The Law and Economics of Marriage and Divorce

The key role of "incentives" in family law is considered in this economic approach to family law. The book discusses the possible adverse consequences emanating from faulty legal design, while demonstrating that good family law should provide incentives for consistent and honest behavior. Economists, specialists in the economic analysis of law, and academic lawyers discuss recent advances in specialized studies of marriage, cohabitation, and divorce. This important new work will be of considerable interest to lawyers, policy-makers and economists concerned with family law. Cover 1 Half-title 3 Title 5 Copyright 6 Contents 7 Tables and figure 9 Figure 9 Tables 9 Contributors 10 1 Introduction 13 2 Marriage: the long-term contract 22 1 The economics of marriage and divorce 23 2 Why marry? Specific assets! 24 3 The danger of breach 28 4 Sharing the risk: reducing opportunism 28 5 The market for husbands and wives 29 6 Women’s loss of value on the marriage market 31 7 Breach and appropriable quasi-rents 36 8 Prenuptial marriage contracts 41 9 Public law remedies for breach 42 10 Conclusion 45 REFERENCES 45 3 Marital commitment and the legal regulation of divorce 47 1 Why marriages fail 49 2 Binding commitment and marital stability 50 Marriage as a signal 51 Marriage as a precommitment 51 Marriage as a contract 53 Traditional law and marital norms 54 3 Marital commitment under modern divorce law 55 The reform of divorce law 55 The impact of reforms on marital commitment 56 4 Commitment options: the prospects for reform 58 The legal structuring of commitment options 59 The substantive terms of commitment 61 Beneficial precommitment restrictions 61 Cognitive biases and limitations on the freedom to commit 64 5 The prospect for legal reform: a cautionary note 65 REFERENCES 67 4 Mutual consent divorce 69 1 A successful marriage 70 2 The legal environment 72 3 The preferred grounds for divorce 75 Mutual consent divorce 76 No-fault divorce 79 Fault divorce 79 4 Conclusion 80 REFERENCES 80 5 An economic approach to adultery law 82 1 Introduction 82 2 The model 83 Assumptions 83 Analysis 84 Externalities 85 3 Penalties 87 Features of penalties 87 Civil damages 88 Criminal penalties 90 Self-help 92 4 Adultery law in practice 93 Civil damages 94 Criminal penalties 97 Self-help 98 5 Concluding remarks 101 REFERENCES 102 6 Louisiana’s covenant marriage law: recapturing the meaning of marriage for the sake of the children 104 1 Introduction 104 2 Why strengthen marriage? For the sake of the children 107 3 Louisiana’s covenant marriage legislation 113 4 Objectives of the covenant marriage legislation and how the legislation achieves those objectives 116 Strengthening marriage 116 Revitalizing mediating structures: inviting religion to assist in preserving marriages 118 Restoration of bargaining power to the “innocent” spouse 119 Restoration of moral discourse to divorce law and the protection of the “innocent” spouse 121 5 Conclusion 124 REFERENCES 125 7 Cohabitation and marriage 130 1 Introduction 130 2 Cohabitation trends 131 3 Cohabitation in relation to marriage 131 4 Optimal cohabitation 134 Case 1 – James and Anne 135 Case 2 – Nancy and Doug 135 Case 3 – Travis and Laura 135 Case 4 – Neil and Germaine 135 Case 5 – Noël and Gertrude 136 5 Cohabitation as a response to changed economic conditions 136 6 Judicial impacts 137 7 Conclusions 141 REFERENCES 142 8 Marriage as a signal 144 1 Introduction 144 2 Marriage as a contract 144 3 Marriage as a signal 147 The theory of signaling 147 Marriage 149 Standard form 152 Covenant marriage 155 Attitudes and behavior 156 4 Cohabitation 157 5 Same sex marriage 161 6 Conclusions 165 REFERENCES 166 9 For better or for worse? Is bargaining in marriage and divorce efficient? 169 1 Bargaining to form marriages 169 2 Bargaining within marriage 173 3 Bargaining over divorce 176 4 Conclusion 179 REFERENCES 180 10 Weak men and disorderly women: divorce and the division of labor 183 1 Data and methods 186 Data 186 Marital disruption 187 Household labor 187 Fairness 189 2 Method of analysis 190 3 Findings 192 4 Discussion 198 REFERENCES 200 11 The impact of legal reforms on marriage and divorce 203 1 Introduction 203 2 The simple economics of fault and no-fault divorce 204 3 The evidence 209 The divorce rate 209 Labor force participation of women 215 The age at marriage 217 4 Conclusion 220 REFERENCES 221 12 European divorce laws, divorce rates, and their consequences 224 1 Introduction 224 Data 224 2 The law and divorce 225 Separation grounds 226 Strong fault grounds 226 Weak fault grounds 227 3 Divorce regime and rate correspondence 227 Cross-country variation in religious influence 228 Cross-country variation in women’s economic status 229 4 The divorce revolution 230 5 Liberalization and the divorce explosion 232 6 The economic consequences of divorce 234 Settlement rules 234 Labor market attachment and opportunities 236 Evaluation 238 7 Conclusions 238 REFERENCES 239 Index 242 Cover......Page 1 Half-title......Page 3 Title......Page 5 Copyright......Page 6 Contents......Page 7 Tables......Page 9 Contributors......Page 10 1 Introduction......Page 13 2 Marriage: the long-term