Monday, October 12, 2009

Sanford Braver on the Economics of Divorce

On Wapiti's recommendation, I checked out Divorced Dads: Shattering the Myths, by Sanford Braver, a psychology professor at Arizona State University. The book examines a number of ways in which family law is heavily biased against fathers, and I hope to review the book in more detail in coming posts; however, the particular data that interested me were those dealing with the economics of divorce.

Chapter four of Divorced Dads deals with the way post-divorce standards of living are calculated. Braver explains that standards of living are calculated as ratios to the poverty level income for a family of a particular composition, and provides the following vignette:

[L]et's make up a hypothetical but typical family and see how divorce might affect their standard of living (the calculations are summarized in Table 4.1 [shown]). Since our sample became divorced in 1987, we will be using 1987 figures throughout the chapter. Later, we'll report the computations on our real families.

Let's assume that Rachel and Jeff have two children. Before divorce, he earned $31,000, while she earned $16,733. Their combined family income was therefore $47,733, 4.14 times the poverty level, giving them an income-to-needs ratio of $4.14 ($47,733 divided by $11.519). they divorce, and Rachel gets custody of the two children. Suppose that after the divorce, Jeff pays $500 per month, or $6000 annually in child support, and Rachel increases her work hours (as most mothers in our sample in fact do) and now earns $20,000. Her combined income including child support she receives is $26,000. Hers is now a one-parent/two-child household; the poverty level for this sort of family is $9,151.

For Rachel's standard of living to remain the same, exactly 4.14 times the poverty level, she would have needed to take in $37,885 ($9,151 x 4.14) in total, in salary and child support. Instead, her income-to-needs ratio is now only 2.84 $26,000 divided by $9,151). So her standard of living is now only 69 percent of what it was (2.84, the post-divorce income-to-needs ratio divided by 4.14, the pre-divorce income to needs ratio); it has declined 31 percent. (If the ratio of post-divorce divided by pre-divorce standard of living is less than 100 percent. (If the ratio of post-divorce divided by pre-divorce standard of living is less that 100 percent, subtract the number from 100 percent to get the percent drop or decline.* If the ratio of post-divorce divided by pre-divorce standard of living is more than 100 percent, subtract 100 percent from the number to get the percent gain.)

Jeff's is now considered a single adult/no children household; the poverty level for him is $5,909. For Jeff's standard of living to stay the same, again exactly at 4.14 times the poverty level, he would need to have $24,463 ($5909 x 4.14) left in income after paying child support. Instead, he actually has a little more, $25,000, left. His income-to-needs ratio is now 4.23 $25,000 divided by $5,909). His standard of living is now 102 percent (4.23 divided by 4.14) of what it was before the divorce, a gain of 2 percent.

Table 4.1: Figuring Rachel & Jeff's Post-Divorce Changes in Standard of Living
Pre-Divorce Salary$31,000$61,733$47,733
Pre-Divorce Needs$11,519
Pre-Divorce Income-to-Needs Ratio4.14
Post-Divorce Salary$31000$20,000
Total Income after Child Support Paid$25,000$26,000
Post-Divorce Needs$5,909$9,151
Post-Divorce Income-to-Needs Ratio4.232.84

Although this method seems fairly straightforward in figuring outhow divorce might affect standards of living, I came to recognize that the method used by Weitzman, and sometimes others (including us) in calculating the "needs adjusted income" was highly misleading and seriously inaccurate for several reasons, which I'll describe in detail next.

Braver goes on to enumerate the difficulties with these calculations:

  • Taxes: Custodial parents enjoy multiple tax advantages that non-custodial parents do not.

    • Dad pays taxes on the child support; Mom does not.

    • Mom gets a tax credit for any child care expenses; Dad does not, even when he must make childcare expenditure during visitation periods.

    • Mom's taxes are calculated from the tables for a "head of household"; Dad's taxes are calculated from the much-higher "single" tables.

    • Mom takes the exemptions and credits for household members; Dad does not. (I should add here that this can be, or used to be, negotiated.)

    • Mom's income-to-family-size ratio might make her eligible for the EITC.

  • Expense Allocation: The needs ratios shown assume that the custodial parent alone spends money on the children, but in fact non-custodial parents almost always make contributions beyond child-support awards.

    • Two-thirds of Dads report buying clothes for their children.

    • Dad bears the visitation expenses. Not just travel expenses, but all the food, recreation, and child-care during visitation periods, during which he is paying twice for the children's upkeep. (This particular injustice was so egregious that child-support tables were recalculated in 1996 to reflect visitation. But the studies of the 1980s that purported to show female post-divorce immiseration did not.)

Braver recalculates the post-divorce standards of living for his typical family after correcting for these factors, and finds that Jeff now suffers a 15 percent drop in his standard of living, while Rachel suffers only a 5 percent drop. But Braver doesn't end here. He enumerates several other expenses that non-custodial parents must endure:

  • Notwithstanding his titular "single" status, Dad must still maintain a residence of sufficient size to accommodate his children during visitation.

  • Dad has no say about where Mom chooses to take the children. If she moves out-of-state, or even out of the country, Dad still bears the transportation expenses for visitation.

