Sunday, August 16, 2009

The Economics of Living Together

Tip of the hat to MR for the pointer.
The following data come from Switzerland and not from the US. Very interesting read. A bit says:
"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."




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3 comments:

Sean said...

Well, I'm being too honest here because it's only morning time and I have not had my coffee yet, but isn't it why we choose to marry and live together? I mean, it's considerably cheaper. I'd rather be single and have as much cash as I have now while living with someone? No worries. She's aware of the sentiment. I think she shares it actually.

Sra said...

Money and sex, the two things that cause the most problems in relationships. I think if earnings are pretty equal and monetary contribution is pretty equal, then the stress of living together is not so bad. When there's an imbalance, it gets trickier. Like right now, since I'm on loans, Ian may have to pick up more of the expenses around the house, but in the future, I will be making more, and thus contributing more. Which is fine, but I worry about resentment. People want things to be equal in one way or another.

Anonymous said...

I bet the second part of the below quoted statement is drastically different in different households.

'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'