of their own aspirations and potential, and they use this knowledge to set standards for courtship and marital offers. Searchers use these standards, or social prices, to estimate unseen qualities in potential mates.

Advice to the lovelorn: Don’t sell yourself short, but don’t price yourself out of the market, either.