Show Me the Money! Marriage, Gender & Housing

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Historically, marriage has been more of a contractual arrangement between property owners than a mutual vow between two lovers. All you romantics out there, you’ve had a nice run for the last couple hundred years, but apparently that particular party is over.

One can’t pick up a newspaper in China these days without running across multiple stories involving marriage or divorce, all of which involve spouses (hopefully famous Asian ones!) fighting over assets. One of the reasons for this of course is that Chinese folks have more assets now and are living with a legal system that acknowledges property rights. These are definitely good things.

On the other hand, a lot of weird stuff is knocking about that has distorted what we’d like to think of as the ideal romantic institution of marriage.

Case in point, the One Child Policy. No matter your opinion on the law itself, which was instituted a few decades ago for economic development reasons, the resulting sex-ratio imbalance (roughly 120 men to every 100 women) is well known. It’s possible that this problem is now being remedied, although it’s too soon to tell.

A fascinating article on the One Child Policy, marriage and property appeared in the New York Times a couple of weeks ago. It was penned by economist Robert Frank.  His basic point:

Economics teaches us that when there is excess demand for a good, its price rises.

[ . . . ]

According to market models, the terms of trade in the Chinese marriage market should have shifted sharply in favor of women.

Indeed. You’ve probably read those dire predictions of hordes of unmarried young Chinese males roaming the countryside and making trouble. We haven’t seen that yet, but there definitely have been economic distortions.

So how has this played out? Frank offers up two examples. First, housing:

Because house size is often assumed to be a reliable signal of wealth, a family can enhance its son’s marriage prospects by spending a larger fraction of its income on housing.

Such a shift appears to have occurred.

Anyone who lives in China can tell you about this from an anecdotal basis. A lot of women won’t look twice at a guy these days unless he owns a home and a car. But what about some quantitative evidence? This is interesting:

[W]hen Shang-Jin Wei, an economist at Columbia University, and Xiaobo Zhang of the International Food Policy Research Institute examined the size distribution of Chinese homes, they found that families with sons built houses that were significantly larger than those built by families with daughters, even after controlling for family income and other factors. They also generally found that the higher a city’s male-to-female ratio, the bigger the average house size of families that have sons.

Nifty research, that. Some hard numbers backing up what we already knew, that there is a marriage arms race going on out there, and since housing is probably the most common signal of wealth in China these days, that’s where the buildup is occurring.

The same research also points to a less obvious, but also completely logical, result of the supply glut of potential grooms:

Mr. Wei and Mr. Zhang find evidence that men are more likely to make risky financial investments in cities with higher male-to-female ratios. Their specific finding was that significantly more local businesses are started in such cities.

So not only is the sex-ratio imbalance distorting the property market, but it’s also changing the way that some Chinese men conduct business. Personally, I’d always chalked up the risky nature of China’s small business environment to other factors, never considering that gender issues and marriage might be driving some of those risky new ventures out there.

Marriage is obviously serious business these days, and although cultural factors are key in shaping these relationships, it seems that basic economic principles should not be ignored.

Note that I haven’t even brought up divorce and how these hard-fought assets are being dealt with on the flip side. Those issues are currently being debated by the nation’s legal scholars, and I’ll take a quick look at that debate in a follow-on post.

One response on “Show Me the Money! Marriage, Gender & Housing

  1. S.K. Cheung

    It makes sense that women can be more discerning given the supply/demand dynamics. It would make sense if single men were devoting disproportionately more resources toward material things like a house and a car, as a reflection of their economic status. However, it s surprising that this trend involves the parents of single men. After all, the economic prowess of the parents does not necessarily equate to the economic prowess of the bachelor himself. That said, it is very common for traditional Chinese families to look not only at their daughter’s suitor, but also at his family. I guess this is an extension of that. Sometimes tradition trumps logic.