Marriage and Consumption Insurance: What's Love Got to Do with it?

Posted: 8 Mar 2004

See all articles by Gregory D. Hess

Gregory D. Hess

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

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Abstract

When markets are incomplete, individuals may choose to marry to diversify their labor income risk. Love, however, can complicate the picture. If love is fleeting or the resolution of agents' income uncertainty occurs predominantly later in life, then marriages with good economic matches last longer. In contrast, if love is persistent and the resolution of uncertainty to agents' income occurs early, then marriages with good economic matches are more likely to be caught short with too little love to save a marriage. Consequently, once married, the partners will be more likely to divorce. Evidence is provided to distinguish between these alternative scenarios.

Suggested Citation

Hess, Gregory D., Marriage and Consumption Insurance: What's Love Got to Do with it?. Journal of Political Economy, Vol. 112, pp. 290-318, April 2004. Available at SSRN: https://ssrn.com/abstract=515085

Gregory D. Hess (Contact Author)

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

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