Sunday, March 11, 2012

Emotions and Reasoning

Economic reasoning requires emotional discipline. When studying the economics of contraception, abortion, slavery or other hot button issues, the economic analyst sets aside personal preconceptions about what is right and wrong to examine cause and effect. Cause-and-effect questions tend to be questions of reasoning, and right-versus-wrong questions tend to be questions of emotions (or, if you wish, morals and norms).

Economists tend to focus on questions of reasoning first, and if there is time, questions of emotions second. To non-economists, this comes off as cold, calculating and callous. After all, how can you reduce an emotional issue to hypotheses, premises, logic, conclusions and extensions? The answer is that it can be insightful to set emotions aside because emotions can get in the way of reasoning.

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To see why, take an example about why economan would get married to econowoman. Here is a list of reasons that were taught to me in a class on the economics of the family:
  1. Specialization within the household. For tasks that cannot be outsourced to the market, it is useful to have one individual specialize in household tasks, and another specialize in market tasks. This way, the household can reap the benefits of comparative advantage.
  2. Income Pooling. A multiple-income households with two adults has a less variable income stream than a single-adult household. Labor market shocks like layoffs affects married couples less drastically because the other adult can pick up the slack.
  3. Public Goods. Living in the same space has certain economies of scale. For example, providing heat, television entertainment, common shelter, etc. is like a public good in the sense that my consumption of the heat, TV and shelter does not diminish the other adult's consumption of the same unit of that good. This works for wireless internet as well. And yes, children and their accomplishments can be thought of as a public good.
Notice that there's nothing about love or caring for the other person in this list of reasons to get married and stay married. In fact, if you take the kids out of the equation, this is a theory of optimal roommates. To a non-economist, it seems wrong to leave out so many elements that give life to a marriage/ life partnership. To an economist, the above framework is useful for understanding broad trends in marriage and divorce. For example, why have we seen a rise in divorce over the last half century?

Setting aside the issue of marriage for love, the specialization motive to get married has become much less of an issue with better processed food (sliced bread, microwave dinners, etc.) and better household technology (dishwashers, washer-dryer, etc.). There is still room for specialization in the modern household, but it is not as binding as it was a hundred years ago (or even 50). This technological improvement combined with female advancement in the labor market has generally led many young adults (both men and women) to have a better outside option to marriage. Certainly, there are a lot fewer reasons to stick with an unhappy marriage today, compared with 50 years ago.

This is a partial explanation for why one might expect the divorce rate to have risen during a time where both household technology and female labor market prospects improved. It does not say that divorce is right or moral, but it does cast broad trends in marriage and divorce in a different light than they are popularly conceived. By this account, divorce is a decision that is optimal, given the set of choices before the couple. Perhaps the couple's preferences are wrong and marriage should be forever, but taking their preferences as given, we would have a hard time convincing them that they made a mistake. This suggests that the rising divorce rate -- if you view it as a problem -- is a persistent problem. After all, it has become a convenient and cheap option relative to how it was in the past.

Is it due to the corruption of our morals? This is possible, but the logical framework is perfectly consistent with corrupt morals before and after the technological change. It is also possible that trying to change people's preferences about marriage will save a few marriages, and potentially, inject some extra happiness into those existing marriages. But, these conclusions need not be true to describe the broad trends we observe.

What does this suggest for someone who is trying to change social preferences in order to achieve stable and happy marriages?
  • First, this effort is noble, but the problem is more difficult than rebooting our preferences 50 years. Circumstances have changed, and these circumstances reduce the ties that bind economan and econowoman.
  • Second, the marriages that lead to divorce are the most unhappy of the existing ones. In the absence of a more nuanced story, the average happiness of married couples should increase. No, that's not a good reason for divorce if you view marriage as a sacred sacrament, but it is a stable reason for divorce, which suggests that this is tougher problem than first glance.
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As you can see from this example, it is not that emotional questions are not as (or more) important than reasoning questions, but distinguishing cause from effect is useful for informing what conclusions we draw. Those who are able to draw the line between cause-and-effect questions and right-versus-wrong questions tend to have more incisive reasoning and more sensible conclusions about incentives, motivations and likely behavior.

For some reading on what inspired this post, check out Landsburg's controversial set of posts on the contraception debate (1, 2, 3, 4, and 5). Landsburg could have used less harsh wording to describe other people's failures of reasoning, but his reasoning is sound. It is right to point out that some calculated reasoning can clarify the debate around contraception and government's role in that market, but harsh language (even if it is harsh language directed specifically at people for being illogical) may inflame the debate rather than get other people to think more logically.

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Note: There is much more to the literature on the economics of the family than I lead on in this post, including additional points and counterpoints. Aside from broad trends and basic models, I am relatively uninitiated to that literature and the relevant data (I study industrial organization). One should not take my example as a complete characterization of the state of that literature, but merely an example of how basic economic reasoning works in a controversial setting.

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