BFI NewsJul 06, 2015

How Bride Price Payments and Pre-Marital Contracts Shape Family Decisions

Thinking about how household behavior is shaped by how members of the same family interact with each other.
Economist Alessandra Voena was researching fertility preferences in Zambia when offhand comments made by parents sparked her curiosity. The parents mentioned that if their daughters went to school, they could earn more money through the girls’ lobolas, or bride prices.
Voena, an assistant professor in the Department of Economics, recognized these comments contradicted economists’ understanding of bride price payments. Bride prices are sums a groom’s family pays to the bride’s parents at the time of marriage. The custom is prevalent throughout Sub-Saharan Africa and in parts of Asia, where brides tend to leave their families and live and contribute mainly to the families of the groom. Economists have long understood these payments to be single, set amounts without much variation.
Voena, whose work centers on the economics of family decision-making in developed and developing countries, dug deeper into the custom after hearing these remarks. She examined the relationship between bride prices and educational attendance, using data gained during and after two major school expansions, one in Indonesia and the other in Zambia.
Voena’s findings revealed an important pattern: women in cultures where bride prices are paid are more likely to receive an education than in similar cultures that do not engage in these payments. In effect, bride prices act as an incentive for parents to educate their daughters.
In field surveys of parents, education was cited as the most highly beneficial characteristic affecting bride price, surpassing characteristics such as “good morals” or “age.”
Recently, the practice of bride price payments has received widespread scrutiny; critics contend that it commodifies women and limits their ability to marry whom they choose. Several campaigns are underway to abolish the practice.
Voena’s work suggests that this may have unintended consequences. While neither encouraging nor discouraging the practice, Voena says, “What we want to point out is that this one custom appears to serve one function, possibly among many others. What we think might be useful to keep in mind in light of our results is, if you are going to discourage this practice, you might want to think about policies that would encourage girls’ education. Simply discouraging bride prices without thinking about how it could backfire in terms of education could be costly.”
Voena notes that she is inclined to view the payments less as an economist might, as a transfer between a male and a female, and more like an anthropologist would: as a payment from a younger generation to the older one. She seeks to understand how the custom works within educational policy in cultures where a paying bride price is prevalent.
Voena and her colleagues are still hypothesizing about what might be driving the relationship between payment and the education of women and why education is the most highly valued characteristic of a woman in a culture where bride prices are paid. It might be that families recognize education leads to better outcomes in terms of improved health, lower child mortality, and better education for the children. Voena summarizes these findings in a working paper titled  “Bride Price and the Returns to Education for Women,” which is co-authored by Nava Ashraf, Natalie Bau, and Nathan Nunn, of Harvard University.
Much of Voena’s research explores the tacit and overt agreements between and among families. “The common thread (for me) is thinking about how household behavior is shaped by how members of the same family interact with each other,” she said.
In Italy, Voena is studying premarital contracting with similarly intriguing results.  Prenuptial agreements have become widespread in that country due to their routine inclusion in the marriage license process. At the time couples apply, they can choose how they will divide the assets they accumulate should they divorce.
Couples are given just two options: a standard, joint-ownership and equal split upon dissolution of the marriage (which is similar to the most common practice in the United States), or couples can hold their assets separately and divide them separately should they divorce. There are no additional fees and courts widely recognize the contracts.
Voena was motivated to look at the practice in greater depth when she discovered that almost 70 percent of couples today were choosing to separate their assets, rather than split them equally. By analyzing data on marriages, divorces, and separations between 1995 and 2011, Voena further discovered that the number of couples choosing separate property agreements almost doubled during this time.
She found that the sharp increase in couples choosing the separate asset option corresponded to an increasing number of women joining the workforce, and a shrinking wage gap between men and women.
Voena’s preliminary interpretation of this data suggests that women who plan to stay home with their children use the joint, equal-split agreement as a type of insurance against the loss of opportunity in the workforce. Women who remained in the workforce were more likely to choose the separate property agreement to protect earnings.  In this way, the prenuptial agreement could be acting as a mechanism for allowing greater specialization for the labor force.  Voena discusses these findings in a working paper, “Prenuptial Contracts, Labor Supply and Household Investments,” which she co-authored with Denrick Bayot, AM’10, PhD’15 (Economics).
Voena believes it is too soon to suggest policy recommendations, but the research helps describe the environment of marital property sharing. It gives insight into how family financial decision-making may be evolving in Italy.
“I think it is very important to have institutions that allow for specialization,” said Voena. She sees the prenuptial agreements as perhaps offering a more effective way for couples to navigate their differing attitudes towards savings, risk, and other family decision-making choices. “I think there is something to understand about the nature of the modern household by looking at these choices,” she said.
—Jennifer Roche