US income inequality and assortative marriages

Jeremy Greenwood, Nezih Guner, Georgi Kocharkov, Cezar Santos, 22 February 2014



Income inequality in the US has sharply increased over the last several decades. This is a well-documented fact (e.g. Gottschalk and Moffitt 1994, Katz and Autor 1999). The general public is also very interested in the issue.

Topics: Poverty and income inequality
Tags: assortative matching, marriage

Get together for the kids

Shelly Lundberg, Robert A. Pollak, 29 October 2013



The US has experienced dramatic changes in patterns of marriage, cohabitation, and childbearing since 1950. Non-marital births have increased from 4% of all births in 1950 to 41% in 2010, and a majority (52%) of non-marital births now occur within cohabiting unions (Manlove et al. 2010).

Topics: Education, Poverty and income inequality
Tags: fertility, gender wage gap, human capital, marriage

The war of the sexes

Paul Seabright interviewed by Viv Davies, 18 May 2012

Paul Seabright of the Toulouse School of Economics talks to Viv Davies about his book, "The War of the Sexes: how conflict and cooperation have shaped men and women from pre-history to the present”. He explains how game theory can shed light on the complex dynamics that create both conflict and cooperation between the sexes. They discuss the connection between the rise of modern capitalism and the rise of feminism, monogamy and marriage and whether there will ever be sexual equality.


