Sunday, August 19, 2012

Ch 4: Moral Hazard, Or, The Too-Big-to-Fail Marriage

This chapter deals with the way humans tend to take risks when they think the are covered by some sort of "insurance," literally or figuratively.  This differing behavior is referred to by economists as "moral hazard," and it can wreak havoc on your marriage, since marriage by traditional definition is understood as permanent insurance against the loss of love.  This is why we need consequences for our actions.

(By the way, the big comparisons they give are to health insurance and welfare, which makes me question their politics...)

The book gives 3 solutions to the problems of moral hazard in marriage, all of them having to do with incentives, not whether the spouse is good or bad.  I take the liberty of just quoting via photo:

Pg 104.
The chapter basically just gives stories of couples who illustrate these solutions to moral hazard, and these stories comprise the majority of the book's text and tone, but there are a few other nuggets of wisdom to note in this chapter:

"Research shows that marital satisfaction plummets after the birth of a first child:" couples are at a greater risk of depression, overwhelming stress, and loss of intimacy, both conversational and sexual (114).  And if you can survive the first few years of the second child, then apparently you're home free (and that would include both of us--"Come on Jet, just get to two so daddy can get laid again!").  If you're interested in the study, it's Gottman and Natarius from Family Process 41.2 (2002).

This one I know by experience and know that it is true--Lennon, G/d love him, has just puts tons of stress on me and my marriage--I'm older, my dad died, work has sucked--but I'm hoping things are leveling out now that he's older.  We'll see.

It's also ironic that many marriages also face problems after the nest has emptied, so kids screw you in two ways...

One of the specifics the authors give about putting regulations on your marriage (Solution 2) is drawing up a contract.  It sounds good in theory, but in practice I think Melanie would rather have teeth pulled.  Unless I drafted it, it just wouldn't happen.  She does make verbal agreements, however, and she is usually good and living up to them.

Solution 3 is about incentives, which seems intuitive, but the authors also warn us against "perverse incentives" wherein the incentive has the opposite effect of what's intended.  They cite the "failure is not an option" attitude as such an incentive in which a partner does anything to keep the marriage together.  That partner is just asking to get taken advantage of or will be blindsided when the other walks out.

Just an aside, Melanie and I think that marriage itself, conceived as a promise of "forever," is in itself a perverse incentive--why would anyone work when the other person has promised to be there "through thick and through thin"?  We've talked a lot recently about why we don't believe in marriage and why we prefer to take a day-to-day approach. We prefer that the other person wake up every morning and say, "this is where I want to be right now."  I think that attitude helps keep us both honest because there's no guarantee the other may not walk out (and that's true in a traditional marriage as well, if you think about it).  Plus, it's nice to know that the other person is here because she wants to be, not because she made some ridiculous promise and has to stick to it out of a sense of duty, not love.  Now, the catch is that the cost for such incentives is a feeling of security, which we are working on.  Also, it prevents our "marriage" from acting as a "commitment device" (wait for more on them in Ch 8).

In the 3rd solution, incentives, the authors mention "co-payments" as a smarter (rather than perverse) incentive.  In other words, co-payments are ways that your partner can share costs and help you enjoy the benefits of marriage (eg, sex, fun, travel, companionship, etc).  Some of the specific examples that come from their sample couple are: working less per week, one paying for something the other wants to do (eg start a business), keeping up maintenance at home, helping with dinner, etc.



Monday, August 6, 2012

Ch 3: Supply & Demand

This chapter relates sex in a relationship to "the negative sloping demand curve," which shows the inverse relationship between cost and desire:  If the cost of something is too high, you want less of it:  "when the cost of sex becomes too high, you'll opt for a mindless night of TV and jelly doughnuts" (69).  Of course, the key term is cost, and they're clear they don't mean prostitution (but let's face it, all marriages are a kind of sexual contract and are essentially prostitution).  They mean what you have to give up in order to get what you want, as in this graph of the negative demand curve below:

Demand for sex, pg. 70.

(Just a note, I think they did the graph wrong.  If you reverse the axes, and put cost on the X axis, then you get a true negative demand curve where as costs go up, sex goes down graphically.  In other words, X and O would change places).

As Paula and Jenny point out, we all tend to become more like Couple X as years go by, where the costs of sex are prohibitive in terms of time, energy, effort, and missed work, etc.  Couple O (ha ha) has lowered the cost by doing it right after the kids go to bed and signaling to each other when they are in the mood rather than waiting for things to happen romantically.  They do it several times a week.

At this point, however, our intrepid authors warn about the dangers of trying to compare your sex life to some other couples'.  For instance, a friend of mine who's been married over 13 years says he's always had sex with his wife about one a week.  I almost spit out my drink.  The economic term for this chatter about what others are doing is called "marked noise," and as in the stock market, you should ignore it most of the time.  Easier said than done, but it's probably a good idea.

It's also a good idea not to let your marriage become celibate:  Studies show that there's a link between sex and marital happiness.  They cite a few studies and report in their own survey that 92% of people who have sex 2-3 times a week report being satisfied or very satisfied in their relationships.  Yeah, no shit. Only 56% of those who had sex every few months reported being satisfied (That is, all the women. And the 6% who were men were either gay or impotent...rimshot).

Solution:  Have More Sex

It really is that simple.  Instead of talking about how you're not having sex, just do it, especially if you want your marriage to be satisfying.  Now the economic lesson here is to lower the costs somehow.  The book offers three ways of doing that:
  1. Be more transparent--only transparent markets work fairly and well, so let each other know what you want, what works, what gets you excited, etc.  Therapy can help air things you've been holding back.
  2. Reset your habits--get back in the habit of having sex by reducing the costs (my examples: put the kids to bed earlier, share chores to get them done faster, do it on the weekends during kids nap times, etc).
  3. Signal your desire to your partner.  Come up with a system of signals and/or recognizeable signs of being in the mood.
I think, though the authors don't emphasize this enough, is that this solution requires compromise and that both partners have to want their marriage to thrive.  They do point out that it's incumbent up each partner to realize that the benefit of have sex must outweigh the cost in order for a marriage to survive.  


That might mean doing it when you don't want to, which most marriage partners report doing at one time or another:

Pg. 90
The point here is to highlight the benefits as well as lowering the costs.

Sure, they admit, there's the issue of differing libidos--you want it most of the time, she doesn't--but economists might say that not having sex is a matter of "coordination failure," that is, "when two or more parties are faced with an identical set of choices" (93).  The outcome can benefit all parties, just one, or none. This coordination game also includes matching buyers with sellers.

This is where signaling can reduce guilt and/or rejection by advertising who's ready for Business Time:

Pg. 96