On Shared Consumption

Last week, I wrote about the economics profession’s new “power couple”, Justin Wolfers and Betsey Stevenson, and mentioned the idea of shared consumption driving marriage rather than shared production. In the comments, Katina asked me to explain shared consumption a bit more in depth and I promised her a longer post on the matter. I’m a little late, but here it is. I haven’t formally modeled any of this, and so I’ll say it’s not very clearly thought out, but in the name of elucidating the inner workings of this economist’s mind, I figured I’d at least outline my thoughts here.

One of the perhaps more complicated ways to define shared consumption comes from the study of public goods. Public goods are things like national defense or clean air. They constitute things that are non-excludable and non-rivalrous in consumption. There’s a lot of buzz words in that sentence, but just think about things that you can enjoy (or gain utility from) without diminishing someone else’ enjoyment (this is the non-rivalrous part) and things that, once they are in existence, no one can easily prevent someone else from enjoying it, say through an entrance fee (this is the non-excludable part).

Shared consumption goods are a little less strict than this, however. The idea of shared consumption lets us take what we would normally call “private” goods (non-public, like shoes–we both can’t wear the same pair of shoes) and give them some public (or sharing) aspects within a marriage or partnership.

A big shift in family economics has been to examine children as a public good. See, for instance, Chiappori, Iyigun and Weiss. The idea is that two people investing in a child reap benefits from both their own investment and the other’s investment. But this is a little convoluted for a non-economist, maybe.

Perhaps even simpler is when we take children out of the equation. Many couples these days marry without any intention of having children, even if though it might mean paying more in taxes. Two-earner households aren’t specializing in household production by one staying at home to cook and clean while the other works, but rather enter into a marriage for the purpose of keeping each other company.

To back me up, the New York Times published a piece outlining a significant demographic shift in parenthood over the past few years. Namely, more than half of children born to mothers under 30 are born to single mothers. If that’s not a refutation of shared production, I don’t know what is. This is a theme that is also prominent in my new favorite ethnography (not so new, really, but if you ever want to see me get really excited, ask me about Promises I Can Keep).

In addition, I’m currently reading Is Marriage for White People? by Ralph Richard Banks of Stanford Law. Early on, he cites a Pew study that says shared religious beliefs, shared interests, a healthy, happy sexual relationship and even sharing household chores were more important for a happy marriage than children. We’re not getting married to have children, necessarily, anymore, and when we are, we’re not convinced that specializing in raising the child is the best thing for one parent to do.

As pertaining to children, there’s a fine line between what constitutes consumption and production, but I think it’s safe to say that most matches aren’t happening with the primary purpose of building a home with a white picket fence in the suburbs and raising a couple of kids who go on to do the same. Americans are marrying to make themselves better off still, just not in the way that our parents and grandparents did.

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For Valentine’s Day, on love and marriage and economics

Perhaps I’m hyper aware of things going on in both media and social media these days, but it seems that UPenn economists Justin Wolfers and Betsey Stevenson are everywhere these days. They’re all over my twitter feed for one. Then, today this came out in the Washington Post, and over the weekend, out came a profile in the NYT. The Times article describes them as a ‘power couple’ of economics. Which is pretty funny if you know any economist couples.

Though our research hasn’t come head to head yet, Justin and Betsey do a lot of work in family economics, much like I do. So, their meteoric rise to national prominence (at least among the WaPo-, NYT-reading set, is of interest to me. In particular, someone mentioned a quote from Betsey Stevenson saying that the household problem (as we so lovingly call it in economics) had turned from one of shared production to shared consumption.

Much of the dominant thinking in family and household economics has roots in Gary Becker’s A Treatise on the Family. It rests on ideas that can only politely be called antiquated. Women are in charge of domestic production (cleaning, child-rearing, cooking, laundry, etc) and men are in charge of bringing home the bacon. It’s specialization at the household level. Very economist-y. On some level, it probably made a lot of sense to think about marriage in this manner, particularly when women’s wages were much, much lower than men’s. In fact, it made so much sense that it partly earned Becker a Nobel Prize in Economics.

At some point during my fourth year of graduate school, I ordered my own copy. It was a simple (though really expensive!) purchase. A paperback, just a book, but a book that essentially formed much of the dominant thinking in my field. Even then, I knew its time in the spotlight was waning. I’ve still never read the whole thing. Despite knowing it was a classic, I can still only look up passages when I think they’re relevant. Reading more than a few pages makes the feminist in me absolutely boil.

But someone else recently said that, as economists, we should hope that our research becomes irrelevant, because that means that society has changed or that we’ve developed policy solutions for those questions and problems. And that’s probably what is happening here.

The world is changing; marriage is changing, love is changing. Household production is definitely changing. And perhaps all of this is about household consumption (enjoying kids and raising them together) rather than household production (raising kids, a public good). I’m unsure whether this is true at every socio-economic level, or whether it’s a privilege of high-earners, but it’s certainly an interesting way to frame and model marriage in economic terms.

Happy Valentine’s Day!