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*Viv Davies*: Hello, and welcome to Vox Talks, a series of audio interviews with leading economists from around the world. I'm Viv Davies, from the Centre for Economic Policy Research. It's the 15th of May, 2012, and I'm in London speaking to Professor Paul Seabright of Toulouse School of Economics about his recently published book titled, "The War of the Sexes: How Conflict and Cooperation Have Shaped Men and Women from Prehistory to the Present." Professor Seabright explains why the book should be of interest to economists and how game theory can help shed light on the complex dynamics that create both conflict and cooperation between the sexes. We discuss the connection between the rise of modern capitalism and the rise of feminism; social conventions such as monogamy and marriage; and whether there will ever be sexual equality. I began by asking Paul what motivated him to write the book in the first place. *Paul Seabright*: Well, I did it for fun. I think it's the kind of thing that all of us have views and opinions about. I've been interested in evolutionary biology for a long time, and I had an earlier book that looked at the impact of natural selection and the way our economic relations happen because it's obvious that relations between the sexes are economic as well. That seemed like an obvious follow-on, really, to the earlier book. *Viv*: The book draws on a range of scientific disciplines including biology, sociology, anthropology, and economics. Why should the book be of any particular interest to economists? *Paul*: Because it's about relative scarcity. That was one of the things I found fascinating when I first studied the biology of sexual reproduction. There is this astonishing asymmetry and scarcity between male and female gametes. Females produce eggs, which are relatively large. They come with these packets of nutrients attached, and there are very few of them, certainly in females. In human females, there's an egg a month. Human males produce 1,000 sperm a second. Now, economics is about scarcity. If you're not interested in the fact that you have what economists would call a Leontief technology because you have to have one of each, but at the same time, a Leontief technology for which the inputs are in startlingly different degrees of scarcity. That's a fascinating economic problem in its own right, and it has of course had enormous repercussions for the way in which the sexes relate right across the animal kingdom. The first half of the book is really about how males and females relate in the rest of nature, including in group-leading primate societies. It's really only in the second half of the book that I really look at what that means for modern human beings. *Viv*: I suppose there's a little bit of game theory involved as well in the sense that the opposites, male and female, are playing games with each other. Both know what the other one is thinking, and both try to anticipate what that response will lead to. *Paul*: Yes, absolutely, with one little twist. I'm not sure it's always clear that both know what the other one is thinking because one of the extraordinary features about natural selection is that natural selection has done the thinking for us in many ways over very, very long periods of time. A lot of our strategies, the way we deal with each other, are actually written into, for example, our emotions and they may be strategic in the sense that they may represent fitness-maximizing responses to the strategies of the other sex without our necessarily being consciously aware of why that's so. I think with the rider of our consciousness, I would agree with you that game theory is absolutely there in the heart of sexual relations. Interestingly, too, one of the main messages about game theory, which is that Nash equilibria are generically inefficient, applies to the way we think about relationships. There's absolutely no reason to think that natural selection has selected for optimal relationships. Natural selection selects for genes that reproduce themselves. As I detail a lot in the first half of the book, there are many strategies of reproduction, which are adaptive in the sense that they get themselves copied in future generations because given the strategies of the other sex, they increase the probability that one's sex sees its descendants appear in future generations. The result for both sexes can be spectacularly wasteful. I show lots of examples of very violent relations between the sexes. The most gruesome one is the little bed bug, which I discuss in the book, where the female has evolved strategies of resistance to male attempts at copulation. The reason for this is something economists would understand, which is that females, because their gametes are scarce, have a high opportunity cost of mating. If you're a female, wasting your scarce eggs on some unsuitable male is potentially costly for you, so females of all species have learned to be very selective in response to the mating attempts of males. But, in some species, males have responded to that by being increasingly aggressively persistent. In the bed bug, you see this horrible, evolved mechanism by which females have large coatings of body armor to prevent the intrusions of males. The males have found a way around this by evolving a sharp, dagger like projection, which bypasses the vagina and goes straight into the abdominal cavity by piercing it and injecting the sperm directly. It's a horrible, wasteful example of a sexual reproduction mechanism. It's a poster child for the inefficiency of Nash equilibrium and understanding why that's so, why that could be the result of a process selection shows you, I think, why game theory is really helpful in biology and indeed in social life. *Viv*: Would you say there's a direct connection between the rise of capitalism on the one hand and the rise of feminism? Paul: I'm not sure about the rise of capitalism, but certainly modern capitalism and the modern information economy has given feminism an enormous boost. I like to think of the really crucial stages as being the move in great ape societies towards the particular type of forager society that we developed, which was one which required enormous investments in a long childhood and, in particular, required women to put together coalitions of help from other members of their society to try and ensure that their children would be looked after. Now, that help could include help from the biological father but wasn't limited to help from the biological father. In fact, there's a wonderful book by the anthropologist, Sarah Blaffer Hrdy called, "Mothers and Others," which talks about how we mustn't think too narrowly that human societies involves emphasis on pair bonding. There was pair bonding to a degree, but much more importantly, there was coalition building by the mother in which the biological father was an important element in that coalition but not the only one. That move from great ape societies to human hunter gatherer societies was very important. Then, the most crucial change after that was the move towards agriculture, where the fact that women had been in forager societies where they needed to be autonomous, they needed to have some freedom of movement, essentially limited the extent to which men could confine them and push them around. But, once agriculture was developed, the technology made it possible essentially to do two things. One was to till fields using female labor that didn't have to be very autonomous, that could simply be supervised and told to follow orders. Secondly, to allow certain males, the successful males, to accumulate surpluses that then allowed them to create hierarchy, of course, societies, concentrations of military power that led to very substantial inequalities between men but also the suppression and the confinement of many