Marrying for money

Zoomer | May 4th, 2006

A person who is married accumulates nearly twice as much personal wealth as a person who is single or divorced, according to a study at Ohio State University.

And those who divorce lose about 77 per cent of their personal net worth, said the study which provided yet more evidence of the devastating financial toll divorce can have on personal wealth.

“If you really want to increase your wealth, get married and stay married,” said Jay Zagorsky, study author and research scientist at Ohio State University’s Center for Human Resource Research. “On the other hand, divorce can devastate your wealth.

The study, published in the Journal of Sociology, tracked the wealth and marital status of 9,055 people from 1985 to 2000. The participants are now 41 to 49 years-old, making them the youngest of the baby boomers. Experts caution that the results could be different for both older and younger Americans, who have different attitudes about marriage, divorce and living together without marriage.

The study also found that married people accumulated wealth much faster, amassing 93 per cent more than single or divorced ople over the life of the study. Wealth was defined as the total value of a person’s assets, such as real estate, stocks and bank accounts, minus liabilities such as mortgages.

And while the data did not provide explanations as to why marriage helps to build wealth so dramatically and divorce, on the other hand, to devastate it, sociological research offers some potential clues.

A big reason married people accumulate more wealth than others is simple economies of scale – one household is cheaper to maintain than two, said Zagorsky.

Divorce reverses these benefits, he said.

David Popenoe, co-director at the National Marriage Project at Rutgers University told the Associated Press that people become more economically productive after they marry.

“They work harder, they advance further in their job, they save more money, and maybe invest more wisely,” Popenoe said. “That’s because, one can speculate, they are now working for something larger than themselves. They are working for a family.”

A Canadian study, conducted by Decima Research, showed that divorce is the most financially expensive event that can happen in a person’s life. Respondents reported that because of their divorce:
o 35 per cent had to go into debt
o 22 per cent had to seek financial support from family and friends
o 28 per cent had to sell household items or personal assets
o 27 per cent had to redeem financial investments.