Dnes, Antony W. --- "Marriage Contracts" [2011] ELECD 134; in De Geest, Gerrit (ed), "Contract Law and Economics" (Edward Elgar Publishing, 2011)

Book Title: Contract Law and Economics

Editor(s): De Geest, Gerrit

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781847206008

Section: Chapter 17

Section Title: Marriage Contracts

Author(s): Dnes, Antony W.

Number of pages: 24

Extract:

17 Marriage contracts
Antony W. Dnes


1. Introduction
The growth of divorce, reduction in rates of marriage, growth of cohabita-
tion, delaying marriage to a later age, and similar trends in many societies
have all caused concern in recent years. Families are less stable and this
has implications for the welfare of children.
From an economic perspective, a major issue is the incentive structure
set up by the law of marriage and divorce. The dependency and vulner-
ability of one marriage partner to opportunistic behavior by the other is
foreseeable under current laws, opportunism being defined as self-seeking
with guile (definition of Williamson, 1985, p. 47). This chapter is specifi-
cally concerned with the extent to which laws may have set up incentives
encouraging divorces that would otherwise be avoided and discouraging
marriages that might otherwise have occurred.
Two adverse incentives are of particular interest. Ill-considered financial
obligations may create incentives for a high-earning partner to divorce
a low-earning, or possibly simply ageing, spouse if the law does not
require full compensation of lost benefits. Elsewhere, I have called this
the `greener-grass' effect (Dnes, 1998; Dnes and Rowthorn, 2002). Under
current social conditions and present marital law in most countries, the
greener-grass effect will typically induce wealthy men to abandon poorer
wives. There could also be an incentive for a dependent spouse to divorce
if settlement payments, based on dependency, allow the serial collec-
tion of marital benefits without regard to the costs imposed ...