Marriage – a mutual insurance system?

marriage

Marriage may not always be as romantic as it appears. Especially if you ask economists.

Rosenzweig & Stark (1989) show that in rural India marriages sometimes act as a mutual insurance systems for family members. This is because in rural towns  income is often based on agriculture, which is dependent on weather. Thus, families live more distant from one another so as to reduce the correlation between rainfall (or other factors, like political turmoil, etc). If something happens in one place (e.g. flood), then at least the other place will most likely still be OK. This means that the other place can send remittances to the worse-off family members (‘interhousehold financial transfers’) to ensure financial stability, in essence pooling risk.

Not sure how relevant this currently is…but still it’s an interesting thought!

—-

Consumption Smoothing, Migration, and Marriage: Evidence from Rural India, by Mark R. Rosenzweig and Oded Stark

The Journal of Political Economy © 1989 The University of Chicago Press.

Advertisements

Leave a comment

Filed under Uncategorized

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s