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Follow Up: On The Economies Of Scale Of Living Together…

August 24th, 2009 · 8 Comments
Follow Ups · Just For Fun

To refresh your memory, I posted a video from The Onion about how the nation’s girlfriends were calling for more moving in together as a way to cut costs during the recession. Here’s the video again (click the link above for the original commentary):

Nation’s Girlfriends Unveil New Economic Plan: ‘Let’s Move In Together’

I made a claim in the original post that there were significant economies of scale to be capitalized on by moving in together, but I merely gave some vague anecdotal evidence as backup. Luckily Tyler Cowen over at Marginal Revolution can do me one better:

Bruce Bartlett sends me a link to this interesting paper:

How large are the economies of scale of living together? And how do partners share their resources? The first question is usually answered by equivalence scales. Traditional estimation and application of equivalence scales assumes equal sharing of income within the household. This paper uses data on financial satisfaction to simultaneously estimate the sharing rule and the economy of scale parameter in a collective household model. The estimates indicate substantial scale economies of living together, especially for couples who have lived together for some time. On average, wives receive almost 50% of household resources, but there is heterogeneity with respect to the wives’ contribution to household income and the duration of the relationship.

That was a lot of words. Let me point you to the most relevant ones: substantial scale economies of living together. There you go, ladies and gentlemen- hard proof. Now to go bring this newfound evidence to my (hypothetical) boyfriend…wait, why is he running away? *sigh* Teaching economics is so hard sometimes…

Tags: Follow Ups · Just For Fun

8 responses so far ↓

  • 1 Tony // Aug 24, 2009 at 10:05 am

    ha ha… As a happily-domesticated man, I can attest that there are significant economies of scale.

    If you read any Gary Becker, there’s another significant benefit: the ability to exploit comparative advantage within the household.

    So, if your (hypothetical) boyfriend has the comparative advantage in cooking, he can make you dinner while you teach the world about economics.

  • 2 econgirl // Aug 24, 2009 at 12:24 pm

    I have an absolute advantage in both economics and cooking, so I am like the professor who is better than the secretary at both research and typing. 🙂 Clearly this doesn’t mean that there isn’t opportunity for trade, but still…

    (Hint to non-cookers: put together pasta, a splash of heavy cream, some form of soft/easily meltable cheese and a vegetable and you’ll be all set. Maybe throw in a touch of lemon juice and some minced garlic if you are feeling adventurous.)

  • 3 The Dealer // Aug 24, 2009 at 12:29 pm

    Here is something that is often overlooked: as a young, single male, I was content to spend my hard-earned money on beer, food, and the occassional DVD. Yes, I had rent, utilities, and other things that could have been shared. However, only when my lady friend moved in did I realize her need for wall hangings, arrangements, and other things that made my 4 walls seemingly more liveable.

    The caveat here is that when my lady friend found an entire extra treasure chest of income to tap into, she took full advantage. The cost for me to live by myself was a full 1/4 the cost of living after she moved in.

    It’s been that way for 13 years now, and I would certainly be retired by now had we at least kept our money separate.

  • 4 Rob // Aug 24, 2009 at 2:30 pm

    “That was a lot of words.” … I’m thinking that all academic reviews, discussant comments, etc should begin with that phrase.

  • 5 Brad Blackham // Aug 25, 2009 at 6:51 pm

    This subject matter is important, as housing costs for an overwhelming majority of people is an overwhelming of their autonomous consumption.

  • 6 Brad Blackham // Aug 25, 2009 at 6:52 pm

    This subject matter is very important, because housing costs for an overwhelming majority of people is an overwhelming portion of their autonomous consumption.

  • 7 Fred // Aug 28, 2009 at 2:43 am

    I know that this is a pre SNL promo!!

  • 8 E // Aug 28, 2009 at 10:38 pm

    Econgirl, if you’d like to move in with me… we can talk.

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