Skip to main content
SpringerLink
Log in

The Role of Cohabitation in Asset and Debt Accumulation During Marriage

  • Original Paper
  • Published:
Journal of Family and Economic Issues Aims and scope Submit manuscript

Abstract

Research has found that married individuals who cohabited only once before marriage with their future spouse (i.e., “spousal cohabiters”) have a distinctive financial advantage: they accumulate more wealth over time than individuals who married without ever cohabiting (i.e., “directly married”). Using the National Longitudinal Survey of Youth 1979 and growth curve models, the present study attempts to identify the source of spousal cohabiters’ wealth advantage. We find that marriage is associated with gains for financial and nonfinancial wealth, increasing home equity, and decreasing debt over time. Spousal cohabiters begin marriage with more debt than the directly married. Conditional on education, income, and other key factors, spousal cohabiters pay down their debt faster and generate greater home equity over time thereby accumulating more wealth than the directly married. This pattern of financial behavior among spousal cohabiters explains some, but not all, of their financial advantage over married persons who never cohabited prior to marrying. Given the increasing prevalence of cohabitation among young adults, these results offer important insights into the long-term economic outcomes associated with premarital cohabitation.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1

Similar content being viewed by others

Notes

  1. The NLSY79 did not collect wealth data until 1985. Compared to post-1985 marriages, respondents in pre-1985 marriages grew up in less educated and lower income households. At marriage, they were younger, had less cohabitation experience, and were less likely to have had a nonmarital birth. They also had lower incomes and were less likely to own a home or have more than a high school education. Excluding these marriages likely biased results upward because the sample omitted marriages with lower wealth potential.

  2. With this measure, we focused on consumer debt and excluded debt with investment qualities (e.g., student loans, home mortgages).

  3. This variable is excluded from the models for financial wealth and personal debt as these variables focus on liquid assets and debts.

  4. In a supplemental analysis of the directly married and spousal cohabiters, we examined respondents’ age at union formation rather than age at marriage to better account for cohabiters’ longer coresidence with their partner. Results were equivalent so we present results using age at marriage with the full sample.

  5. Results were robust when we substituted respondents’ education for the household-level measure.

  6. Missingness was most common for the financial variables in our models. For the outcome variables, between 22 and 23 % of the person-year sample was missing on at least one of the four measures. Family income (29 %) and the amount of inheritance received (24 %) had similar levels of missingness as the outcome variables. We imputed 5 datasets for each model using SAS Proc MI and SAS Proc Mixed. We obtained our final results using SAS Proc MIAnalyze. Results were equivalent to those returned by listwise deletion.

  7. The rate of growth for marital financial wealth among the directly married with one nonmarital birth is also positive. In this instance, marital financial wealth is associated with a significant increase of 0.3 % [=e0.006−0.0037 – 1] per year of marriage ($1,617 in whole dollars).

  8. For clarity in the graphs, we only present predicted values for spousal cohabiters because they are the only cohabitation history that consistently differs from the directly married.

References

  • Avellar, S., & Smock, P. J. (2005). The economic consequences of the dissolution of cohabiting unions. Journal of Marriage and Family, 67, 315–327. doi:10.1111/j.0022-2445.2005.00118.x.

    Article  Google Scholar 

  • Avery, R. B., & Rendall, M. S. (2002). Lifetime inheritances of three generations of whites and blacks. American Journal of Sociology, 107, 1300–1346. doi:10.1086/344840.

    Article  Google Scholar 

  • Axinn, W.G. & Barber, J.S. (1997). Living arrangements and family formation attitudes in early adulthood. Journal of Marriage and Family, 59(3), 595–611. http://www.jstor.org/stable/353948.

    Google Scholar 

  • Axinn, W. G., & Thornton, A. (1992). The relationship between cohabitation and divorce: Selectivity or causal influence? Demography, 29(3), 357–374. doi:10.2307/2061823.

