And in an investment you compare the costs to the stream of future returns.
Tyler Cowen has been struggling with definitions lately. First we had "Keynesianism", and now he's calling David Frum and Paul Krugman "economic determinists" for suggesting that maybe the working conditions of the working class have some impact on their social lives. I have no idea why that fairly banal point is "determinism", but let's move on.
He cites Bryan Caplan who points out that marriage increases wages. Being single is expensive, so it doesn't make sense that hard economic times would cause a "decline in social values" in certain classes of workers.
Allow me to blow your minds folks: causality can work in two directions at the same time, and in complex systems like human society, it often does.
Back to the initial point - marriage is an investment. You are making a decision about a whole stream of future benefits - psychic, social, and also of course, monetary. Reduced job prospects reduce the attractiveness of that investment. Now - is Caplan right? Of course he's right. Yes, it's quite well established that marriage has beneficial impacts on income and that relation is causal. I don't see how this refutes Frum and Krugman.
Let's say the present discounted value stream of your earnings and your potential spouse's earnings are both $1,000. And let's say the marriage premium would increase both of those figures by $100. So now you're looking at a combined discounted income of $2,200. I'm not sure how family bargaining models usually work - let's say it's split 50/50 to make this simple. So yes, $1,000 < $1,100. Voila! Krugman and Frum disproved, right?
Marriage is an investment. It's hard. It's costly. I have a fantastic wife and we haven't had any major relationship crises yet, but it's still hard. Being single would be much easier. Plus, if you have a less steady relationship the cost of divorce is very high, and that's a real risk. Not to mention that point when the biological imperative finally lands me with a few kids, which I will have a much harder time ignoring if I'm married than if I were single and sleeping around. There are lots of costs associated with marriage! For me, the costs are well worth the benefits (including the kids... I'm just illustrating the point above - I am excited to have them eventually).
Bryan and Tyler are essentially saying "Duh Paul - $1,000 < $1,100, so what are you citing William Julius Wilson for?". The point is, if we monetize the costs of marriage as being $1,500 and if in an alternative macroeconomic history the working class could have earned $1,4000 on their own with the same $100 marriage premium, you would get more marriage.
On Mises’ Use of the Term “Inflation”
1 hour ago