The Economics of a Successful Marriage

These econ theories keep giant corporations afloat—why not marriages?

Does economics apply to marriage—and even help make it successful? We're not talking about cash flow here; we're talking about economic theories.

In many ways, marriage is like a business arrangement. Think about it: Two people get a license, make an agreement, and pool their resources toward a common goal. They make a verbal contract that states that both parties are committed to making it work ("for richer, for poorer, in sickness and in health," or words to that effect) and put in a large initial investment with hopes for great returns over time. Granted, there are other elements involved, but it's not too great a leap to think that marriage might benefit from smart economic principles just as traditional businesses do.

Key Takeaways

  • Marriage may benefit from applying economic principles that help make traditional businesses successful.
  • Principles such as moral hazard, loss aversion, game theory, and thinking at the margin can all be applied to relationships to help make them stronger.
  • It's important to keep in mind that human behavior is influenced by additional factors, including context, emotional states, and the tendency to live in the moment.

Cost-Benefit Analysis

In marriage, many decisions—from tiny to life-altering—need to be made. One tool to help your decision-making: cost-benefit analysis. The idea is to weigh the marginal cost of doing something against the benefit that you would receive from it.

Consider this example of low cost, high benefit. As foodies, you and your spouse agree to put $30 aside each week for regular date nights at new restaurants. If the amount you're saving isn't a hardship and it means you regularly spend time together in a mutually enjoyable pursuit, the benefit of strengthening the bonds of your marriage far outweighs the cost.

Now think about your spouse's annoying habit of leaving the toilet seat up. Is the cost of nagging them about it worth the potential benefit to you? Cost-benefit analysis in instances like this can help you let go of things in your relationship that cost more than they are worth and learn to choose the battles that are most important to you (which is not necessarily the same as what's important to your spouse, of course).

Moral Hazard (Too Big to Fail)

Remember when organizations like Fannie Mae, Freddie Mac, AIG, and Bear Stearns were deemed by the federal government to be too important to be crushed by the economic crisis of 2007-09? We know where "too big to fail" led to big bailouts. The moral hazard theory is that those who feel there are no consequences—that is, someone else will bear the cost—take unnecessary risks.

In a marriage, operating according to moral-hazard principles can lead to taking your spouse for granted. Think of the possible consequences before you decide to pursue an "innocent" Facebook relationship with that college sweetheart you re-met at your recent reunion. Stay invested in your current relationship if you want to stay out of divorce court. In marriage, there's no such thing as a bailout.

Loss Aversion

The idea behind loss aversion is that the experience of a loss has a greater psychological impact than the experience of a gain of equal value. What does that mean in the real world? The regret you feel if you lose a $20 bill is posited as more painful than the pleasure of finding $20 on the sidewalk.

One realm in which this behavioral tenet might play out in a marriage is in sticking with the status quo. Research has shown that when presented with a choice of doing something or doing nothing, people will choose to do nothing if it will maintain the status quo. With loss aversion, you might stick with the status quo because what you might lose by taking steps to make a change looms larger than what you think you might gain.

Let's say you and your spouse are arguing over how you'll spend your vacation. You want to go to the same beach cottage you've been renting for the past six years, but your spouse wants to go to the mountains this year. She has found a cabin near a lake that would cost the same, and it's the same driving distance from your home. Discussing your different desires, acknowledging your concerns about what you fear you might lose, and hearing about the attractions at the mountain retreat may help you come to see that the new plan—and your spouse's happiness in undertaking it—outweighs your loss aversion.


Businesses use incentives to motivate behavior all the time, whether it's sales bonuses for employees or interest-free balance transfers for credit card users. The obvious reason they're used is that incentives motivate people's behavior.

But they have to be the right incentives. Thanking your spouse for doing the dishes or taking the dog for a walk makes them feel good about themselves and their behavior. Kindness and gratitude go a long way toward greasing the wheels of a smoothly running marriage. Planning a terrific dinner out as a reward for doing something tiresome and time-consuming like finally cleaning out the garage together is another example.

Game Theory

How do we make decisions in strategic situations? That's what game theory is all about. It's not only useful as a concept on the world stage between nations bent on defending their own interests. According to game theory, two (or more) parties interested in their own gain but forced to deal with an "other" can engage either in cooperation, where they work together to come to a reasonable solution, or noncooperation, where it's basically everyone out for themselves.

In a marriage, you're often confronted with similar choices. You want what you want, regardless of what your partner wants, and you'll stick to that position no matter what (that's the noncooperative attitude). Of course, cooperating is the better option, but it's often very tempting to dig in. Game theory teaches that what you should strive for is the best possible result under the circumstances—which is not the same as the best results for you. There is no independent "best" choice that you can make, as best doesn't depend on you alone. After all, your spouse has their wishes, too, and they have to be taken into consideration.

How to do that? Paula Szuchman, co-author of It's Not You, It's the Dishes: How to Minimize Conflict and Maximize Happiness in Your Relationship, suggests three game-theory strategies when you find yourself in conflict with your spouse:

  • Think ahead. Consider how your spouse will react to what you plan to do or say. How should that reaction guide your behavior at this moment?
  • What was your spouse's past reaction? When you did or said what you are about to do or say, how did your spouse respond? What can you do now that is different in order to produce a different outcome?
  • Put yourself in your spouse's place. What would they do in this circumstance?

In a marriage, you must learn to pick your battles and let go of things that cost more than they are worth.

These strategies should help you find an alternative to the one-upmanship and standoffs that most married couples find themselves in from time to time.

Think at the Margin

Change can be scary, but life is all about change and moving forward. When you think at the margin, you consider your next step—what you should do right now.

Microeconomics stresses the benefits of very small changes. Let's say your spouse is upset that you never help with the kids. If you make one little change, like getting them ready for bed a couple of times a week, the cost of this change—perhaps an hour or two a week—is small compared to the benefits of a happier spouse. It's another example of the value of cost/benefit analysis, the theory we started with.

The Bottom Line

The economic approach to marriage might not be the most romantic option, but it does provide an alternative framework for managing your relationship. Just keep in mind that our behavior doesn't always hew to the rational, or even to our own best interests, according to behavioral economics, a study of psychology as it relates to the financial decision-making processes of individuals and institutions.

We tend to live in the moment, resisting change, affected by our physiological and emotional states. We're also not very good at predicting our future behavior, and our thinking is influenced by incomplete knowledge and the context in which we make a decision. Still, if theories like the ones listed here can keep multimillion-dollar corporations afloat, it's certainly worth trying them out to increase the odds of wedded bliss.

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  1. Behavioral "Loss Aversion."

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