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Researchers: Cohabitation Before Marriage Leads to Greater Wealth Accumulation

September 27, 2011
UW researcher Matthew Painter found that couples who lived together before marrying, on average, accumulated greater wealth than those who did not live together before marriage.

A new study led by University of Wyoming Assistant Professor Matthew Painter provides the first evidence of a positive marital outcome associated with premarital cohabitation.

"Individuals who marry their one and only cohabiting partner experience a wealth premium that is twice as large as that for married individuals who never cohabited prior to marrying," says Painter, a faculty member in the UW Department of Sociology who conducted the research with his colleague Jonathan Vespa. Their findings, published in Demography, the flagship journal of the Population Association of America, contradict previous research showing that cohabitation results in worse marital outcomes.

Using data from the National Longitudinal Survey of Youth 1979 (an ongoing study that has followed a cohort of young baby boomers since they were in high school in 1979), the researchers explored the net worth accumulation of married individuals in light of their premarital cohabitation histories.

The authors found that couples who lived together before marrying, on average, accumulated greater wealth than those who did not live together before marriage.

"This advantage is even more remarkable since these couples begin their marriage with less wealth, on average, when compared to the directly married," Painter says.

Painter and Vespa speculate that this result may be due to the experience of cohabitation itself. Cohabitation may provide a period before marriage that "lays the groundwork" for future wealth accumulation via the experience of managing a financial household.

"Many cohabiters view marriage as something that happens after they achieve a certain level of financial security in life," Painter says. "Falling short of this level casts doubts over future relationship stability and may lead couples to delay marriage."

As a result, the perceived need of financial security may drive certain cohabiters to change their financial behaviors accordingly and work toward meeting their economic goals.

"In doing so, cohabiters may galvanize their wealth accumulation and thus experience an accelerated rate of accumulation during marriage," Painter says.

This research is important for understanding families and financial resources because it suggests that relationship history shapes long-term wealth accumulation, he says. It is also among the first studies to more fully explore the divergent paths individuals take prior to marriage.

"Given the attention in the media and by scholars on cohabitation, it is important to consider the diversity of cohabitation experiences as this type of relationship continues to become more prominent," Painter says.

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