Unequal households: a modest proposal

Dr Eric Crampton
Insights Newsletter
15 July, 2016

I have a solution to inequality.

It will take a long time, and I don’t think you’re going to like it.

I don’t like it either.

But, it is a solution. And with all the shouting that something must be done about inequality, this particular something might be more effective than a lot of the other proposals floating around the traps. 

Let’s step back to a potted history. For much of history, marriage was different than it is now. People chose their partner based on who was their best possible match out of a pretty narrow set of options.

And, as economists Betsy Stephenson and Justin Wolfers put it, people looked for good partners based on complementarities in production: someone who was really good at working outside of the home and earning money would try to find someone who would be really good at raising the family inside of the home.

And so there was a lot more variability within couples.

When there is more variability within couples, kids across different households wind up being more similar to each other.

As technology changed and household appliances made housework feasible for two working partners, marriage changed too. People started looking for partners who enjoy the same things that they do. People who like going to the opera are less likely to partner up with somebody who prefers stock car racing. Couples started looking more and more like each other, matching on preferred recreational activities, earning potential, education, and even political party preferences.

More equality within households then leads to more divergence across households – and especially for the kids.

This has shown up strongly in American data where, if people chose their marriage partners randomly, one measure of income inequality, the Gini coefficient would drop from 0.43 to 0.34.

It has not yet shown up as strongly in New Zealand data, where inequality has been flat or declining for over a decade, but that could only be for lack of thorough interrogation of the data.

But if we follow the American trends, the college-educated will wind up only marrying the college-educated, and society starts following diverging tracks.

There is only one thing for it: Ban the college educated from marrying each other. Before it is too late.

By the way, some of the country’s top debaters will be arguing about it in August. Please join us there.

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