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The Strange Economics of Cohabitation

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Conventional wisdom says that two can live together as cheaply as one. Conventional wisdom is, as usual, a little off. Studies indicate that two can actually live together about 1.4 times as cheaply as one. And new research suggests that a lot depends on who those two are, and what their living arrangement is.

While college graduates who live together have a higher median household income than those who are married or single, the opposite is true of high school graduates: high school–educated couples who live together but aren’t married have a lower median household income ($46,540) than those who are married ($56,800) and are brushing against those who live with no partner ($45,033).

For the college educated those numbers differ significantly, according to a new Pew Research Center analysis, which used a standard equivalence-scale methodology in order to compare households of different size on an equal basis. Those living together but not married had the highest household income ($106,400,), followed by the married ($101,160) and the single ($90,067).

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Cohabitation, as sociologists call living together, while still not as mainstream in the U.S. as in some European countries, has become increasingly popular in the last decade. According to the Pew report, which used data from the 2009 American Community Survey conducted by the Census Bureau, the proportion of 30-to-44-year-olds living together has almost doubled since 1999, from 4% to 7%.

It’s a small percentage, but the image of a husband carrying his wife over the threshold for the first time as they start their life together is practically a cave painting relative to the modern picture of marriage. The majority of people have lived with a member of the opposite sex (the study did not weigh in on same sex couples) before they were married. Fifty-eight percent of women aged 19 to 44 had ever cohabited in data collected in 2006-08, while in 1987 only 33% had.

Cohabitation is much more prevalent among those with less education. “Among women ages 19 to 44, 73% of those without a high school education have ever cohabited, compared with about half of women with some college (52%) or a college degree (47%),” note the Pew study’s authors, Richard Fry and D’Vera Cohn.

But while those with the least education and economic means are the most likely to live together, they are the ones who seem to benefit  least from the economies of scale offered by partnering up.

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The Pew researchers present several explanations for why cohabiting seems to benefit the college educated financially more than marriage does, and why the same doesn’t hold true for their peers with less education:

• College-educated couples were less likely to have children in the house if they were cohabiting than if they were married. There was also a higher likelihood that both partners were working.

• Non college-educated unmarried couples were more likely to have children than college- educated married couples.

• College-educated cohabiters are more likely to marry within three years of moving in together than couples with less education and may use different, more efficient money management systems, such as pooling their resources.

Of course, it may not be marital status that is making the difference. As sociologist Andy Cherlin has pointed out, it’s not that marriage makes the less-educated wealthier, it’s that they tend to wait until they’re a little wealthier to get married. Marriage is less a part of their life plan as a trophy for financial independence.

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This does not seem to be true for cohabitation. An earlier Pew survey asked couples whether they had moved in together partly for financial reasons, and only a third said money had played any role. Moreover education made no difference in the way the question was answered.

Sociologist Dalton Conley thinks selection criteria also play a big role in these figures. “I think it’s because among the college educated, cohabitation is a practice of the elite who tend to live in high-cost, high-salary areas on the East and West coasts,” says Conley, dean of social sciences at New York University. “Whereas you’re more likely to find non college-educated cohabiters in the rest of the country where salaries are lower.”

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