Tuesday, January 14, 2014

Influencing the Culture - Economics of Divorce

Fellow SLOB blogger, KTCat, rightfully points out the overwhelming number of correlations between cultural dysfunction and economic blight both in the U.S. and overseas.  He asks tough questions and gets on my case over drug legalization because I believe he sees it as another step backward in maintaining a culture that caused our country to become a great and wealthy country.  The culture is at least partially the product of the incentives that the populace operates under.  For example, we subsidize single parenthood through AFDC and low and behold we get more of it.  We should ask what incentives could be changed to start to change the culture.  I have also been surveying some blogs that focus on culture for some of the answers.  I offer some ideas for your consideration.

Divorce.  The U.S. Census Bureau reports that children of divorce are more likely to live in poverty.  What causes divorce?  I don't know all of the reasons, but we know that divorce was less likely in times past.  Maybe the question we should be asking is what prevents divorce.  It turns out that the extent to which courts enforce alimony and child support increases the probability that a woman will seek divorce.  H/T Dalrock.  Dalrock points out that the authors of the study think this is a good thing, because it allows mothers to have more leverage over fathers in marriage.  Why this is good is not explicitly stated.  Any discussion of reducing the rate of divorce has to start with reducing the incentives, including alimony which typically goes to the woman, because woman tend to marry up.

Single Parenthood.  The divorce rules will also provide an incentive for men to avoid marriage as well.  The greater the potential financial penalty in a potential divorce, the less willing will men be to enter into marriage.  Given the average woman's desire to have offspring and the uncertainties of birth control and the lack of opprobrium surrounding extramarital sex, there are powerful incentives for men to avoid marriage.  Changing the ground rules in family court might help change these incentives.  Perhaps the old rules requiring a cause of action for divorce would apply if one of the aggrieved parties desired alimony or child support.  Flimsy reasons for divorce provided by supposedly Christian mommy-bloggers might not look so attractive if no child support or alimony were forthcoming.

Penalizing Marriage. The ACA encourages divorce because of the way that subsidies are tied to the poverty level.
Any married couple that earns more than 400 percent of the federal poverty level—that is $62,040—for a family of two earns too much for subsidies under Obamacare. "If you're over 400 percent of poverty, you're never eligible for premium" support, explains Gary Claxton, director of the Health Care Marketplace Project at the Kaiser Family Foundation.
But if that same couple lived together unmarried, they could earn up to $45,960 each—$91,920 total—and still be eligible for subsidies through the exchanges in New York state, where insurance is comparatively expensive and the state exchange was set up in such a way as to not provide lower rates for younger people. 
The tax code overall is mixed regarding penalties and bonuses for getting married.  Continuing to ensure that there is no penalty for marriage is helpful.

These are a few ideas that come to mind.  I am not so naive as to believe that economic incentives by themselves will change the culture, and surely not in the short term.  But I notice that people respond to incentives in the long run.

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