This claim has been made repeatedly by many experts, such as Forbes, etc.:
Here’s the claim:
As an individual, a married person is 2x as wealthy as s/he would be if not married;
A married couple as a unit is 4x as wealthy a single individual
Main reason given: Economies of scale (basically paying half the cost)
So is the claim true? Are married people really wealthier than singles?
Here’s where I have a problem with this theory: True, you’re paying half the cost for items that will be shared (e.g. one dishwasher, one house, etc.), but that assumes that what you’re buying also benefits the spouse. Your wealth doubles only so long as the other person also benefits from it. But let’s suppose you want to spend money on something that benefits you directly, but doesn’t necessary benefit the spouse. Your have unique interests or pursuits where you’d like to spend money – in that case, you have to allow your spouse to pursue their unique investments, as well, so you’re back to square one!
It’s incorrect to assess a married person’s wealth as being 2x that of the single person because the former isn’t free to spend it directly on themselves to the same extent, which the latter can. Does this objection have merit?
Marriage means (for most couples) some compromise in your spending habits. But even without cutting back on toys or booze, marriage represents a savings of 50% on housing costs, which for most people accounts for over 25% of their monthly expenses. That’s a pretty significant chunk of savings.
Of course, these savings can (theoretically) then be placed into retirement investments, which further magnify the wealth differential between married and unmarried couples.
Thanks. That’s what I suspected: the most obvious advantage is in housing costs, but beyond housing or a few similar everyday issues, there is actually some compromise, which may dampen that purported wealth – maybe not enough to blur the line between singles and married people, but wouldn’t make it as high as 2x.
I wonder what conclusions can be drawn by drilling down further into these specific demographics. For instance, one of the realities of our life is that men make more money than women, even controlling for children. It’s a controversial but accurate reality. Men go into higher-paying fields such as STEM while women aren’t as focused on money in a job. So, given that, who benefits more from marriage in a financial sense: men or women?
OK, so you’re not spending everything on yourself any more, but there’s another person who’s spending some on you now too. It seems to me that, on average, these two should average out to a net of zero.
You’d want to check out the research cited, but I doubt that the reasoning is “married couples can divide their expenses in two; therefore they must be twice as wealthy”. Rather I expect it proceeds from empirical observations that married people do in fact accumulate twice the value in assets, savings, etc that single people do, and then makes and tests hypotheses as to why this should be so.
Yes. Which is different than saying you’re suddenly 2x as wealthy as when single – but that’s what these articles claim.
You’re right, there are plenty of reasons, but I highlighted the one that made the most sense. I rejected their other explanations: (1) to begin with, affluent/educated people are likely to be married, whereas poor/uneducated people tend to be poor – as an counterexample, I’m an educated high-income man, but I’m single, so that assumption doesn’t apply to me, and I’m sure many others; (2) better handling of child responsibilities compared to single parents – let’s not talk about single parents; since that’s a special case.
It’s not “suddenly”: it’s after cutting housing costs (and others such as transportation or medical insurance) by an amount which can be as much as “in half” and then doing something with it other than “buy glittery toys”. The articles call for the need to stay together: people keeping two houses have smaller savings, people do not “suddenly” become twice as healthy the instant they leave the courthouse - it takes years, decades. You’re the one who’s reading a “suddenly” which is the exact opposite of what the articles claim.
Real estate is the first thing to come to mind. A couple with two decent incomes is better positioned to buy a house with a higher ROI than an individual with the same decent income.
This is speculation, but I wonder whether there’s an element of mistaking correlation for causation here. Perhaps some of the same characteristics that help people get and stay successfully married also help them become and stay successful financially.
This seems reasonable. The articles does mention this as a factor:
[QUOTE=Article]
The demographics of who gets divorced also play a role. Wilcox, of the National Marriage Project, said less wealthy people are more likely to get divorced, which may have to do with the stress caused by having very little money.
“More affluent and more educated Americans (are) not only more likely to get married, they’re also less likely to get divorced,” Wilcox said.
[/QUOTE]
I agree there’s a multiplier but no way is it as high as two. Two can’t live as cheaply as one. But it’s possible for two to live as cheaply as maybe one and a half.
But that’s just framing it in terms of expenses. There’s also the issue of income. If one member of the couple is producing income and the other member is not, than the income earner is coming out behind financially. He or she is bringing home the same income as they did when they were single but is now spending money to support a couple. Using my 1.5 factor from above, the income earner is only .75 as wealthy as they were when they were single.
That’s only true if you presume a closed system, that is they are now married and living together, but otherwise everything else is the same. In real life even if he or she is bringing in the same income as before, stay at home spouse now will take over a lot of the work of home, such as cooking, cleaning, the laundry, paying the bills , gardening and other assorted errands. That is a tangible benefit and the spouse working will have more time to work and earn more or be in a position to do so.
How often does one partner quit a job these days?
What expenses are doubled? Clothing, true. Cars. Not food since buying larger packages of many foods is cheaper than buying single packages. Plus some couples, at least, reduce their eating out expenses or eat at cheaper places than they would go to on a date. More TV, fewer movies. One bed not two. One set of furniture, not two.
I would like to know if the 2X improvement is for people with similar income and education levels, or for everyone. If the latter the fact that wealthier people get married more could explain most of the difference.
There are other “economies of scale” at play here as well. child care and less impact on career as child care needs are shared. Dual income couples can also often choose to live closer to the means of one income earner so that in the event of loss of employment they can still get by or have sufficient reserves to get by for many months without resorting to credit or incurring late fees on bills. A married couple that has a nice dinner out once a week can skip that and save that $250/month. For a while back when I was married, we regularly threw about $200 a month into our “vacation fund” made it easy to run off for a weekend when it didnt touch the normal day to day budget. In the event of a surprise car or home repair, that fund could easily be tapped and hold off on travel plans for a few months.
I also found that many “family centric” activities like kids birthday parties for cousins, nieces, nephews, inlaws, etc tended to eat time more so than money, making them inexpensive ways to spend a weekend day.
Everything I was going to say has been mentioned - but some of the reasons that occured to me…
Disasters are “less bad” as a couple - one half loses the job, the income from the other half can maintain things for a while
Multiplier effect of “spare” income. I remember when we were first married - we lived off one income, and ALL of the other income went to the mortgage - we were almost tripling our monthly payments, this is not really possible for a single person
Sharing of household chores so that one party can “work harder” when required, or chase opportunities that may not be so easy for a single person (of course, the reverse also applies)
Sharing of household expenses
Easier to be disciplined about eating out etc as a couple - it is not worth cooking for one person, but when you have two, it is more “worth it” -
Couples more willing to stay at home so spend less on entertainment?
My emphasis above: That’s not how to do statistics. Feel free to show how married people aren’t wealthier than single people for the specific case of childless affluent men, but don’t pretend it has anything to do with the claims you refer to in the OP.
Lets say someone earns $500 per week and has living/social expenses of $450 per week. They have $50 to save or do with as they please. They get approximately a 10% pay rise and now earn $550 per week. 10% increase doesn’t sound like much, but they have doubled their disposable income and can now save $100 per week if they wish.
Then they meet someone who has very similar finances as they do, earning $550 a week and saving $100. They fall in love and get married blah blah and merge finances. Now they earn $1100 per week between them but their combined expenses are only 1.5 x that of a single person due to combined housing costs etc.
So they now earn $1100, and spend $725 with $375 for saving. That is how a couple can end up being 4 x better off than a single person.
All numbers pulled out of my head but the basic concept is valid.