Lucky in Life, Unlucky in Love? The Effect of Random Income Shocks on Marriage and Divorce

37 Pages Posted: 26 Jun 2010 Last revised: 15 Jul 2010

See all articles by Scott Hankins

Scott Hankins

University of Kentucky

Mark Hoekstra

University of Pittsburgh - Department of Economics

Date Written: July 14, 2010

Abstract

Economists have long been interested in the extent to which economic resources affect decisions to marry and divorce. For married couples, an increase in resources can either provide a stabilization effect or, alternatively, can enable divorce by allowing the couple to overcome costs associated with divorce. Similarly, while economic theory predicts that an increase in income makes an unmarried person more attractive to potential marriage partners, it may also make single life more attractive. However, answering these questions empirically has been difficult due to a lack of exogenous income shocks. We overcome this problem by exploiting the randomness of the Florida Lottery and comparing recipients of large prizes to those of small prizes. Results indicate that while positive income shocks of $25,000 to $50,000 do not cause statistically significant or economically meaningful changes in divorce rates, single women are less likely to marry as a result of the additional income.

Keywords: Marriage, Divorce

JEL Classification: J12

Suggested Citation

Hankins, Scott and Hoekstra, Mark, Lucky in Life, Unlucky in Love? The Effect of Random Income Shocks on Marriage and Divorce (July 14, 2010). Available at SSRN: https://ssrn.com/abstract=1629878 or http://dx.doi.org/10.2139/ssrn.1629878

Scott Hankins

University of Kentucky ( email )

121 Washington Ave, 105
Lexington, KY 40536-0003
United States

Mark Hoekstra (Contact Author)

University of Pittsburgh - Department of Economics ( email )

4714 Posvar Hall
230 S. Bouquet Street
Pittsburgh, PA 15260
United States

HOME PAGE: http://www.econ.pitt.edu/facpage.php?uid=108

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