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Sexual orientation and household financial decisions: evidence from couples in the United States

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We analyze how sexual orientation is related to household financial decisions using 2000 US Census data, and find that lesbian couples pay higher annual mortgages relative to house value than do heterosexual or gay couples. We also estimate that cohabiting heterosexuals pay more than their married counterparts. We link this homosexual-specific differential to homeowners’ propensity to save. This differential reflects the gender composition of same-sex households, and their very low fertility, in addition to the precautionary motives increasing cohabiting couples’ propensity to save relative to married ones. Evidence from retirement and social security income of older couples exhibits the same pattern of differentials by sexual orientation and cohabiting status.

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  1. For instance, Lin et al. (2000) estimate that including the mortgage payment into the savings measure increases the average total savings rate from 18.53 to 24.94%, using micro data from Taiwan.

  2. In the case of lesbians, the 5.5 coefficient represents 8.7 percent of the average annual mortgage payment of married couples: 5.5 × 184,040/1000/11,649 = 8.7%. By the same token, the coefficient for homosexuals of 2.6 also corresponds to 4 percent more than the average annual mortgage payment of married couples.

  3. While we do not report the coefficients on education squared for brevity, the corresponding marginal effect of education of head is—1.59.

  4. Results not reported for brevity, available upon request from authors.

  5. The working paper version of our study, Negrusa and Oreffice (2010), develops a simple two-period model of household savings decisions, based on Browning et al. (2011). We expand the model to describe the impact of relationship status and fertility on savings behavior rather than focusing only on gender differences in life expectancy.

  6. Children may also represent a potential source of care-giving when parents are old. We note that this source would generate a further incentive for the household to save less, as additional income would be available later in life.

  7. Moreover, data by individual age, race and gender on the expected number of years left to live in the year 2000 is merged to our samples from the National Vital Statistics Reports (CDC, 2002). We then use the absolute value difference of the expected years of the head and the partner (spouse) as additional robustness check control to account for the number of years that a couple can expect to spend together. This measure may play a role for homosexual couples, since they share the same gender and thus tend to face more time together ahead of them, ceteris paribus. However, being married to an opposite-sex spouse may also affect the incentives underlying the accumulation of retirement income, as spouses are entitled to survivor benefits and male retirement income is higher on average.

  8. Additional estimates of the homosexual differential for older households, using the same specification as in Table 5 but also controlling for the absolute life-expectancy difference between head and partner, or narrowing the focus to never-married homosexuals, show consistent patterns of results. The estimated coefficients for the dummy variables identifying same-sex households and gays and lesbians remain positive and significant, with a similar magnitude to the corresponding ones estimated in Table 5. Results not reported for brevity.


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Sonia Oreffice acknowledges financial support from the Spanish Ministry of Science and Innovation (ECO 2008-05721/ECON). We thank Pierre-André Chiappori, Lola Collado, Erik Hurst, Sebastian Negrusa, Climent Quintana-Domeque, the Editor Shoshana Grossbard, two anonymous referees, and participants at the Spanish Economic Symposium 2010 for helpful comments and suggestions. Any errors are ours.

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Correspondence to Sonia Oreffice.

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Negrusa, B., Oreffice, S. Sexual orientation and household financial decisions: evidence from couples in the United States. Rev Econ Household 9, 445–463 (2011).

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