    Article  Google Scholar 

  • Bauman, K. J. (1999). Shifting family definitions: The effect of cohabitation and other nonfamily household relationships on measures of poverty. Demography, 36(3), 315–325. doi:10.2307/2648055.

    Article  Google Scholar 

  • Bernstein, D. (2004). Household debt and IRAs: Evidence from the survey of consumer finances. Financial Counseling and Planning, 15(1), 63–72.

    Google Scholar 

  • Beverly, S. G., McBride, A. M., & Schreiner, M. (2003). A framework of asset-accumulation stages and strategies. Journal of Family and Economic Issues, 24(2), 143–156. doi:10.1023/A:1023662823816.

    Article  Google Scholar 

  • Blau, F. D., & Graham, J. W. (1990). Black-white differences in wealth and asset composition. Quarterly Journal of Economics, 105(2), 321–339. doi:10.2307/2937789.

    Article  Google Scholar 

  • Blumstein, P., & Schwartz, P. (1983). American couples. New York: William Morrow and Co.

    Google Scholar 

  • Brines, J., & Joyner, K. (1999). The ties that bind: Principles of cohesion in cohabitation and marriage. American Sociological Review, 64(3), 333–355. http://www.jstor.org/stable/2657490.

  • Brown, S., & Booth, A. (1996). Cohabitation versus marriage: A comparison of relationship quality. Journal of Marriage and Family, 58, 668–78. http://www.jstor.org/stable/353727.

    Google Scholar 

  • Bumpass, L., & Lu, H.- H. (2000). Trends in cohabitation and implications for children’s family contexts in the United States. Population Studies, 54, 29–41. doi:10.1080/713779060.

    Article  Google Scholar 

  • Burgoyne, C. B., & Morison, V. (1997). Money in remarriage: Keeping things simple—and separate. Sociological Review, 45(3), 363–395. doi:10.1111/1467-954X.00069.

    Article  Google Scholar 

  • Burgoyne, C. B., Reibstein, J., Edmunds, A., & Dolman, V. (2007). Money management systems in early marriage: Factors influencing change and stability. Journal of Economic Psychology, 28, 214–28. http://dx.doi.org/10.1016/j.bbr.2011.03.031.

    Google Scholar 

  • Campbell, L. A., & Kaufman, R. (2006). Racial differences in household wealth: Beyond black and white. Research in Social Stratification and Mobility, 24, 131–152. http://dx.doi.org/10.1016/j.bbr.2011.03.031.

  • Cherlin, A. (2004). The deinstitutionalization of American marriage. Journal of Marriage and Family, 66(4), 848–861. doi:10.1111/j.0022-2445.2004.00058.x.

    Article  Google Scholar 

  • Cohen, P. N. (2002). Cohabitation and the declining marriage premium for men. Work and Occupations, 29(3), 346–363. doi:10.1177/0730888402029003004.

    Article  Google Scholar 

  • Conley, D. (1999). Being black, living in the red. Berkeley, CA: University of California Press.

    Google Scholar 

  • DeLeire, T., & Kalil, A. (2005). How do cohabiting couples with children spend their money? Journal of Marriage and Family, 67, 286–295. doi:10.1111/j.0022-2445.2005.00116.x.

    Article  Google Scholar 

  • Dew, J. (2007). Two sides of the same coin? The differing roles of assets and consumer debt in marriage. Journal of Family and Economic Issues, 28, 89–104. doi:10.1007/s10834-006-9051-6.

    Article  Google Scholar 

  • Dew, J. (2008). The relationship between debt change and marital satisfaction change in recently married couples. Family Relations, 57(1), 60–71. doi:10.1111/j.1741-3729.2007.00483.x.

    Article  Google Scholar 

  • Dush, C. M. K., Cohan, C. L., & Amato, P. R. (2003). The relationship between cohabitation and marital quality and stability: Change across cohorts? Journal of Marriage and Family, 65(3), 539–549. doi:10.1111/j.1741-3737.2003.00539.x.

