Does Shacking-Up Before Marriage Hurt the Bottom Line?

When my sister married a man she had only known for nine months, seventeen-year-old me thought that was a bad idea. “Why not live together first?” I asked. Because, she explained, people who live together before they get married are less likely to have successful marriages. Ridiculous, I thought. Turns out, though, that she was both right and wrong about that, particularly when it comes to the economic success of marriages.

Two-thirds of recently married Americans lived together before they married and, empirically at least, that seems like a bad idea. On average, couples that live together before marriage have lower quality marriages that are more likely to end in divorce. They also fare much worse economically, accumulating less wealth over their marriages than do couples that do not cohabitate before marriage.

New research published in the current issue of Demography suggests some hope for couples that want the benefits of living together before they are ready to take a walk down the aisle. It finds that while it may be true that cohabiters as a group fair worse later in their relationships, a subset of cohabiters actually do better over time than couples that didn’t live together before they married – couples that have no previous history of living with other people.

In the study (that uses data collected over a 30-year period that includes 4,205 couples) separates people into four categories:

They find evidence that supports what we already believe to be true about cohabiters – that serial and one-time cohabiters have both lower incomes and lower wealth levels in marriage. Those who are “spousal cohabiters” (having lived with only their spouse), however, may start their marriages with less wealth (about 5% less) than those who never cohabited, but their wealth level grows twice as fast after marriage (about 2% per year compared to 1%).  

What this means is that over time the wealth levels of people who lived together before marriage, with only their current spouse, eventually converge to the same level as those who did not. The reason why cohabiters look so financially unsuccessful in their marriages, and in their wealth levels, is not because cohabitation is bad for marriage – it is because those who marry without cohabitating are more confident in the first place about the success of their marriages. They are also more likely to be financially stable, have higher incomes at marriage and higher wealth levels (for example, they are more likely to own a home).

One of the possible explanations as to why serial and one-time cohabiters do worse than spousal cohabiters, controlling for all other factors, is that they have first-hand experience with relationship dissolution and are less able (because they lost part of their wealth when that happened) or are less willing to pool financial resources and decision-making with their new spouse. For example, they might be less willing to pool their resources to buy a house.

So, the factor that is contributing to this poor financial outcome is not cohabitating, per se, but rather the qualities of an individual who has had more live-in partners in the past that is creating the issue. So, really my sister was wrong. Living with her now husband for a few years before marrying probably wouldn’t have lowered their chance of success. This is not because he would have been her first live-in lover but because it isn’t the living together that makes the difference – it is the circumstances that lead couples who want to live together to delay marriage.

First time cohabiters, on average, delay marriage for different reasons than do serial cohabiters. They wait, for example, because they want to finish school or because they want to be able to afford a house before marriage. And, it seems that delaying for these reasons, helps them do much better in the long run.

Reference: Vespa, Jonathan and Matthew Painter (2011). “Cohabitation History, Marriage and Wealth Accumulation.” Demography Vol. 48: pp 983-1004.