Economists Do It With Models

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Economics Really is Everywhere…

August 15th, 2007 · 1 Comment
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Okay, so I’m sitting here minding my own business and reading the NYT style section…I get to an article titled “Buy Low, Divorce High”, and as anyone even mildly cynical about relationships would do, I begin reading. The general gist of the article is that the rising values of homes/condos for married couples is tending to lead to divorce, since the people involved recognize that they could live comfortably by themselves as a result of the large profit on their real estate. I can’t help but think that it’s a bit sad that financial insecurity is what keeps a lot of relationships together, but I digress. Anyway, I get to about the middle of the first page of the article only to find that the author starts referring to the work of Gary Becker. In the style section? Apparently Becker is trendy and I didn’t know it.

To quote the article:

“Economists are familiar with this phenomenon. Even though divorce rates are declining over all, as far back as 1977 the economist Gary Becker showed that couples experiencing any unexpected, drastic rise in net worth are at risk of divorce. (The same holds true for a drastic decline in net worth.)

Extrapolating from survey data, Dr. Becker concluded in The Journal of Political Economy that “a greater deviation between actual and expected earnings increases the probability” of divorce.

Although couples who see their incomes rise steadily generally stay together, those who make more money than they ever expected are vulnerable to divorce. They realize that they are less financially dependent on each other and that they might have chosen different spouses if they had more choices at the time, said Dr. Becker, who teaches at the University of Chicago.

Dr. Becker, who won the Nobel Prize in 1992, also explored in his divorce study the economic argument for what many people today call trading up, or finding a trophy spouse.”

I try hard to respect people’s preferences, but really?

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