Tuesday, June 22, 2010

Save if you're glad to be gay

There are a small number of papers on economic aspects of sexual orientation, mostly looking at the effects on earnings but there are also papers on patterns of home ownership and the division of labour within the household. A new paper looks at the effects on savings. The results are, perhaps, unsurprising but interesting nonetheless. Part of the effect may be due to the fact that homesexual couples are more likely to be cohabiting since marriage is not an option: essentially they have to have more precautionary savings. If civil partnership is introduced, as is being discussed in Ireland, this would presumably lessen this effect.

Sexual Orientation and Household Savings: Do Homosexual Couples Save More?
Negrusa, Brighita & Oreffice, Sonia

We analyze how sexual orientation is related to household savings using 2000 US Census data, and find that gay and lesbian couples own significantly more retirement income than heterosexuals, while cohabiting heterosexuals save more than their married counterparts. In a household savings model, we interpret this homosexual-specific differential as due to the extremely low fertility of same-sex couples, in addition to the precautionary motives driving cohabiting households to save more than married ones. Evidence from homeowners' ratio of mortgage payments to house value exhibits the same pattern of savings differentials by sexual orientation and cohabiting status.


Gerarard O'Neill said...

I have to admit I'm a bit conflicted on the savings issue. Should we be encouraging people to save more? It means the banks have more money to lend to businesses after all. Or should we be encouraging them to save less? More consumer spending could be just what the country needs.

But unfortunately I don't think civil partnership legislation will have any impact on savings habits one way or another. Why? It seems that:

"If you're in a male same-sex marriage, it's 50 percent more likely to end in divorce than a heterosexual marriage. If you're in a female same-sex marriage, this figure soars to 167 percent."

From the ever insightful 'Barking up the wrong tree': http://www.bakadesuyo.com/what-really-predicts-divorce

Kevin Denny said...

I wasn't being normative Gerard: I am assuming gays, like everybody else, can decide for themselves how much they should save.
So the question is: will allowing gays to regularize their unions make them save a bit less? My interpretation of the evidence is yes although probably not enough to make the banks notice. After-all, they won't all get divorced.