  • Dad's are often ordered to pay medical and dental expenses and insurance as part of the divorce decree, independent of child-support awards.

  • Dad usually moves out. Thus Dad must pay for all expenses of setting up a new household. On top of which, he must typically acquire new housing at a much higher price than that which Mom continues to enjoy at the old residence.

Braver brings these revised criteria to his own study with more recent data. He finds that the medium-term economic impact of divorce appears to be evenly distributed between men and women. But he adds an important caveat about the longer term impact:

There are at least two reasons to believe that the earlier we study the economic impact, the more disproportionately disadvantageous to mothers it will appear. Put another way, the longer we wait before assessing teh impact of the divorce, the less it will appear that mothers are disadvantaged. The first reason is that as time goes on, women will progressively upgrade or rehabilitate their education or job skills, earn promotions, and work more hours (as the children age), all of which will help them earn more.

The second factor is remarriage. Statistics show that 75 percent of women and 80 percent of men will remarry, the vast majority within seven years after the divorce. When a woman remarries, she tends to marry someonen who brings substantial income, but relatively few expenses. When a man remarries, however, he tends to marry someone who brings expenses proportinately greater than income. Duncan and Hoffman found that five years after divorce, even the minorithy of women who had not remarried had risen from a 30 percent declind to within six percent of their pre-divorce standard of living, due to their enhanced salary, while those who had remarried now had a living stnadard 25 percent higher than in the year before their divorce.** And Randal Day and Stephen Bahr found that males who remarried suffered a 3 percent decline in per capita family income (compared to their predivorce levels) whiole females experienced a 14 percent increase.

* Braver belabors what appears to be pretty elementary math because this was exactly how Weitzman screwed up her study. As she later admitted (and blamed a grad student for), her "74 percent decline" in a woman's living standards was actually a 26 percent decline.

** My impression is that these values were calculated using the methods of Table 4.1. Using Braver's revised criteria, I would assume that the disparity would be even more dramatic.


Trumwill said...

Dad has no say about where Mom chooses to take the children. If she moves out-of-state, or even out of the country, Dad still bears the transportation expenses for visitation.

I've heard this, but I'm not sure how true it is. My cousin's ex-wife wanted to relocate to a neighboring state but the judge wouldn't let her do it unless she were willing to give up primary custody of their son. This was in the early nineties, I think.

Φ said...

Fair enough. Perhaps it varies by state, or has changed in the last decade. In the early eighties, however, there was no legal recourse.

trumwill said...

That's probably right. I remember when my ex cous-in-law was prevented by the judge from moving, our reaction was "Wait, a judge can do that?" I think that was her reaction, to. I think that she more-or-less felt entitled.

Another thing: If the guy remarries, she is not likely to earn as much as him, but the household gets income from child support (and they combined get the attendant tax breaks, right? Though not always the case, in most cases of divorce-and-remarriage that I'm familiar with (with kids involved), the next spouse has kids of their own.

Seems to me that if you have two men that make 60k a year and each have two kids and the wives each go on to make 30k a year, you're about breaking even. Rarely is it going to be the case that all things are going to be that equal, but then you then have winners and losers depending on the amount of income and the child support arrangements of the successor spouses that tilt things in one way or the other.

(I neither agree nor disagree with the position that men are generally disadvantaged in the case of divorce. Probably true, though I don't really know enough to know and in the ways that matter I don't think there are any winners. And I suspect that even if it does tilt towards men - or women - that it's the sort of thing that varies from circumstance to circumstance.)

Φ said...

I neither agree nor disagree with the position that men are generally disadvantaged in the case of divorce.

This is an empirical question. Public policy assumes that women are immiserated by divorce, which is how it justifies (officially, at any rate) the endless punitive measures taken against divorced men. Braver conclusively demonstrates that the assumption is wrong.

trumwill said...

To the extent that the assumption is wrong, it is wrong in part because of these measures, no? In other words, the assumption that justifies the laws is valid (that absent policy measures women will be significantly harmed by divorce), but the laws themselves overcompensate.

trumwill said...

Regarding why I'm not taking a position on something factual in nature, it's because all I know is what you've passed along. It sure does sound convincing, but I haven't done any looking into it myself. For all I know, the second I say "This proves it!" someone else will come along and say "But that's only if the numbers are counted this way. If counted this other way, not addressed in what you've read so far, it's different!" So in cases like this, I've found that it's better to sidestep the larger truth, which I don't have a claim to know about other than what I've just been told, and focus on smaller tidbits.

Φ said...

Braver worked with 1987 data, i.e. before the welfare reform act, for instance.

But if we want to keep this at a philosophical level, then let's address this: if, in fact, women are requesting divorces for non-forensic reasons (as today's post demonstrates), then why shouldn't women bear the economic consequences of those decisions? Why should the state give rights and priviledges to women in the process of breaking a contract that it doesn't give to women who fulfill a contract?

Trumwill said...

If a woman does initiate the divorce (and not because she's being beaten or whatever), I don't really have a problem with her facing the brunt of the economic consequences. I also don't want to say, however, that because women initiate divorce 2/3 of the time that women as a class should pay the price.

That brings us back to No Fault Divorce, a subject in which we are on relative agreement.