Monday, January 13, 2014

      Megan McArdle has a post about the economics of marriage, titled "Marriage Makes You Rich and Stupid." A fair bit of it is just a restating of the fairly well understood economic benefits of marriage (i.e. household economies of scale and non-rival consumption). However, what is particularly interesting about her take on it, is her argument that marriage makes us, in effect, less capable individuals

      I used to know where I kept my batteries and old documents. But when we got married, my husband, who is much tidier than I am, took over organizing the house. Now, unless it’s a piece of my clothing or kitchen equipment, I have no idea where we keep anything. And while I’m pretty sure I used to be able to put up shelves, now all I know how to do is ask my husband to do it.
        On the other hand, he has no idea how much money we have, or in what accounts. And he can’t do the grocery shopping, because he doesn’t know what we consume. Individually, we are less competent to survive on our own. But collectively, we eat better, and we have a tidier house and better-managed finances. And our shelves don’t fall down so often.

       Of course, this is really just a re-stating of the consequences of the division of labor in the context of a household. I have chosen to use this as the first post for this blog for a few reasons, but one in particular; I think it reflects an important theme that I intend to return to throughout the postings, namely it discusses both the benefits and the costs of the division of labor using a readily accessible example.
       For reasons long understood in economics. The division of labor as well as the whole apparatus of exchange, market or otherwise, that comes with it does make us wealthier. It is important to acknowledge, however, that these gains come with a cost. In the case of Megan's example it is of skills lost by her and her husbands increased reliance on each other (I suppose a technical term for it would be human capital displacement).
       Of course, it is entirely possible that the costs are outweighed by the benefits, as presumably they are in the case of Megan and her husband otherwise they probably would be maintaining separate residences and bank accounts. However, it is important to ensure that we minimize these costs as much as possible as we pursue the benefits, thereby enriching ourselves even further.
      In Megan' s case, though I do not pretend to tell her how to run her house, I suppose the best way they could do that is with effective and regular communication between her and her husband about what they are doing, how they are doing it, and why they are doing it.  This way each of them is aware of conditions and decisions that have important material consequences for each of them, and therefore exercise more control over them, even if they are not personally acting upon them. It also forces each of them to maintain at least enough understanding of the tasks to be able to communicate with each other, minimizing the skill loss she refers to. Again, this is just an pedagogical example, I have no intention of suggesting that Megan fails to run her house effectively.
      The beginning of Megan's post also has a good example (originally sourced from Matt Yglesias) of the use of data to mislead by relying on calculation methodologies that remain unstated, even if those methods make a lot of sense in their own right.

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