    Article  Google Scholar 

  • Ferber, R., & Lee, L. C. (1980). Asset accumulation in early married life. Journal of Finance, 35(5), 1173–1188. http://www.jstor.org/stable/2327092.

    Google Scholar 

  • Finke, M. S., Huston, S. J., & Sharpe, D. L. (2006). Balance sheets of early boomers: Are they different from pre-boomers. Journal of Family and Economic Issues, 27, 542–561. doi:10.1007/s10834-006-9026-7.

    Article  Google Scholar 

  • Grinstein-Weiss, M., Hun Yeo, Y., Zhan, M., & Charles, P. (2008). Asset holding and net worth among households with children: Differences by household type. Children and Youth Services Review, 30, 62–78. http://dx.doi.org/10.1016/j.bbr.2011.03.031.

  • Hao, L. (1996). Family structure, private transfers, and the economic well-being of families with children. Social Forces, 75(1), 269–292. doi:10.1093/sf/75.1.269.

    Google Scholar 

  • Heimdal, K. R. (2008). “Investing in the relationship: Financial arrangements and kin relations among cohabiting and married couples.” Dissertation, The Ohio State University, Columbus, OH.

  • Heimdal, K. R., & Houseknecht, S. H. (2003). Cohabiting and married couples’ income organization: Approaches in Sweden and the United States. Journal of Marriage and Family, 65, 525–538. doi:10.1111/j.1741-3737.2003.00525.x.

    Article  Google Scholar 

  • Hirschl, T. A., Altobelli, J., & Rank, M. (2003). Does marriage increase the odds of affluence? Exploring the life course probabilities. Journal of Marriage and Family, 65, 927–938. doi:10.1111/j.1741-3737.2003.00927.x.

    Article  Google Scholar 

  • Holden, K. C., & Kuo, D. H. (1996). Complex marital histories and economic well-being: The continuing legacy of divorce and widowhood as the HRS cohort approaches Retirement. Gerontologist, 36, 383–390. doi:10.1093/geront/36.3.383.

    Article  Google Scholar 

  • Keister, L. A. (2000a). Race and wealth inequality: The impact of racial differences in asset ownership on the distribution of household wealth. Social Science Research, 29, 477–502. http://dx.doi.org/10.1016/j.bbr.2011.03.031.

  • Keister, L. A. (2000b). Wealth in America. New York: Cambridge University Press.

    Book  Google Scholar 

  • Keister, L. A. (2003). Religion and wealth: The role of religious affiliation and participation in early adult asset accumulation. Social Forces, 82(1), 173–205. doi:10.1353/sof.2003.0094.

    Article  Google Scholar 

  • Kenney, C. T. (2004). Cohabiting couple, filing jointly? Resource pooling and U.S. poverty policies. Family Relations, 53(2), 237–247. doi:10.1111/j.0022-2445.2004.00014.x.

    Google Scholar 

  • Krivo, L. J., & Kaufman, R. L. (2004). Housing and wealth inequality: Racial-ethnic differences in home equity in the United States. Demography, 41(3), 585–605. http://dx.doi.org/10.1016/j.bbr.2011.03.031.

  • Lerman, R. I. (2002). How do marriage, cohabitation, and single parenthood affect the material hardships of families with children?. Washington, DC: Urban Institute.

    Google Scholar 

  • Lichter, D. T., & Qian, Z. (2008). Serial cohabitation and the marital life course. Journal of Marriage and Family, 70, 861–878. doi:10.1111/j.1741-3737.2008.00532.x.

    Article  Google Scholar 

  • Lichter, D. T., Qian, Z., & Mellott, L. (2006). Marriage or dissolution? Union transitions among poor cohabiting women. Demography, 43, 223–240. doi:10.1353/dem.2006.0016.

    Article  Google Scholar 

  • Lupton, J. P., & Smith, J. P. (2003). Marriage, assets, and savings. In S. A. Gorssbard-Shechtman (Ed.), Marriage and the economy (pp. 129–152). New York: Cambridge University Press.

