Antony W. Dnes

Autonomy & the Law Commission’s Proposals

Marriage & Cohabitation:Insights from Economics of Law

• Cohabitation and Marriage - Joint Investment of Human and Other Capital) with Expected Surplus.

• Life Profile Theory of Marriage (Cohen, 2002) - c.f. Burns

• Marriage as Standard Form Contract, Insurance, Signal...

• Emotional Theory Fails to Predict, e.g. Differences Between Groups, Impact of No-Fault Laws...

•Laws, Regulation, Institutions - Internalize Externalities

• All about Incentive Structures, Opportunism, Exploitation.

Law Commission & Marriage Lite:Chipping Away Choice?

• Divide Retained Benefits & Continuing ‘Disadvantages’ (Sunk Costs = Reliance) on Separation.• Old Contract, Trusts: Poor Recognition of Human Capital.• But ‘Volunteers’ Issue – Chip Away at Choice, Autonomy?• Regulation Need not Undermine Autonomy: (i) Enforcing Discernable Promises; (ii) Response to Changed Constraints. • A New Contract View? FC to Complete Expectancy by Compensating Sunk Cost Linked to Outstanding Retained Benefit, & Divides Remaining Benefit• c.f. Hydraulic Engineering (QBD, 1878) – Expectancy Includes Reliance.

Constrained Choice & Marriage Guarantee(Akerlof, 1996)

• Women Face High Expected Costs of Unwed Pregnancy (P).• % (α) Demand Marriage Guarantee (P+d>P) for Intimacy.• Sufficiently High α Implies Most Women Require Guarantee• HPUs (Happy to be Pregnant & Unmarried) Still Benefit from & Require Guarantee• So Many Women Require & Men Give Guarantee (Male Benefits Lower but Still > 0). • 1950s World of Marriage, ‘Engagement Intimacy,’ Stigma. • Series of Choices, but Constrained.

Technical Change & Cohabitation (Akerlof, 1996)

• Contraception – Probability of Unwed Pregnancy Falls• Expected Costs (P)↓ - Guarantee Group (α) Smaller.• Women Fail to Obtain Guarantee, even if most Prefer it.• Consider HPUs - would Benefit from Marriage, but α is Smaller - no Longer Insist (Competition from (1- α) Group).• Post-1960s Cohabitation - Driven by Technical Change & Competition among Women - Constrained Choices.• Common-Law Marriage Myth Possibly a Self-serving Rationalization for Both Sexes? Sense of Drift.

Non-Rent-Seeking Arguments for Regulatory Intervention:

a Matter of Life & Profile

• Constraints Leave Women Open to Immiseration.• Cohabitation - no Life-profile Linked Support Obligations.• Restricting Non-obligated Cohabitation ‘Ties Hands’ & Stops Damaging Competition between Women.• c.f. State Coercion Over Public Goods: or Everyone Understates Preferences for Police, Military... • All Sorts of Limits on Freedom of Contract (Trebilcock 1994): Child Labour, Corruption, Perpetuities, Easements …

Non-Rent-Seeking Arguments: Negative Technical Externality

• Not Pecuniary Externality (one gains, one loses).• e.g. Instability of Cohabitation Removes Fathers from Home, Resulting in Child Delinquency – a Technical Externality. • Stabilizing Cohabitation Reduces Antisocial Behaviour.• Real Effects

• Cohabitation Intended to Share Long-term ‘Surplus’ to Household and Market Inputs• Returns to One Party not Protected → he/she Under Invests.• e.g. Increases Paid Work, as ‘Insurance,’ not as Better Use of Time for Family.• e.g. Child Delayed Owing to Family Insecurity.• In Extreme, Some Parties Avoid ‘Efficient’ Cohabitation.• Efficient to Secure Returns against Sunk Costs – More Happy People, Better Efforts.

Non-Rent-Seeking ArgumentsCompleting Expectancy

Opt Out?

• Opt In/Out Same if Law Known & Bargaining Cost Low.• Adjust Relationship Elsewhere if FC Adjudication Expected to Disturb - Includes No/Low Obligation Cohab (Coase).• Undesirable Chilling Effect if Law Creates Uncertainty, or Inhibits or Deflects Bargaining.• e.g. A Bargains Over Domestic & Market Roles, Savings, Consumption & Property - Court Expected to Favour A - Chills B as A’s Risks Were Already in ‘Upfront Points.’• Enforcing Promise Warms A – Chills Exploiting B Only.

Obligated Cohabitation: Effects on Marriage, Cohab …

Single Cohabitation Married

Dividing Lines May Move - Welfare Change Uncertain

Single Cohab Married

All OK if Gains>Losses

•Marriage Incentives Unchanged? •Some Bs Deterred from Cohab?•Some As Happier About Cohab - But 2 to Tango

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An Economist Writes …

• Need Welfare Focus or Run into Problems (e.g. Menages).• Under Property Rule, Small-Numbers Bargaining Works - Need Clear Case, Beyond ‘Give More to A,’ for Change to Liability. • Obligations ↑ → Clear Disincentive to Cohabit c.f. Separation.• Implication for Marriages: Benefits for Some B’s ↑ if Cohab Accepted; Benefits for Matching A’s > 0; Competition from Other A’s Accepting Cohab → Some B’s Offer Cohab, not Marriage (c.f. LC179, p.104) (c.f. Akerlof 1996). • Above e.g. - Welfare Enhancing, but Marriage Undermining. • Inescapable: World Move to ‘Lite’ - ‘Heavy’ not a Fit?• Unintended Promotion of Separation?