Are pornography and marriage substitutes for young men?

Apparently they are, according to a recent IZA Discussion Paper (PDF) by Michael Malcolm (West Chester University of Pennsylvania) and George Naufal (IZA). Using data on young males from the 2000, 2002 and 2004 waves of the U.S. General Social Survey (for which the data are freely available online for most waves), the authors investigated whether the number of hours spent on the internet each week and self-reported use of the internet to view pornography lowered the probability that respondents were married at the time of the survey.

There are a couple of obvious problems here, which the authors acknowledge. The first is reverse causality – married people are likely to have less opportunity to view pornography (what with their wife looking over their shoulder at what they are working on). Second, people with poor interpersonal skills are less likely to get married, and more likely to use the internet, which would confound the issue.

To overcome these problems, the authors use instrumental variables analysis (which I have earlier discussed here): they essentially find some variable that is expected to be related to pornography or internet usage, but shouldn’t plausibly have a direct effect on marriage rates. In this case, the authors use father’s education level as an instrument for hours of internet usage (because more educated people used the internet more, particularly in the early 2000s), and use urbanisation as an instrument for pornography usage (as more urbanised areas have better internet, and hence pornography, access).
The results show that pornography is indeed a substitute for marriage for young men:

“For pornography consumption specifically, the magnitude of the marginal effect also varies across models, but again all are negative and significant at the 10% level. Using the bivariate probit model, each 1% increase in propensity to look at pornography is associated with a 0.6% decline in the probability of being married. Across other models, the estimated marginal effect ranges from 0.07% to 5.3%.”

Can we be sure this is the effect of pornography, and not just general internet usage (which also had negative and significant effects on marriage)? Based on other results from the paper it seems likely, since self-reported use of the internet for other things (visiting finance sites, news sites, education sites, health sites, or sports sites) each had smaller marginal effects than visiting porn sites. Interestingly, visiting religious sites was associated with a higher probability of being married.

What does all this mean? One interpretation is that greater access to pornography via the internet lowered the cost of sexual gratification. As we know from simple demand theory, if ‘goods’ are (close) substitutes and you lower the cost of one, the demand for the other will fall. To the extent that marriage is also a source of sexual gratification, the demand for marriage has reduced, and this is consistent with marriage and pornography being substitutes. I tell a similar story in my ECON110 class, about the increasing availability of casual sex, and its effect on the demand for commercial sex services over time (the evidence is in the decrease in the price of commercial sex services, an example described in the Levitt and Dubner book SuperFreakonomics.

[HT: Bill Cochrane]

It turns out that diamonds aren't forever

Or at least spending more on engagement rings is associated with shorter, rather than longer, marriages. So says a SSRN paper last year by Andrew Francis and Hugo Mialon of Emory University, which has been sitting on my must-read-this list for far too long. The wedding industry would have us believe that more extravagant weddings are associated with longer-lasting weddings. However, Francis and Mialon find:

...little evidence that expensive weddings and the duration of marriages are positively related. On the contrary, in multivariate analysis, we find evidence that relatively high spending on the engagement ring is inversely associated with marriage duration among male respondents. Relatively high spending on the wedding is inversely associated with marriage duration among female respondents, and relatively low spending on the wedding is positively associated with duration among male and female respondents.

What might be causing this observed negative relationship between wedding expenses and marriage duration? The authors posit that expensive weddings create more debt-related stress, and that may create problems for the marriage. They show that:

...in the sample of all persons, sample of men, and sample of women, spending less than $1,000 on the wedding is associated with an 82% to 93% decrease in the odds of reporting being stressed about wedding-related debt relative to spending between $5,000 and $10,000.