contract......Page 22 1 The economics of marriage and divorce......Page 23 2 Why marry? Specific assets!......Page 24 4 Sharing the risk: reducing opportunism......Page 28 5 The market for husbands and wives......Page 29 6 Women’s loss of value on the marriage market......Page 31 7 Breach and appropriable quasi-rents......Page 36 8 Prenuptial marriage contracts......Page 41 9 Public law remedies for breach......Page 42 REFERENCES......Page 45 3 Marital commitment and the legal regulation of divorce......Page 47 1 Why marriages fail......Page 49 2 Binding commitment and marital stability......Page 50 Marriage as a precommitment......Page 51 Marriage as a contract......Page 53 Traditional law and marital norms......Page 54 The reform of divorce law......Page 55 The impact of reforms on marital commitment......Page 56 4 Commitment options: the prospects for reform......Page 58 The legal structuring of commitment options......Page 59 Beneficial precommitment restrictions......Page 61 Cognitive biases and limitations on the freedom to commit......Page 64 5 The prospect for legal reform: a cautionary note......Page 65 REFERENCES......Page 67 4 Mutual consent divorce......Page 69 1 A successful marriage......Page 70 2 The legal environment......Page 72 3 The preferred grounds for divorce......Page 75 Mutual consent divorce......Page 76 Fault divorce......Page 79 REFERENCES......Page 80 1 Introduction......Page 82 Assumptions......Page 83 Analysis......Page 84 Externalities......Page 85 Features of penalties......Page 87 Civil damages......Page 88 Criminal penalties......Page 90 Self-help......Page 92 4 Adultery law in practice......Page 93 Civil damages......Page 94 Criminal penalties......Page 97 Self-help......Page 98 5 Concluding remarks......Page 101 REFERENCES......Page 102 1 Introduction......Page 104 2 Why strengthen marriage? For the sake of the children......Page 107 3 Louisiana’s covenant marriage legislation......Page 113 Strengthening marriage......Page 116 Revitalizing mediating structures: inviting religion to assist in preserving marriages......Page 118 Restoration of bargaining power to the “innocent” spouse......Page 119 Restoration of moral discourse to divorce law and the protection of the “innocent” spouse......Page 121 5 Conclusion......Page 124 REFERENCES......Page 125 1 Introduction......Page 130 3 Cohabitation in relation to marriage......Page 131 4 Optimal cohabitation......Page 134 Case 4 – Neil and Germaine......Page 135 5 Cohabitation as a response to changed economic conditions......Page 136 6 Judicial impacts......Page 137 7 Conclusions......Page 141 REFERENCES......Page 142 2 Marriage as a contract......Page 144 The theory of signaling......Page 147 Marriage......Page 149 Standard form......Page 152 Covenant marriage......Page 155 Attitudes and behavior......Page 156 4 Cohabitation......Page 157 5 Same sex marriage......Page 161 6 Conclusions......Page 165 REFERENCES......Page 166 1 Bargaining to form marriages......Page 169 2 Bargaining within marriage......Page 173 3 Bargaining over divorce......Page 176 4 Conclusion......Page 179 REFERENCES......Page 180 10 Weak men and disorderly women: divorce and the division of labor......Page 183 Data......Page 186 Household labor......Page 187 Fairness......Page 189 2 Method of analysis......Page 190 3 Findings......Page 192 4 Discussion......Page 198 REFERENCES......Page 200 1 Introduction......Page 203 2 The simple economics of fault and no-fault divorce......Page 204 The divorce rate......Page 209 Labor force participation of women......Page 215 The age at marriage......Page 217 4 Conclusion......Page 220 REFERENCES......Page 221 Data......Page 224 2 The law and divorce......Page 225 Strong fault grounds......Page 226 3 Divorce regime and rate correspondence......Page 227 Cross-country variation in religious influence......Page 228 Cross-country variation in women’s economic status......Page 229 4 The divorce revolution......Page 230 5 Liberalization and the divorce explosion......Page 232 Settlement rules......Page 234 Labor market attachment and opportunities......Page 236 7 Conclusions......Page 238 REFERENCES......Page 239 Index......Page 242 What sort of contract is marriage? What does it offer the parties? What are the difficulties of enforcement, and the result of failed effective enforcement? This book takes an economic approach to marriage and divorce, considering the key role of'incentives'in family law: it highlights the possible adverse consequences emanating from faulty legal design, while demonstrating that good family law should provide incentives for consistent and honest behavior. Economists, specialists in the economic analysis of law, and academic lawyers discuss recent advances in specialist work on marriage, cohabitation, and divorce. Chapters are grouped around four topics: the contractual perspectives on marriage commitment; the regulatory framework surrounding divorce; bargaining and commitment issues relating to marriage and near-marriage arrangements; and finally empirical work, which focuses on the impact of more liberal divorce laws. This important new study will be of considerable interest to lawyers, policy-makers and economists concerned with family law.