Tuesday, January 10, 2012

Cohabitation Versus Marriage

Why Cohabitation Might Be A Better Partner For Generation Y

Column Quick Summary:
  • Education gender ratio defends my assertion that the Millennial generation will have a lower marriage rate than former American generations.
  • Cohabitation may be viewed as an alternative to marriage.
  • Cohabitation offers four advantages over marriage: (1) fewer financial complications, (2) cohabitation is defined in more simple and less complex terms, (3) cohabitation is prevalent in modern art and implies marriage may come later through it, and (4) cohabitation matches the current culture more than marriage.
  • Do sociocultural trends affect economics and finance or vice versa?
  • Young men could always change their mind about marriage and family much later as there's no reason for them to rush.

In the past year, this blog has missed any discussion concerning cohabitation. While any reader could find many opinionated views on cohabitation, this post will only discuss it as an alternative to marriage and a part of serial monogamy (one could also argue that cohabitation is a natural result of hooking up). While I will discuss advantages that cohabitation offers over marriage, these advantages reflect the current attitude of many Echo Boomers.

In my interview with Kay Hymowitz, I asked about the declining marriage rate, and the prediction that Echo Boomers will have a lower marriage rate than former American generations. She replied:

Does this mean that Millennials will not marry in their 30’s or even their 40’s? Not based on my own observations - or the data. The percentage of educated women who get married has increased over the past decades; it’s the less educated who are marrying less. Also, the large majority of young people continue to say they want children someday. College educated men and women know from first-hand observation what research shows over and over: a child has a better chance at doing well in life – including graduating from college - if he or she grows up with her stable, married mother and father.

She makes an excellent point that the educated may experience a different world regarding marriage than the uneducated. However, regarding the Millennial marriage rate only, does this foreshadow a large marriage rate or low one?

As it turns out, if we were look at education as a prediction of marriage in the future and family stability, we have problems. Susan Walsh calls attention to one of these problems:

II. The college sex ratio predicts a dramatic erosion in marriage rates over the next generation among the educated.

At first glance, the news is less alarming for the college educated, if not for society as a whole. The share of college educated individuals currently married is 64%, down 16% from 1960. In contrast, only 47% of those with a high school education are currently married, down 35% since 1960. Marriage has been a more stable institution among the college educated population.

That cannot last. The current sex ratio nationwide in American colleges and universities is 57% female, 43% male, and the gap is widening. This means that among today’s college graduates, 25% of women will not marry college educated men. Let me say that again.

So, the educated are experiencing a better marital world than the uneducated, but when looking at these trends we have to keep in mind that men and women aren't pursuing education in equal numbers. Women are more educated than men, and historically, women don't marry less educated men. If this trend holds, this can only mean one of two things:

  1. The Millennial generation will have lower marriage rates, partially due to an unequal number of educated men and women.
  2. Millennial women will settle for less educated men.
Even I wouldn't have predicted this: Catherine Rampell points out that more young women are going back to school instead of working, which also predicts an even higher unequal education rate among young men and women. The truth is that my prediction in the long run may be too low.

Of course, I don't predict that marriage will die, but I do predict that Echo Boomers will have a 60-66% marriage rate (note that the current marriage rate is 51% for the United States as a whole). While traditionalists might bemoan this prediction or progressive might praise this prediction, we know that the Millennial generation still values parenthood, therefore Echo Boomers still value children and parenting their children regardless of whether they are married. In other words, family values will remain, but the definition of family has changed to no longer include opposite sex parents (Stephanie Coontz discusses family-pertinent topics and the changes we see in family).

Why Echo Boomers Might Favor Cohabitation

Even though Generation Y will have a lower marriage rate than former American generations, does not mean that Generation Y will abandon relationships altogether. Serial monogamy allows more freedom to relationship participants and even offers various forms. For instance, one form of serial monogamy is cohabitation - a couple living together, while maintaining legal and financial separation. The Millennial generation may see some major advantages with cohabitation over marriage, such as:

1. Finances The financial world has changed in the last few decades. For instance, consider the rise of retirement accounts, like the Roth-IRA or the 401(k). How many people do you think discussed these in 1990? As the financial world has changed, this has affected the notion of marriage. Echo Boomers, unlike other American generations, have witnessed the huge financial cost of marriage - from the beginning with weddings, jewelry and honeymoons to the end with alimony, 50-50 splits and attorney fees. While many act as if marriage is an emotional decision, reality makes it clear that finances play the biggest role (as a former banker, I can assure you that money is a major factor in marriage).