women. I think those developments, which long predated capitalism as we understand it, were crucial. When what we think of as modern industrialized capitalism happened, the industrial revolution, what was surprising in a sense was how slowly it impacted women because even though technologies like the steam engine took out of the work the need to be physically strong for quite a long time until the 20th century, essentially, women didn't have either the political organization or the scarcity of talent that was needed for their contribution to the modern workplace to change. What's really changed in the 20th century is that almost all of the barriers to women participating in all parts of the modern workplace have been removed. The result has been spectacular that women, essentially, have moved into almost all areas that used to be occupied by men. A lot of the last part of the book is about why that spectacular change has not happened everywhere, why there remain some very important pockets of male power, which this process of women moving into previously male occupations doesn't quite seem to have touched. *Viv*: Will we ever have sexual equality? If so, what would you say that actually means? *Paul*: There's a lot of evidence that I survey in the book that men and women do have different preferences for lots of things, for the way they compete, for the kinds of risks they take, for the way they structure their lives and the role that flexibility plays in the structure of their careers. Now, I need to emphasize, of course, that those are preferences on average. There are many women who have preferences that are like those more typical of males. There are many males that have preferences like those that are more typical of females, flexibility in the workplace, for example. I'm at the very far female end of the spectrum on those preferences, if you want to put it that way. I don't want to imply there's something rigid or deterministic about that, but there are, nevertheless, good differences in the mean preferences that have been established. I would expect those differences to go on persisting for the foreseeable future. What doesn't have to persist and what is very striking is the high price women pay for those preferences. One of the things I talk about is the extent to which, for example, revealed preference for breaks in the career at the time when children are young or for slightly less long working hours than men lead to very striking differences in earnings and in career progression, and not just at the time. You can sort of understand why a woman who's taken five years off to look after her children will be less productive than her male colleagues in the year or two after she returns. What is really startling is that she goes on paying a price for these 30 years later. Everything we know about the value of innovation, flexibility, willingness to change in modern economies suggests it's just dumb to think that a woman in her fifties is less capable of running a large company because in her 30s, she took five years out of work. Yet, that's what the statistics seem to show, that there's a large shadow cast by those preferences. What a lot of the last part of the book is about is about the reasons for that. In particular, I focus on the idea that there's a difference in conspicuousness because of the way women network but also because of the way men respond to women's networking. Now, that's controversial. That evidence will be discussed. A lot of it is still being developed and understood. The research on which I based it is still at a very preliminary stage. I quite understand that we don't know how convincing that explanation's going to turn out to be. The result is I wouldn't expect there to be a convergence towards identical profiling of men's and women's work and career progressions. I would expect and hope that the professional price that women pay for that will not be as severe as it's been in the past. Importantly, men have paid a price, too. I talk a lot about inefficient signaling equilibrium in the work place, one of which is why do men feel they need to work such long hours in order to show employers that they're committed to them, and I think that the inefficient signaling equilibrium that we live with are bad for men as well as being bad for women. *Viv*: So, one of the questions you try to address in your book is Sigmund Freud's great unanswered question, which is what do women want? Or, what does a woman want? Did you answer it in the book? *Paul*: Well, I drew on the evidence we've got. About whether what women want is very different from what men want. I think we can safely say that most men and most women want and need to have partnerships. Not just sexual partnerships, but professional partnerships, domestic partnerships, just human relations generally that are reasonably free of conflict. What the book is about, and this is where I think a game theoretic perspective really helps, is that, a recognition of divergent interests isn't inimical to the establishment of cooperation. On the contrary, you can't really establish stable cooperation unless you're lucid about the extent to which you have conflicting interests. If you think falling in love with somebody means that differences in your interests have been dissolved, then you're being naive and you're heading for great disappointment. I want to suggest that in some sense, thinking lucidly, using some of the tools of game theory about why our interests diverge from those of our professional colleagues, from our sexual partners, from our children, from the people with whom we live and cooperate more generally. Understanding that is the key to making cooperation happen. One of the things that is really helpful and which economists can make great progress in having our discipline better understood by the general public, is that we're thought to be people who understand competition, but aren't really very into cooperation. You know, cooperation is thought to be a soft, touchy feely thing that sociologists and others are interested in, and that's not what we do. We do competition. That's completely wrong. Any professional economist knows that, but we're not very good at expressing that to the general public. The modern industrial economy is as much about cooperating as it is about competing. It's about cooperating in groups that compete with other groups. But certainly, the cooperation within groups is as important as the competition between groups. And we economists could do a better job of selling our discipline to the wider public, if we managed to sell the idea that we're as interested in and as shrewd about what it takes to cooperate as what it takes to compete. *Viv*: What does your research tell us about normally held social values and conventions such as monogamy and marriage, for example? *Paul*: The point that I made earlier about the generic inefficiency of Nash equilibrium, does suggest a strong message about the idea that natural selection would not have selected for optimal relationships. Now, you might say, well that's obvious. But, it's not that obvious. Because many people think of natural selection as having fashioned the organs of the human body, for example, in a reasonably optimal way. It's tempting for many people to think that for example, if erotic love is something clearly built into our emotional systems and our physical bodies that it must have evolved to be optimal in the way that the eye has evolved to be optimal. Well, that's just wrong. That's wrong for reasons that a game theorist can fully appreciate. Because an erotic relationship is one, it's an equilibrium of a set of strategies that the parties to that relationship have developed. Those strategies have been selected for, but the equilibrium may be very far from optimal. So, there's no reason to think that natural selection would have selected for