Marriage and the family in economic theory and policy.

• Author: Aguirre, Maria Sophia
• Position: Special Issue: The Nature of Marriage and Its Various Aspects

INTRODUCTION

Human beings are social by nature; the most basic manifestation of this sociability is the family. (1) In his article, Alfonso Cardinal Lopez Trujillo underlines the reality that man is a social being who is naturally oriented toward the family--family based on the natural unit of marriage. Marriage, the union of a man and a woman, generates children. Marriage in itself establishes the beginning of the family community. (2) A community is something radically different from considering "family members separately" (3) or as a sum of isolated individuals living together by simple chance or biological reasons. Rather, a community is "a social subject," (4) "a unit into which all the members of the family are integrated." (5) It follows from this view that an understanding of either marriage or the family that converts a relationship between persons into an exchange of "things" or "objects" is not fitting to them. A person normally comes into the world within a family, and it is there where he develops, grows, and matures into an adult capable of being a productive member of society. (6)

From an economic policy point of view, both marriage and the family are important. Healthy families are essential because they directly impact human, moral, and social capital; and, therefore, they impact resource use, economic activity, and economic structures. (7) Thus, resources are used inefficiently when they are directed toward policies that weaken families instead of policies that strengthen them. This, in turn, hampers the sustainability of real economic growth and perpetuates poverty. (8)

Both economic theory and policy are engaged in trying to understand the reality of marriage and the family within economic activity. Within economics, Nobel Prize winner Gary S. Becker's work on human capital and his neoclassical economic analysis of human behavior, including the family, have set the course of these efforts for the past four decades. (9) More recently, economists such as Jennifer Roback Morse and John D. Mueller, among others, have attempted to contribute to mainstream economic theory by introducing a more holistic understanding of the person into the economic analysis of human behavior. This article presents some of the approaches that mainstream economic theorists have taken toward the analysis of marriage and the family, and it evaluates their consequences for policy design as well as implementation. In doing so, this article proposes some modifications to this framework to analyze the family within the economy. With this view in mind, it evaluates some of the policies implemented in the past fifty years in both developed and developing countries, taking into account the needs of the families in these regions and the empirical evidence thus far available.

Empirical data indicate that when economic policy is either indifferent to the family structure or undermines it, the consequences for the economy of a country are disastrous and economic growth can become unsustainable. (10) Policy shapes behavior; thus, it behooves policymakers at all levels to design policies that foster and support healthy families, both directly and indirectly. Since, as previously mentioned, an individual develops within the family, it follows that this person will be able to contribute the most to society as an economic agent when the family is promoted by the very same economy in which the member is working. Furthermore, evidence seems to suggest that when the family is framed by an individualistic understanding of the human person, the natural sociability of men is reduced to utility, which in turn leads to the view that relationships are exchanges of commodities for the sake of utility maximization. (11) Until recently, mainstream economic analysis and policy have fallen into this mistaken view, which is particularly damaging when addressing marriage and the family. In order to be effective, economic policy must take into account the effect it has on the family, the latter considered as a social subject rather than a sum of individuals connected by a contract.

This article is divided into three sections. Section I presents the treatment of marriage and the family within modern neoclassical theory. Some modifications to the model and views of the role of the family within economic growth are proposed. Section II addresses the relationship between policy and the family. Section III presents the most salient challenges that the family in both developed and developing countries faces today, as well as the policies that have proven helpful in promoting and fostering healthy families. The article finishes with conclusions.

1. MARRIAGE AND THE FAMILY WITHIN NEOCLASSICAL THEORY

   When addressing the functions of production, consumption, and distribution in the economy, neoclassical macroeconomic theory approaches the household's decision-making processes typically from an individualistic point of view (i.e., assuming a self-interested (12) and utility-maximizing (13) behavior on the part of the economic agent). In the context of marriage and the family, this approach applies to both the economic nature of the marriage agreement and the decision-making processes of the individual members, both as consumers and producers. This section will address Becker's approach (as well as modifications proposed to it) to the analysis of the marriage agreement, the formalization of the economic decision process within the family, and the production and consumption roles of the family.

   1. Formalizing the Economic Nature of the Marriage Agreement

      Becker, consistent with the neoclassical approach, presents a theory that views and compares marriage, which is the foundation of a family, to a contract. He proposes that people marry when the utility they expect to gain from marriage is greater than that from being single, and that they stay married as long as the expected utility from being married is greater than that of becoming single and possibly remarrying. (14) He also suggests that this process is applicable to other contracts of indefinite duration in which the parties involved have the option of termination. He compares the relationship between employee turnover and length of employment to marriage by evaluating the utility-based decisions that take place regarding termination, either of marriage or employment. (15)

      Becker furthers this analysis by examining the process behind a spouse's decision to divorce. Within the marriage contract, Becker claims that the decision to divorce is based on whether the couple's combined wealth is greater than their combined single wealth. A spouse will choose to terminate the marriage if his or her expected single wealth after any redistribution due to divorce will be greater than that of his or her pre-divorce division of outputs. (16) Becker applies the same argument to show the distinction between "quits" and "layoffs." If the employee's expected wealth is greater after terminating his position, he will quit, though the company will still want him. If the company's expected wealth is greater without employing the same employee, then it will lay him off, even though the employee's expected wealth is greater while still employed by the company. (17) According to Becker's analysis, the decisions being made by the employer and the employee are the same as those made by both spouses within a marriage. (18)

      Through Becker's analysis of marriage as a contract, it is clear that the Nobel Laureate reduces the relationships within both marriage and the family to the seeking of utility, thereby reducing the natural sociability of man to self-interest. In doing so, he distorts the definition of a household because he converts a relationship between persons into an exchange of "things" or "objects." (19) Morse attempts to correct Becker's distortion by proposing the use of a partnership instead of a contract when comparing marriage to any commercial relationship.

      She proposes that the relationship between husband and wife bears the closest similarity to a contract of all family relationships; yet, she acknowledges that it falls short in capturing the reality of marriage. This is so because: 1) it "is chosen by the parties"; 2) in choosing the other party, a person "expects to be better off"; 3) "[m]arriage vows are promises expressly and publicly exchanged, similar to the exchange of promises in a contract"; and 4) "[a]t the most superficial level, a marriage is the sharing of a household by two adults and usually involves exclusive sexual rights." (20) Yet, she argues that the "key elements of marriage" are "commitment and self-giving to another person." (21) She claims that these elements explain "some seemingly anomalous facts about modern marriage" when compared to contracts. (22) First, people usually do not marry based on renegotiable contracts, although almost "every other form of negotiation [occurs] over the traditional terms of marriage." (23) Second, contrary to what some people expected, social science data clearly show that people who cohabit before marriage have a significantly higher probability of getting divorced than people who do not. (24) The first anomaly speaks to self-giving, while the second speaks to commitment and underlines that "self-giving is required at the heart of the committed marriage." (25)

      In Morse's view, a partnership is more than a contract because it involves a voluntary exchange in which each member of the partnership contributes something to the joint venture and receives something for her or his efforts. While a basic contract establishes the relationship between the parties, it also "brings it into being as a legal entity distinct from either of the two individual persons." (26) Furthermore, she notes,

      The partnership differs from other contractual relationships in significant ways. The contract between the partners does not govern every detail of the relationship's...