But now, with the financial world changing, there are new costs. For instance, how are retirement assets divided up after a divorce? How well does a pre-nup actually hold up after a divorce? How much does a pre-nup cost? What if the man and the woman want to spend different amounts on a wedding (according to Ramit Sethi, the average is around $25,000)? Who pays for the wedding? The questions compound on and on.

How much does cohabitation cost? Compared to marriage, very little. And if it ends, it's relatively light on the wallet, even if it does come with heavy emotional costs.

2. The cohabitation landscape is defined more clearly than marriage. Relationships come with major confusion for young people in today's world, especially young men. Who asks out whom? Who pays for the date? Who proposes? Who's last name is taken? Ad infinitum. Cohabitation eliminates at least half of these absurd questions. For instance, when you cohabit, a honeymoon destination does not have to be agreed upon. Neither does a couple need to agree on a wedding location. Nor does a couple have to introduce their spouse as Ms. Atkins-Johnson or Mr. Johnson-Atkins.

A couple is separate in cohabitation, but together enough to fulfill their relationship needs. A basic observation about social psychology and human behavior: humans tend to avoid confusing situations. For instance, you wouldn't enter a debate where everyone defines words differently because the confusion would frustrate everyone.

3. "Life imitates art far more than art imitates life." Oscar Wilde might assert that since TV portrays cohabitation as a pre-cursor to marriage, some Echo Boomers might think that cohabitation will lead them in the direction they want (assuming they want marriage). In reality, the opposite is true, but art is seldom based on reality; in fact, art is often used as an escape from reality.

Note that this point only addresses those who cohabit with the intent of marrying their partner. Many cohabit as an alternative to marriage.

4. Cohabitation matches the hook up culture better than marriage. If you read the above interview about hooking up, you know it isn't dating. Dating, like marriage, is intentional. Hooking up, like cohabitation, is flexible. I would adduce, based on how Generation Y currently behaves, that Echo Boomers are seeking flexible relationships, not intentional relationships. And I expect this to remain for the long run (for instance, even if Echo Boomers married in high numbers, their desire for flexibility would be seen in a high divorce rate).

So, Which Came First: the Chicken or the Egg?

When I started this blog, I lacked interest in sociocultural factors because they don't seem to be pertinent to finance and economics. I was wrong, and thus have added a focus in sociocultural factors of Generation Y. Sociocultural factors affect businesses and economic trends that we see, and while change is guaranteed in life, a person should be careful about building a career or making economic assumptions based on what other American generations have done.

For instance, if we assume that a higher marriage rate will mean a higher home-ownership rate, we might state that a declining marriage rate would mean bad news for the housing market. However, the opposite could be true: if you have more single people and the majority of the single people buy a home, the housing demand would be higher than if the majority of people married. In a nutshell, sociocultural factors are important in any economic or finance discussion.

That being written, which affects which? Do economic factors affect sociocultural factors or vice versa?

A Final Note on Men

Numerous social experts have noted that young men aren't doing as well as young women. However, the young men who are doing well, are succeeding in numerous areas - most notably wealth. But young men with substantial amounts of wealth were seldom married and lacked interest in marriage, though they had numerous other goals. Kay Hymowitz makes an excellent sociocultural point about men and Dan Eisenberg makes an excellent biological observation about older men, which could be missed in this relationship discussion:

With no biological pressure, men don’t have the same time frame. Some of them continue to think of themselves as boys – or “dudes” – and to think of adulthood as something way off in the distance. [Kay Hymowitz]
However, previous studies have shown that children of older fathers have longer telomeres (probably because as a man ages, telomeres in his sperm get longer). Our study shows for the first time that this happens across at least two generations: older fathers not only have offspring with longer telomeres, but their sons also have offspring with longer telomeres. That is, having an older grandfather on your dad’s side at the birth of your father predicts that you will have longer telomeres.


Consistent with this, shorter telomere lengths are associated with increased mortality from infectious diseases and cardiovascular diseases. [Dan Eisenberg]

In other words, Millennial males could pursue hooking up and cohabitation for now until marrying later in their forties or even fifties. For instance, one well-known investor, Jim Rogers (commodities expert), had children much later in life. While this is unusual for his generation, I wouldn't be surprised if a portion of Millennial males did this.

In a nutshell, young men could change their mind about marriage and family much later. Considering that Echo Boomers are currently 17-32, there is no rush.