relationships that last a lifetime. Now, you may say well isn't that obvious? Well, it's obvious up to a point. What we tend to do is think for example, the people who get divorced have failed. Did the relationships fail? Well, the relationship could have succeeded for quite a period of time, but then reach the end of the period at which the parties can continue to make it work. Similarly, if people have marriages or relationships that last for a lifetime, that's not because somehow or other their love was the true kind and everybody else's was the false kind. It's because they were lucid about the kinds of compromises that they had to undertake to bring about a solution to their conflicts of interests. What's helpful is that this modest game theoretic perspective helps to remove our tendency to be over awed by an unduly utopian view of the possibilities that erotic love could bring about for us. Because when erotic love turns into something a little bit more day-to-day and ordinary, there's a tendency to feel, well, what went wrong? Understanding the evolutionary biology of that, tells us nothing went wrong. It's the way it was always likely to be. Similarly, on issues like monogamy, it's what we do know, and I discuss at length in the literature on hunter gatherer societies, that monogamy was never likely to be very universal among males, that's known, but there's been a tendency to say, well actually, males evolved to be promiscuous, women to be monogamous. That's wrong too. There's a large amount of evidence from hunter gatherer societies that both men and women had multiple sexuality; that multiple sexuality was not unproblematic, it caused tensions and conflicts. But, that the idea that somehow or other women's greater selectivity with regard to sexual relationships meant that they had to be monogamous is just flat wrong. You can be selective about the number of partners you have without meaning that you have to stick to only one. If you're in a group-living primate species, essentially you can have opportunities for multiple relationships while still being pretty selective about whom you have them with. The evidence strongly suggests that that was true for women during prehistory. Now, what then happened was that in a move to agricultural societies men were able, because of the change in their economic circumstances, to enforce a form of coercion on women to establish a set of penalties for them if they had multiple sexual relationships, which had never been true during pre history and was the fruit of essentially coordinated male power. Now, fortunately, that's changed. In particular, going back to what I said earlier in response to a question about capitalism, modern information society capitalism, if you like, makes us much more like hunter gatherers than we are like farmers. You have to go out and gather information. You can't plant it in your field. What that suggests is the whole basis for male control over female sexuality is dissolving. *Viv*: Finally, the book is a fascinating read and is very entertaining. But is it just that, or is there a more powerful message that should be taken on board? And if so, who should be listening to that message most of all, who is it directed towards? Men, women, both? *Paul*: Both. I wouldn't dream of cutting the potential market for the book in half. I think the message, really, at the end is threefold. One is, I think the stuff is fun. I just found it fascinating doing the research for this, and I'd like to invite anybody who is interested in where we came from as a species and as a society, to go back over some of that evidence with me. So, I hope readers will enjoy it. But, if you want more policy messages, and I suppose CEPR is about policy messages, I think there are two. One, which we've touched on a bit, is messages for our own, the way we organize our own lives, and that is just as much an economic issue as issues to do with the workplace. How we organize our own lives for the reasons I've talked about, is a profoundly economic question. It's not just about household budgets, it's just about how we negotiate everything with our partners, both our relationship partners but also our colleagues and so forth. What I want to do with the book is steer people towards a number of facts and a number of ideas that can help us negotiate that with greater lucidity. But then when we think about the workplace, there are very important messages. Again, it's a mistake to think that policy conclusions have to be addressed to government. Lots of policy conclusions are addressed to other audiences than governments. To individuals, to employers, to non governmental organizations, to people in the press who talk about these things. So, one of the things I discuss in the book is the collective peacock's tail of wasteful signaling that we engage in the workplace. Men who stay very late to work to signal their commitment to their employers, women who need to signal a commitment to their families. But, because of the way in which the modern workplace separates child rearing from so called productive work, unlike hunter gatherer societies where it all took place in view of everybody, this means that the two kinds of signaling are separated out, to the great detriment of both men and women. Women, for example, as much of the evidence from labor economics shows, have often a number of characteristics such as conscientiousness, which are highly valued in the labor market, have a domain for displaying their conscientiousness, which is the domestic domain, which is simply not observed by their employers. Women who take time off work to rear children face the additional and unnecessary cost that precisely at the time when they're signaling their conscientiousness, most visibly and effectively, it's not actually being observed by the people who most count in their careers later. A lot of the policy conclusions are not just about people drafting legislation on sex discrimination or whatever. It's about people thinking about how to organize a working environment. People thinking about how to recruit talented individuals to fill positions of power in their organisation. And indeed, sometimes, well meaning policy prescriptions can backfire. I discussed the fact that proposals to have quotas on women in the boardroom appear from the evidence to have an important negative impact, which is that many firms who would like to comply with the quotas, like to show that they're doing something to increase women's visibility in boardrooms say, "Ah, good, we'll appoint them as non executive directors." As I discuss in the book, there isn't really anything like the same shortage of women non-executive directors. There's no real evidence of different salaries for female non executive directors compared to males. But many firms that comply with quotas on women in the boardroom by appointing women non executives then think, "Oh, well, we've done what we need to do." Most of the real discrepancy is in positions of executive power. And there, of course, it's much harder to do something about it. But if you want quickly to up your proportion of women in the boardroom, you appoint non executives because you can do it, not overnight, but in a matter of weeks and months. Whereas, thinking about the potential talented individuals who might be your next CEO, and including many women, who you might not have thought of including on your short list for that, requires a lot more imagination. So, a lot of the policy messages are about trying to be more imaginative in the way in which we do things. That's hard to legislate. But I've always thought that economic policy messages should be not just directed to central banks and finance ministries, and a few charmed individuals at the central government, but policy messages can be directed to all of us. *Viv*: Paul Seabright, thanks very much. *Paul*: Thank you.