However, as I discussed in this post last year, weddings are a way of couples' signalling the quality of their wedding to others. Signalling is necessary when you have a problem of asymmetric information. At the risk of repeating myself, I'll quote from that earlier post. A problem of asymmetric information:

...happens when one party (the informed party) has private information that the other party (the uninformed party) doesn't know, and (importantly) the informed party uses that information to their advantage and to the detriment of the uninformed party. The classic example that we use in ECON100 and ECON110 is the used car market. Sellers know the quality of the car, but buyers don't. Since buyers don't know whether they are being offered a good car or a lemon until after they have bought it, sellers can easily misrepresent the car as being good quality even if it is a lemon.

Crucially, asymmetric information is only a problem if it leads to market failure. In the used car market example, since buyers don't know the quality of the cars in the market, they have to assume that any car on offer is low quality. This lowers the amount that they are willing to pay for a car, and drives the good quality cars out of the market (since sellers of good quality cars can't convince buyers of the quality of their cars, and buyers aren't willing to pay enough to buy them). The market for good cars collapses (of course, the market has developed mechanisms that deal with this market failure, such as test drives, pre-purchase inspections, etc.). We call this an adverse selection problem, since those that select to remain in the market are those with the lowest quality cars (when at least some buyers want those with the highest quality cars, not the lowest quality)...

Signalling is one way that markets have adapted to deal with adverse selection problems. With signalling, the informed party finds a way to credibly reveal the private information to the uninformed party. There are two important conditions for a signal to be effective: (1) it needs to be costly; and (2) it needs to be more costly to those with lower quality attributes. These conditions are important, because if they are not fulfilled, then those with low quality could still signal themselves as having high quality. Sticking with used cars as an example, offering a warranty on the car is a good example of signalling. It is costly (since if the car breaks down, the seller must pay the cost of repair), and it is more costly to those with low quality cars (since they are more likely to break down).

How does this apply to weddings? Couples have private information that wedding guests don't know about: (1) the quality of their relationship; and (2) their social status. Again, quoting from my earlier post on the topic of weddings:

Starting with (1), guests don't know the quality of the relationship that is about to be formalised, but the couple does (hopefully!). Does this create market failure? That is, can the couple take advantage of this information asymmetry to their advantage and to the detriment of their guests? Maybe, if we consider wedding gifts. Guests would probably give less valuable gifts if they believed the marriage wouldn't last (i.e. if the marriage is low quality), than if they thought it would last a long time (i.e. high quality). So, if guests can't be sure about the quality of the marriage, then they may assume the marriage is lower quality and buy less expensive wedding gifts (or no gift at all) as a result. So, high-quality couples need to find some way of signalling their quality, and this may be through the cost of the wedding. This may be an effective signal, because it is costly (obviously), and more costly to low-quality couples since they may expect to marry more than once over their lifetime. So, lower quality couples may be less willing to spend a lot on their wedding than high quality couples.

What about (2)? This isn't an adverse selection problem at all, since there is no market that will fail. However, there is still signalling here - the couple may want to signal their social status to the community. Higher social status is linked with wealth, which means that couples with high social status are likely to be able to afford a more lavish wedding celebration than couples with lower social status. This is of course conspicuous consumption (where spending is intended as a way of maintaining or attaining social status). And, there is at least some evidence to support this (gated, here is an earlier ungated version) - even though the evidence is from India, it doesn't seem much of a stretch that there is something similar at play in a lot of weddings in the western world as well.

Now if we believe what I wrote about signalling above, then we should expect more expensive weddings (or engagement rings) to be associated with more successful (i.e. longer) marriages, not shorter marriages. So, what is going on? I think that there is a crucial conflict between the two types of signalling I discussed above. In the first case, the couple are trying to signal that their relationship is high quality and will only tend to do so (the payoff is only worth it) if the relationship is indeed high quality. So holding social status constant, higher wedding spending should increase marriage duration. In the second case, the couple will increase their wedding expenditure to signal high social status even if their relationship is not high quality. So holding relationship quality constant, higher social status should increase marriage duration. These results are in conflict for couples whose relationship is low-quality, but who want to signal high social status.

