Research Handbooks in Law and Economics series
Edited by Lloyd R. Cohen and Joshua D. Wright
Chapter 6: Partnering and Incentive Structures
Antony W. Dnes INTRODUCTION The previous fifty years are associated with growth of divorce, decline in marriage, increased unmarried intimate cohabitation, and the delaying of marriage and childbirth to a later age. These and similar trends in many societies have all caused concern in recent years, particularly for the welfare of children. Additionally, there has been recent pressure to extend marriage rights to same-sex couples. All of these changes raise questions in relation to the operation of underlying incentive structures. From an economic perspective, major issues arise concerning the impact of changes in the law of marriage and divorce. Much depends upon the vulnerability of one married or cohabiting partner to opportunistic behavior by the other. This chapter is specifically concerned with the impact on incentives of current socioeconomic and socio-legal changes affecting partnering. Underlying the incentive structures in intimate partnerships, we find a potential problem of exploitation by one partner. This can arise if long-term promises of pecuniary and non-pecuniary support induce detrimental reliance, such as one partner’s giving up work to become a homemaker, in expectation of benefits such as legal or beneficial ownership of property. Under weak enforcement of promises, a high-earning partner could opportunistically promise and then subsequently renege. Easy divorce law, with less-than-expectations damages obligations, can be predicted to create such adverse incentive structures for married partners: a “greener-grass” effect (Dnes 1998; Dnes and Rowthorn 2002) that will typically induce wealthy men to abandon poorer older wives. There could also be an incentive for a...