It is no secret that divorces are expensive. Between hiring separate attorneys and dividing assets, to starting over again with a single income, the cost of divorce has increased in the past few years. While divorces are expensive for the parties involved, there are implications for the economy as well. In recent studies, there has been a significant link between divorce rates and economy health. Here is a look at how divorce can directly impact the economy, and where the divorce rate stands today.

Divorce Slows Economic Growth
There are few things than can slow economic growth quite like a high rate of divorce. According to a study performed by the Marriage and Religion Research Institute, marriage is an important contributor to economic growth. Healthy marriages have been proved to promote economic growth, while divorce adversely impacts the economy. Another factor that affects economic growth is the increase of total households. When couples are divorced, more housing, power and resources are required. The more the divorce rate increases, the more adverse the affect on the economy.

Changing Family Formula Driving Down Divorce Rates
A commonly-quoted statistic regarding the topic of divorce is "The divorce rate in the United States is 50% of all marriages." While this information has become common knowledge, is it accurate? It turns out that statement isn't as accurate or telling as the truth itself. Divorce rate is calculated for a number of different groups divided by age, whether this is the person's first marriage, gender and more. The average divorce rate in the U.S. for a first marriage is actually 41%, according to Divorcerate.org. While the average may have been higher at another time, there are some significant factors that may be driving down the average divorce rate in the U.S.

Changing family formulas and dynamics certainly come into play when considering the drop in the divorce rate. Women are largely becoming the breadwinners of their families. It appears the divorce rate is dropping as dual-income families become the norm. Another important aspect of a lower divorce rate is the older average age at which people are now getting married. According to an article written by CNBC.com in March 2012, the average age in 2009 for men to marry was 28, and for women, 26. This is a far cry from the average ages in 1950, which were just 23 for men, and 20 for women. While the divorce rate remains high, it has slightly improved over recent years, and this is believed to a result of people waiting to marry, as well as modernized family restructuring.

How the Divorce Revolution Impacts Growth
With the divorce rate being so high, it has negatively affected America's potential for economic growth. According to an article written by BusinessNewsDaily.com in March 2012, there is no equivalent byproduct of policy change that can wreak havoc on a country's economy quite like the divorce revolution can. Divorce not only affects the individuals involved, it can also deeply hinder a country's ability to climb out of a recession and improve economic growth.

The Bottom Line
While the divorce rate in the U.S. has certainly decreased in recent years, divorce continues to play its part in dragging down the country's economy. With divorce comes the need for more housing, energy, transportation and other important resources. If the changing family dynamic continues to improve divorce statistics, the U.S. may experience the financial benefits that come from a healthy marriage - financial stability over a long period of time.

Related Articles
  1. Economics

    Economist Guide: 5 Lessons Milton Friedman Teaches Us

    Find out what can still be learned from the late economist Milton Friedman, a Nobel prize winner and champion of free market economics.
  2. Economics

    Economist Guide: 3 Lessons Karl Marx Teaches Us

    Read about three lessons that modern economic thinkers can learn from German philosopher Karl Marx, the founding father of communism.
  3. Fundamental Analysis

    The 3 Best Investments When Bull Markets Slow Down

    Find out why no bull market lasts forever, and why investors should shift their assets away from growth and toward dividends when stocks slow down.
  4. Economics

    Industries That Thrive On Recession

    Recessions are not equally hard on everyone. In fact, there are some industries that even flourish amid the adversity.
  5. Economics

    Economist Guide: 3 Lessons Adam Smith Teaches Us

    Learn three critical lessons about economics from 18th century philosopher Adam Smith, considered by many to be the father of economics.
  6. Fundamental Analysis

    How Globalization Affects Developed Countries

    The increase in communications technology has companies competing in a global market.
  7. Term

    What's the Economy?

    The economy is the production and consumption activities that determine how scarce resources are allocated in an area.
  8. Retirement

    How Women In Transition Should Mind Their Finances

    A whopping 70% of female clients leave for a new advisor after the death of their husband or a divorce.
  9. Personal Finance

    Tips for Talking About Money at Every Step of a Relationship

    How much you talk about money differs, depending on the stage of the relationship.
  10. Markets

    What Saudi-Iranian Tensions Mean for Oil Prices

    The recent break in diplomatic relations between Saudi Arabia and Iran adds complications to the already chaotic environment of Middle East geopolitics. 
RELATED FAQS
  1. What's the difference between microeconomics and macroeconomics?

    Microeconomics is generally the study of individuals and business decisions, macroeconomics looks at higher up country and ... Read Full Answer >>
  2. How do you make working capital adjustments in transfer pricing?

    Transfer pricing refers to prices that a multinational company or group charges a second party operating in a different tax ... Read Full Answer >>
  3. How are Social Security benefits calculated for divorced spouse?

    The maximum Social Security retirement benefit payable to a divorced spouse is 50% of the amount that would be paid to the ... Read Full Answer >>
  4. How does divorce affect Social Security benefits?

    If you are eligible to receive Social Security retirement benefits on your own account, your marital status has no impact ... Read Full Answer >>
  5. Can a divorced woman collect Social Security from her ex-husband?

    While a number of conditions must be met, a divorced woman is able to collect Social Security benefits through her ex-husband. ... Read Full Answer >>
  6. What is the utility function and how is it calculated?

    In economics, utility function is an important concept that measures preferences over a set of goods and services. Utility ... Read Full Answer >>
Hot Definitions
  1. Short Selling

    Short selling is the sale of a security that is not owned by the seller, or that the seller has borrowed. Short selling is ...
  2. Harry Potter Stock Index

    A collection of stocks from companies related to the "Harry Potter" series franchise. Created by StockPickr, this index seeks ...
  3. Liquidation Margin

    Liquidation margin refers to the value of all of the equity positions in a margin account. If an investor or trader holds ...
  4. Black Swan

    An event or occurrence that deviates beyond what is normally expected of a situation and that would be extremely difficult ...
  5. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the ...
  6. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
Trading Center