Francis and Mialon's results provide some support for both propositions. If we take some of their variables (respondent-spouse differences in age, race, and education; whether they knew their spouse very well before marriage; the length of time they dated before marriage) as indicators of relationship quality, those variables are statistically significantly associated with marriage duration in the expected direction after controlling for income and education (both of which are indicative of social status). And higher income and higher education are both positively associated with marriage duration (controlling for the relationship quality variables). To investigate these relationships more thoroughly though, it would have been good to test whether interactions between wedding expenditure and the relationship quality variables, or between wedding expenditure and income or education, were statistically significant. That is, are there differences in the relationship between marriage duration and wedding expenditure between high-quality and low-quality relationships, and between high income (or education) and low income (or education) couples?

On another note, the couple's private information (about their relationship quality) might not be kept private from all potential wedding guests - some will know more than others. We can expect guests to be less likely to attend a wedding if they expect that the couple's relationship is low quality (e.g. if they believe the marriage will not last). Francis and Mialon find some support for this as well. Wedding attendance is strongly associated with marriage duration - higher wedding attendance was significantly associated with longer marriage duration.

Finally, Hugo Mialon must have one of the most interesting research portfolios. I've blogged before about one of his papers on the economics of faking orgasm (ungated here).

[HT: Marginal Revolution, last October]

Have we reached peak economist in Australasia?

Perhaps we have. Last month one of my colleagues pointed me to a depressing article from Agenda by John Lodewijks (University of New South Wales) and Tony Stokes (Australian Catholic University), entitled "Is academic economics withering in Australia?" (PDF). In the article, the authors discuss the increasingly sorry state of academic economics in Australian universities, with many closing or downsizing their economics departments:

The recent news reports that the La Trobe School of Economics is being forced to reduce its established positions from 28 to just 10 is the latest in a series of cutbacks being imposed on academic economists in Australia. At La Trobe the proposed cuts include three professorial positions and three Associate Professors. Its stand-alone economics degree will no longer be offered from 2015. The developments at La Trobe are a carbon copy of what happened at the University of Western Sydney starting in late 2012. Four Economics professors were made redundant, along with seven other staff, and their B.Ec. no longer admitted students from 2013.

These have been high-profile media events. Less well-known is the disappearance of Victoria University’s Department of Applied Economics, with staff scattered across Finance and International Business. A similar story of economics being subsumed within Business unfolded at the University of Newcastle, the University of New England, the University of Tasmania and James Cook University. Griffith University has reduced the number of offerings in Economics and there are reported upper-level enrolment concerns at ANU.

Something similar has been underway in New Zealand, including the recent downsizing and narrowing of focus at the University of Canterbury. What is behind this reduction in the size of academic economics departments across Australasia? Lodewijks and Stokes point first to perceptions of economics among the public:

It can be conjectured that the reported failure of economists to predict the global financial crisis might be one reason for the declining enrolment... Perhaps of greater importance is the negative way that economics is often portrayed in the media. Many commentators have heaped scorn on economists and economics... Very rarely do we see stories of the positive contribution that economics has made to public policy debate and overall economic prosperity in this country... The profession needs a whole new image as a vital contributor to business and policy debate.

This may well be true. Certainly, there's no shortage of complaints about economists in the media. Second, the authors also point to the way economics is taught at university level:

The often narrow content of economics instruction blocks students from wider backgrounds doing double-majors with economics in areas such as psychology, political science, sociology, anthropology and geography. 

and at high school level:

The BEA raised serious concerns regarding the low numbers of economics graduates going into teaching... Schools had little choice but employ teachers with one unit of economics (business economics) or no economics to teach economics to years 11 and 12 students... Another key issue associated with having school teachers with limited or no qualifications in economics is that they tend to favour the subjects in which they are qualified and may turn students away from studying economics. In addition, schools may not offer economics as a subject if they cannot get an economics teacher. All of this worsens the situation in schools and, subsequently, universities.