    Chapter  Google Scholar 

  • McNamee, S. J., & Miller, R. K., Jr. (1998). Inheritance and stratification. In R. K. Miller Jr & S. J. McNamee (Eds.), Inheritance and wealth in America (pp. 193–213). New York: Plenum Press.

    Google Scholar 

  • Murphy, R. G. (1998). Household debt and consumer spending. Business Economics, 33, 38–42.

    Google Scholar 

  • Nock, S. L. (1995). A comparison of marriages and cohabiting relationships. Journal of Family Issues, 16(1), 53–76. doi:10.1177/019251395016001004.

    Article  Google Scholar 

  • Oliver, M. L., & Shapiro, T. M. (2006). Black wealth/white wealth. New York: Routledge.

    Google Scholar 

  • Oppenheimer, V. K. (2003). Cohabitation and marriage during young men’s career-development process. Demography, 40, 127–149. doi:10.1353/dem.2003.0006.

    Google Scholar 

  • Oropesa, R. S., Landale, N. S., & Kenkre, T. (2003). Income allocation in marital and cohabiting unions: The case of mainland Puerto Ricans. Journal of Marriage and Family, 65(4), 910–926. doi:10.1111/j.1741-3737.2003.00910.x.

    Article  Google Scholar 

  • Peterson, C. L. (2004). Taming the sharks: Towards a cure for the high-cost credit market. Akron, OH: University of Akron Press.

    Google Scholar 

  • Pollak, R. A. (1985). A transaction cost approach to families and households. Journal of Economic Literature, 23(2), 581–608. http://www.jstor.org/stable/2725625.

    Google Scholar 

  • Prelec, D. & Loewenstein, G. (1998). The red and the black: Mental accounting of savings and debts. Marketing Science, 17(1), 4–28. http://www.jstor.org/stable/193194.

    Google Scholar 

  • Raudenbush, S. W., & Bryk, A. S. (2002). Hierarchical linear models: Applications and data analysis methods. Thousand Oaks, CA: Sage Publications.

    Google Scholar 

  • Schoen, R., & Owens, D. (1992). A further look at first unions and first marriages. In S. South & S. Tolnay (Eds.), The changing American family: Sociological and demographic perspectives (pp. 109–117). Boulder, CO: Westview Press.

    Google Scholar 

  • Schoen, R., Landale, N. S., & Daniels, K. (2007). Family transitions in young adulthood. Demography, 44(4), 807–820. doi:10.1353/dem.2007.0044.

    Article  Google Scholar 

  • Schramm, D. G., Marshall, J. P., Harris, V. W., & Lee, T. R. (2005). After ‘I Do’: The newlywed transition. Marriage and Family Review, 38(1), 45–67. doi:10.1300/J002v38n01_05.

    Article  Google Scholar 

  • Singer, J. D., & Willett, J. B. (2003). Applied longitudinal data analysis: Modeling change and event occurrence. New York: Oxford University Press.

    Google Scholar 

  • Smock, P. J., Manning, W. D., & Porter, M. (2005). Everything’s there except money: How money shapes decisions to marry among cohabiters. Journal of Marriage and Family, 67, 680–696. doi:10.1111/j.1741-3737.2005.00162.x.

    Article  Google Scholar 

  • Steensland, B., Park, J. Z., Regnerus, M. D., Robinson, L. D., Wilcox, W. B., & Woodberry, R. D. (2000). The measure of American religion: Toward improving the state of the art. Social Forces, 79(1), 291–318. doi:10.1093/sf/79.1.291.

    Google Scholar 

  • Stratton, L. S. (2002). Examining the wage differential for married and cohabiting men. Economic Inquiry, 40, 199–212.

    Article  Google Scholar 

  • Sullivan, T. A., Warren, E., & Westbrook, J. W. (2000). The fragile middle class. New Haven, CT: Yale University Press.

    Google Scholar 

  • Teachman, J. (2003). Premarital sex, premarital cohabitation, and the risk of subsequent marital dissolution among women. Journal of Marriage and Family, 65(2), 444–455. doi:10.1111/j.1741-3737.2003.00444.x.

