Downturns Dampen Divorce


When this journal’s editor asked Rep. Paul Ryan if his “Roadmap to Prosperity” included a provision to help reverse family breakdown, the chairman of the House Budget Committee conceded that his budget blueprint helps the family only indirectly. By presenting a plan focused on rebuilding the economy, he argued, the family would be able to take care of itself. Yet two studies that explore the economics of divorce undermine any notion that a recovery or boom will automatically translate into an economy that strengthens marriage and the family.

The first study, by Paul R. Amato and his Penn State colleague Brett Beattie, finds that a high unemployment rate has exerted, since 1980, the opposite effect on marriage than what conventional wisdom might dictate. Rather than being associated with an increase in the divorce rate as was the case before 1980, higher rates of unemployment since the Reagan era have actually tempered the American propensity to divorce.

Using data from 1960 to 2005 on unemployment and divorce rates for each of the 50 states (and D.C.) from the Bureau of Labor Statistics, the National Center on Health Statistics, the Statistical Abstract of the United States, and the Current Population Survey, the two researchers conducted a pooled time-series analysis to measure the effects of the unemployment rate on divorce. In their bivariate model, the correlation between the two variables was both positive and statistically significant. But when state- and year-fixed effects were added to their second statistical model, the association collapsed toward zero and was no longer significant. Moreover, when the data were split into time periods, the positive association was only marginally significant before 1980 and turned negative (and significant) for the years after 1980.

Amato and Beattie believe their findings are consistent with what happened during the first few years of the Great Depression, when divorce rates declined. They also claim that the methodology of their most sophisticated model for the years 1985–2005 predicts a decline of about 2 percentage points in the divorce rate since 2007, a drop which is consistent with Centers for Disease Control and Prevention data showing declines in the divorce rate of 1.4 percent between 2007 and 2008 and an additional 2.8 percent between 2008 and 2009.

Explaining their results, the sociologists theorize that American expectations for an acceptable standard of living have “increased substantially” in recent decades. These enhanced financial expectations, related in part to the dramatic increase in health-care costs and ability to secure medical insurance, means that divorce is simply more costly than before. “Even when a husband and wife are both employed, a high rate of unemployment means that they will be cautious about ending their marriage.” The researchers also note that in downturns, “employed husbands and wives may be evaluated especially positive by their spouses—another disincentive to divorce.”

Likely to agree with Amato and Beattie are three economists, Martin Farnham, Lucie Schmidt, and Purvi Sevak, who examine another effect of downturns on divorce—the reduction in housing prices that has occurred during the Great Recession. These scholars begin with data representing ever-married individuals who participated in the Current Population Survey, March Supplement, for the years 1991 to 2010. Then they aggregated the data by metropolitan statistical area, five-year age groups, sex, and year to create “cells” to match against the Federal Housing Finance Agency House Price Index. Their findings show, as predicted, that declining home prices increase divorce risk for married couples that rent but significantly lower divorce probabilities for those who are homeowners. Among their cohort of married couples who live in their own homes and are college-educated, the researchers claim that a 10 percent decrease in house prices translated into a 29 percent decrease in their respective divorce rate. In essence, the real-estate meltdown tempered divorce by “locking in” couples to both their houses (because of the relatively high costs of selling) and their marriages.

Both studies clearly show that the costs of marriage dissolution, which may be obscured during boom times, are more clearly revealed in an era of retrenchment, when marriage shows itself as a resilient institution that transcends economics. If only the politicians on Capitol Hill understood this counterintuitive reality, and directed as much of their attention to saving the family as to saving the economy.

(Paul E. Amato and Brett Beattie, “Does the Unemployment Rate Affect the Divorce Rate? An Analysis of State Data, 1960–2005,” Social Science Research 40 [May 2011]: 705–15, and Martin Farnham, Lucie Schmidt, and Purvi Sevak, “House Prices and Marital Stability,” American Economic Review 101.3 [May 2011]: 615–19.)