The lack of specialist economics teachers is definitely true at a lot of high schools, not just in Australia but in New Zealand as well. In many cases, accounting teachers are co-opted to teach the economics curriculum, or schools are choosing not to offer economics at all. I'm aware of a number of schools that have cut economics from their curriculum in recent years.

In a recent paper in New Zealand Economic Papers (I can't find an ungated version), Stephen Hickson (University of Canterbury) notes that the number of students studying economics at high school has fallen 31% between 2003 and 2012, while the number of students taking economics at university has declined 20% between 2008 and 2012. Hickson attributes the decrease in high school numbers to the gradual replacement of economics with 'business studies'. The decrease in university numbers probably relates to the reduction in the economics core in the commerce degrees at Canterbury and Auckland.

Is there something wrong with the way we teach economics though, that isn't attracting students? Lodewijks and Stokes think so:

The point, however, is that we have slanted our teaching to mimic our research focus and not to cater to the composition of the student body we now face. At least at the lower levels of undergraduate teaching we need to impart, and to let students apply, the basic skills and techniques that make economics so valuable as a policy science. At a macroeconomic level, we need policy simulations so that students can select different parameter values and themselves see what it does to macroeconomic targets and how shocks affect aggregate performance... Combined with this they need to be able to use basic quantitative techniques without always having to derive the theory behind them from first principles. At a microeconomic level it is the repeated application of a small set of basic principles relating to opportunity cost, decisions at the margin, price–quantity interactions, externalities, competitive dynamics and, particularly, cost–benefit analysis that is needed... It is these skills that set us apart and raise the employability of our average graduates. The other bells and whistles can be covered at higher levels and particularly during the Honours year. We should not be selfreplicating Ph.D. trained academics when we teach the bulk of students we encounter. I think we need to face the fact that a vast majority of our students are not going to do a Ph.D. but only complete an undergraduate degree with often just minimal exposure to economics.

Caroline Saunders (Lincoln University) said something similar in the latest issue of Asymmetric Information (PDF) - the newsletter of the New Zealand Association of Economists:

The trouble is we’re not very good at getting across what economics is about. We’ve been a bit complacent about teaching it because we had captured compulsory first years, so we focus on the techniques and the models, as opposed to what economics can do for you and the underlying pinning of economics. So when these business management courses come along, that are relatively easy, they tend to get more popular.

It's pretty clear to me that, in general as a discipline, we do a poor job of selling the value of economics to students and non-students. This is why our first-year core management (ECON100) paper at Waikato is specifically designed to focus on the intuition of economics and not the mathematics of economics. And also why our other first-year economics paper (ECON110) focuses on the applications of economics to a range of policy and social issues.

In spite of our efforts at first year, our number of economics majors at Waikato have been in decline - although this may be about to change, as our intermediate microeconomics class has recovered this year from an all-time low last year. We also have an extremely enthusiastic group of students involved in the new Economics Discussion Group that I set up last year.

As I have reported before, there are lots of reasons why students should be studying economics (see here or here or here). To add to that, Dutch website NRCQ reported last month that economists and econometricians are in high demand (in Dutch). There is nothing to suggest that the demand economics or analytical skills has fallen in Australasia recently. So if we believe our own supply-and-demand models, when the supply of graduate economics students is decreasing we should expect that the remaining graduates should be able to take advantage in the form of better job prospects and higher entry-level salaries. I know a number of Bachelors graduates who have secured jobs this year and last, that in recent years would have only gone to honours graduates. Reaching peak economist might be a temporary situation, and a good one for our forthcoming graduating classes.

[HT: Dan Marsh for the Lodewijks and Stokes article; Jacques Poot for the NRCQ article]

TMML: Every TV news report on the economy in one

This video parodies the format of every news story on the economy, ever. Seriously funny:

[HT: Alex Tabarrok at Marginal Revolution]