    Article  Google Scholar 

  • Teachman, J., & Polonko, K. (1990). Cohabitation and marital stability in the United States. Social Forces, 69, 207–220. doi:10.1093/sf/69.1.207.

    Google Scholar 

  • Townsend, N. W. (2002). The package deal: Marriage, work, and fatherhood in men’s lives. Philadelphia, PA: Temple University Press.

    Google Scholar 

  • Treas, J. (1993). Money in the bank: Transaction costs and the economic organization of marriage. American Sociological Review, 58(5), 723–734. http://www.jstor.org/stable/2096283.

    Google Scholar 

  • Ulker, A. (2009). Wealth holdings and portfolio allocation of the elderly: The role of marital history. Journal of Family and Economic Issues, 30, 90–108. doi:10.1007/s10834-008-9139-2.

    Article  Google Scholar 

  • van Lange, P., Rusbult, C. E., Drigostas, S. M., Arriaga, X. B., Witcher, B. S., & Cox, C. L. (1997). Willingness to sacrifice in close relationships. Journal of Personality and Social Psychology, 72(6), 1373–1395. doi:10.1037/0022-3514.72.6.1373.

    Article  Google Scholar 

  • Vespa, J. E., & Painter, M. A., I. I. (2011). Cohabitation history, marriage, and wealth accumulation. Demography, 48(3), 983–1004. doi:10.1007/s13524-011-0043-2.

    Article  Google Scholar 

  • von Hippel, P. T. (2007). Regression with missing Y’s: An improved strategy for analyzing multiply imputed data. Sociological Methodology, 37(1), 83–117. doi:10.1111/j.1467-9531.2007.00180.x.

    Article  Google Scholar 

  • Waite, L. J., & Gallagher, M. (2000). The case for marriage. New York: Doubleday.

    Google Scholar 

  • Wilkie, W. L. (1994). Consumer behavior (3rd ed.). New York: Wiley.

    Google Scholar 

  • Wilmoth, J. & Koso, G. (2002). Does marital history matter? Marital status and wealth outcomes among pre-retirement adults. Journal of Marriage and Family, 64(1), 254–268. http://www.jstor.org/stable/3599792.

    Google Scholar 

  • Winkler, A. E. (1997). Economic decision-making by cohabitors: Findings regarding income pooling. Applied Economics, 29, 1079–1090. doi:10.1080/000368497326471.

    Article  Google Scholar 

  • Xiao, J. J. (1996). Effects of family income and life cycle stages on financial asset ownership. Financial Counseling and Planning, 7, 21–30.

    Google Scholar 

  • Xiao, J. J., & Anderson, J. G. (1997). Hierarchical financial needs reflected by household financial asset shares. Journal of Family and Economic Issues, 18(4), 333–355. doi:10.1023/A:1024991304216.

    Article  Google Scholar 

  • Xie, Y., Raymo, J. M., Goyette, K., & Thornton, A. (2003). Economic potential and entry into marriage and cohabitation. Demography, 40, 351–367. doi:10.1353/dem.2003.0019.

    Article  Google Scholar 

Download references

Acknowledgments

We thank Editor Dolan, former Editor Xiao, the anonymous reviewers, and Richard Petts for their advice and time spent reviewing this paper.

Author information

Authors and Affiliations

  1. Department of Sociology, University of Wyoming, 411 Ross Hall, 1000 E. University Ave, Laramie, WY, 82071, USA

    Matthew A. Painter II

  2. Ohio State University, Columbus, OH, USA

    Jonathan Vespa

Authors
  1. Matthew A. Painter II
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Jonathan Vespa
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Matthew A. Painter II.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Painter, M.A., Vespa, J. The Role of Cohabitation in Asset and Debt Accumulation During Marriage. J Fam Econ Iss 33, 491–506 (2012). https://doi.org/10.1007/s10834-012-9310-7

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10834-012-9310-7

Keywords

Search

Navigation