Topics: Frontiers of economic research, Labour markets
Tags: Behavioural economics, marriage, Sex

Gender gaps in performance pay

Sara de la Rica , Juan Dolado, Raquel Vegas, 3 August 2010



One of the cornerstones of the standard competitive model of the labour market is the equilibrium condition equating wages to the value of the marginal product of labour.

Topics: Labour markets
Tags: Discrimination, gender gap, marriage, performance pay

Are married women less risk-averse? If so, why?

Graziella Bertocchi, Costanza Torricelli, Marianna Brunetti, 13 March 2010



A growing literature has explored gender differences in making financial decisions. At the same time, there is a parallel literature on the implications of marital status. This research generally reveals a higher degree of risk aversion among women and single people.

Topics: Financial markets, Labour markets
Tags: gender, marriage, risk aversion

The effect of joint custody on marriage and divorce

Martin Halla, 3 August 2009



The American family has undergone radical changes over the last decades. Marriage rates have been falling over the last thirty years and cohabitation has emerged as an important social institution. Divorce rates rose sharply starting in the mid-1960s, peaked in the early 1980s, and have been declining since (Figure 1).

Topics: Frontiers of economic research
Tags: divorce, joint custody, marriage

Marriage meets the Joneses

Tara Watson, 5 May 2009



Low-income American men are less likely to be married than their higher-income counterparts. Among 25-to-34-year-old white men in the 2000 US Census, for example, 34% of those in the bottom quarter of the income distribution are married, compared with 67% of those in the top quarter of the income distribution. For black men, the numbers are 16% and 50%, respectively.

Topics: Frontiers of economic research
Tags: economic status., marriage

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