Increasing Income Inequality Tied to Marrying Similar Partners

Income disparities among American households have increased by nearly a quarter since the 1960s. Scientists have discovered a phenomenon that explains this change. Contrary to other studies, it is not about the proliferation of online dating services.

Despite the saying that opposites attract, marriages are increasingly being formed between individuals who are similar in many respects. Scientists call this phenomenon "assortative mating".

Economists have known for at least a decade that such assortative mating fosters income inequality between married couples. It's easy to understand why this happens. The difference in total income between a household consisting of two well-earning individuals and a household of two low-wage earners is more significant than the difference between families in which one person earns a lot and the other earns little.

According to one hypothesis, the intensification of assortative mating is due to the proliferation of dating services. In 1998, only 2% of marriages met online. A decade later, this percentage was 20%, and in 2017 it reached 50%. This means that dating services have become the dominant way to initiate relationships.

In a research paper published in mid-September, three American economists argue that this hypothesis is not supported by the data. According to Anton Cheremukhin from the Federal Reserve Bank of Dallas, Paulina Restrepo-Echavarria from the Federal Reserve Bank of St. Louis, and Antonella Tutino from Haverford College, assortative mating indeed intensified in recent decades and contributed to income inequality, but this largely occurred before the advent of dating services.

The authors of the new study calculate that in the U.S., income inequality between households formed by married couples (traditional) has increased by nearly 25% since the 1960s. The Gini coefficient, a popular measure of inequality, increased from around 0.25 to 0.31 (the extreme value is 1.00). Initially, however, as economists' simulations suggest, inequalities would have grown similarly if couples had randomly paired off. It was only later, after 1980, that inequality increased due to the more selective (assortative) nature of marriage. What were the sources of this phenomenon?

Economists, based on data from censuses and extensive surveys (covering even 5% of the U.S. population), noticed that over the past decades, the preferences of those seeking a partner have clearly changed. However, this happened before 2008, which is the period of rapid development of online dating services.

Racial preferences are horizontal (meaning participants in the marriage market look for people who are similar to them in this respect - editor), preferences regarding education level and age are moderately horizontal, while preferences regarding income level and skill level are decidedly vertical (participants look for partners with higher incomes and qualifications than their own - editor), the article states. From 2008 to 2021, these preferences changed minimally, but compared to the 1960s and 1980s, horizontal preferences have increased, particularly concerning income and skills, the authors note.

In short, marriages are now more often formed between similar individuals in many areas. According to the three economists, this change raised the Gini coefficient by about 0.03, accounting for roughly half of the increase in income inequality in the U.S. The most significant contribution to this was the change in potential partners' preferences concerning education and skill level (measured in the study based on the job held) and then concerning income and age.

The findings of Cheremukhin and his co-authors suggest that preferences have changed mainly due to women's emancipation. In the past, women preferred men with higher education levels, but today, they seek men with higher incomes and skills but similar education levels. Traditionally, men sought "housewives," partners with lower status regarding education, skills, and income. However, the increase in the percentage of educated and working women means fewer such partners are now in the marriage market. As a result, the way couples match has changed: couples are more often formed by individuals similar in education and other long-term income-affecting traits.

Why didn't dating services have at least an equally significant impact on this market?

According to economists, these services reduced the costs of searching for partners, which theoretically could make it easier for similar people to pair off. In practice, however, human cognitive abilities are the limiting factor. While technological advancements have increased the choice of potential partners, people's ability to process this information has not increased.