Marriage rates have declined. Cohabitation rates are up. There’s another social change less spoken about. Fewer people than ever are matching up at all. Sean Elliott, a PhD candidate with the Department of Economics took a close look at data that captures the changing nature of happily ever after. The applied econometrician applied his research toolkit to understanding what amateur observers might call a romance shortage. Ironically, he used a methodology best known in industrial organization that sounds like it could be the framework for a dating app, but isn’t, called dynamic discrete choice econometrics. Unlike other research models, this one enabled Elliott to estimate the payoffs and costs of being in a relationship separately.
“The question was what theoretical framework do we have to address all these changes simultaneously? It turns out there isn’t a great one that exists,” Elliott explained. “So, I proposed a new one, a dynamic model that explains why fewer matches are formed even as those that do persist are more stable. I take it to the data and show that people have been enjoying their matches more, but entry costs have also been rising substantially, creating frictions that prevent matching.”
According to Elliott’s results, captured in the paper Marriage, Cohabitation, and Separation: A Dynamic
Approach to the Second Demographic Transition, financial stability and housing availability are all slowing the coupling vibe. Marriage stability is supporter by the higher economic benefits of the relationship while cohabitation stability is supported by the higher costs of breaking up. Major financial events and housing policy changes coincide with data that shows increases in the stability of these relationships, as well as the trend to remain single.
“Following the financial crisis of 2008, there’s really a lot to explain what’s happening, but the thing I look at most closely is housing,” Elliott said. “People wonder, ‘Why aren’t young people getting married?’ and, well, it’s because they can’t get out of their parents’ basement. They can’t afford a home, and often the rental market is prohibitively expensive. They just don’t have access to housing that would enable them to form a family.”
There is another challenge to getting out of the basement. People with lower levels of education are more likely to stay single.
“If you are a highly educated individual, your marriage market experience has changed substantially less over the last 40 years relative to someone with lower levels of education,” Elliott said.
In other words, an expensive housing market makes it harder to enter marriage, but it also keeps couples living together. If it’s too expensive to buy or rent, singles have no incentive to leave their current living situations, whether that’s the stereotypical parents’ basement, or a shared house with room mates splitting the bills.
“I ran a counterfactual where I fixed home prices at 2010 levels,” Elliott said.” You’d get about 20% more marriages, but also more divorces. While housing costs clearly affect entry and exit, the overall stock of marriages doesn’t change much because inflows and outflows offset each other.”
However, Elliott notes, there is now less difference in relationship longevity between married and cohabitating couples.
“Twenty or thirty years ago, cohabitation was a very tenuous type of relationship that wasn’t expected to last long term,” he said. “Now, it’s an alternative to marriage, and people are finding it harder to leave cohabiting relationships.”
While no one has recommended changing the marriage vow from ‘for as long as we both shall live’ to ‘as long as we have a place to live,’ this research suggests that is what the real estate markets have decreed is the new happily ever after.
“Yes,” Elliott said, “expensive housing makes it harder to enter marriage, but it also keeps couples together.”
What Elliott’s research approach might lack in romance, it makes up for in sound methodology.
“Sean combines the rigor of structural econometrics with an eye for real-world relevance,” said Professor Marcin Pęski, Elliott’s thesis advisor. “By modeling how people form and dissolve relationships in a changing economic environment, he explains key shifts in marriage, cohabitation, and fertility. This agenda connects demography, economics, and policy. And it promises to redefine how economists think about the family.”
It’s an approach Elliott is already ensuring economists of the future will be able to access. He has taught ECO372, Data Analysis and Applied Econometrics in Practice, three times. The course offers an introduction to causal inference for third and fourth-year students
“We assume they know basic econometrics and statistics and then show them how economists use these tools to answer causal questions,” Elliott said. “Teaching the course multiple times gives you a sense of what works and what doesn’t. It’s individual. What works for me might not work for someone else, which is how I approach teaching in general.”
Return to the Department of Economics website.
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