Changing families
The firm model for families is necessarily incomplete. It does not, for example, explain the legal and other ties that exist after families are legally dissolved through adoption, emancipation or divorce (Brinig, 1996).
Because the love that flows between family members is unconditional and permanent, divorce becomes difficult and frequently painful. What may be left after the law pronounces family relationships ended is akin to the economic concept of a franchise, while what people involved in such transitions may experience is an attempt to return to the market unfettered, again thinking of their relationships contractually. Couples divorce, according to Becker et al. (1978), when the gains from remaining married are outweighed by the anticipated benefits of returning to the single life. Frequently, this occurs when couples have married in relative haste and are therefore surprised by negative traits in each other. Sometimes it occurs even after a more lengthy marriage when one spouse can extract the quasi-rents of the other (Lloyd Cohen, 1987) or the other does not have enough to offer to keep the marriage viable (Zelder, 1993; Allen and Brinig, 1998).The divorce rate, after rising steadily throughout the twentieth century, exploded during 1960-80 in the United States, and has increased in parallel, though usually not at such a high level, throughout most of the world (Goode, 1993). Allen (1990) notes that no-fault divorce statutes seem to increase across cultures as more married women participate in the paid labour force, and South (1985) indicates the relationship between divorce and lack of strong social cohesion in the party’s home state. Scholars debate whether nofault divorce itself causes more divorces, though there is little doubt that the rates increase around the time no-fault is introduced (Nakoneszy et al., 1995).
Peters (1986) used a panel data study to suggest that, under the Coase theorem, unhappy spouses would reach an efficient level of divorce. The relaxation of divorce grounds would negatively affect women, who would be forced to trade tangible property rights to keep a marriage together. Peters’s results were disputed for a variety of reasons by Duncan and Hoffman (1981), Allen (1992a) and Brinig and Buckley (1998a), all of whom suggest that, because divorce transactions costs decreased when no-fault was introduced, there ought to be a permanent effect on the divorce rate. In no-fault states, divorces cost far less and there is generally much less litigation (Brinig and Alexeev, 1994), as the Priest-Klein (Priest and Klein, 1984) model would predict. Mediation has become increasingly prevalent as an alternative to litigated awards, and has the advantage, not only of being less costly, but also of allowing the parties to reach freely their own settlements (Brinig, 1995b).Peters (1986) predicted substantial differences in divorce settlements before and after no-fault, and her fears were echoed in the sociological literature (Weitzman, 1981) and the legal literature (Mnookin and Kornhauser, 1979). In fact, many divorced women with children do live in poverty, but perhaps mostly because of the loss of economies of scale as the marital household divides in two (Duncan and Hoffman, 1981). Despite the great variety in American divorce laws, the settlements people receive in terms of child custody and financial assets seem quite constant across states (Maccoby and Mnookin, 1992; Brinig and Alexeev, 1993; Fox and Kelly, 1993; Garrison, 1993; Weiss and Willis, 1993; Brinig and Buckley, 1998a).
There seems to be little doubt about the adverse effects of divorce on children, both psychologically (Hetherington et al. 1982; Wallerstein, 1991) and financially (Weiss and Willis, 1985; Brinig and Buckley, 1998b). Whether because they are forming new relationships, as Seltzer (1998) suggests, or because they can no longer monitor how their former wives are spending child support contributions (Weiss and Willis, 1993), or whether time with children has some of the properties of an addictive good (Becker and Murphy, 1988), more than half the child support payments ordered in the United States remain uncollected.
Although the parents may be more comfortable ending their relationship, the contracting that they do has the negative external effect typical of a Kaldor-Hicks rather than a Pareto-optimal solution. Perhaps for this reason, divorce laws may be more stringent for couples with children (Scott, 1990) or parents may be ordered to pay for children’s college education, as they are not while married. The other troubling external aspect of divorce is its effect on other marriages. As the divorce rate approaches 50 per cent, many couples can rationally expect an end to their relationship. Husbands, who are typically in a better financial position, may use their advantage to extract quasi-rents from their wives (Lloyd Cohen, 1987; Brinig and Crafton, 1994). Some couples may choose not to marry at all, while in others women may work ‘too hard’ (Parkman, 1996). To some extent, these problems were relieved by the institution of alimony (Landes, 1978). As states make permanent alimony the exception rather than the rule, spouses, at least theoretically, may engage in ‘trading’ of custodial time with financial assets (Mnookin and Kornhauser, 1979). Brinig and Alexeev (1993) note that, in the states they studied, people seemed to bargain towards a standard custody pattern, with men giving up property until reaching about a 25 per cent custody share, and afterwards ‘paying’ not to have more time with the children. This result seems to be true nationwide (Brinig and Buckley, 1998b) even when state statutes presume an even division of custody (Maccoby and Mnookin, 1992). Child custody adjudications are difficult and, like the termination of parental rights that takes place if parents abuse their children, pose all the economic problems of the rules and discretion debate (Kydland and Prescott, 1977) and the confusion introduced when it is difficult to identify which error is of Type I (Schneider and Brinig, 1996b) (the error the state most wants to avoid).
In relationships with joint custody, child support seems to be easier to collect (Maccoby and Mnookin, 1992; Fox and Kelly, 1993), suggesting that, if the relationship with the non-custodial parent continues to be strong, not only will the hoped-for psychological stability remain, but also the child will be better off financially.
Similarly, although adoption legally terminates relationships with birth parents, many family members seem reluctant to declare the ties severed. Grandparents, for example, are litigating to keep visitation rights at an ever-increasing rate, as are foster parents, natural siblings of the adopted child and even birth mothers (Brinig, 1996). Some of this litigation is no doubt produced by the monitoring problems Weiss and Willis (1985) discuss. Some may be simply an attempt to preserve the family franchise: the reputation and other assets of the extended relationship (Brinig, 1996).References
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