Thursday, May 10, 2012

The Economics of Same-Sex Marriage

President Obama made a semi-big splash yesterday when he finally announced his explicit support for same-sex marriage. I support same-sex marriage, so naturally, I was pleased. I never really saw a genuine reason not to support it (I don't buy the whole "it'll destroy the sanctity of marriage argument," straight couples already did that long ago). In any case, I'm not here to argue about the legal, moral, or philosophical aspects of it, I'm here to talk about the economic implications of it. I must give credit where credit is due: this post by Matt Yglesias about gay marriage today is actually what got me thinking about it, so I figured I'd try to dig a little bit deeper.

Data on this sort of thing are somewhat scarce, to say the least, but I've scrounged together what I could, and it looks encouraging. Anyways, I should probably explain my premise before delving into the numbers. The economy is depressed right now largely because of a lack of demand. As such, we need something to boost demand so that companies start hiring again, leading to a cycle of increasing demand, etc; I've talked about this before. Anyways, legalizing gay marriage would provide a bit of a boost in demand. Why, you may ask? Well, marriages are expensive, and you'd better believe that if it was legalized, same-sex couples across the nation would be flocking to get married. Like I said, there isn't a huge amount of data on this, but there have been some  studies done about the potential economic effects of it. 

A number studies done by UCLA's Williams Institute for Sexual Orientation Law and Public Policy all concluded that legalizing same-sex marriage would be beneficial for the economy. In California, the study estimated that the legalization would add $684 million to the economy over 3 years, while simultaneously boosting state revenues from sales taxes (though this particular budgetary effect would be temporary). Similarly, another study concluded that legalization of same-sex marriage would bring $1.2 million to Rhode Island's economy over 3 years. Yet another study examined the economic effects of legalization in Iowa (legalized same-sex marriage in 2009) and concluded that it has resulted in $12-13 million being added to Iowa's economy. For those who are curious, that whole three-year timeframe was used because the models UCLA used were based on data from Massachusetts, where the bulk of increased marriage spending took place within three years following legalization. 

Again, the data on this isn't as complete as I'd like, but still, it certainly is quite encouraging. Along the same lines, legalizing gay marriage would actually result in lower taxes for many same-sex couples, since they could file jointly instead of as individuals on their federal income tax returns. In most cases, this results in lower taxes. In fact, same-sex couples have to pay out as much as $6,000 more a year in income taxes than economically similar straight couples because they aren't allowed to file jointly. Legalizing same-sex marriage would effectively be a tax cut for them, and tax cuts are economically stimulative. 

To be sure, legalization would also result in increased costs for employers for things like health benefits, but this is going to happen anyway because of the Affordable Care Act. Moreover, it could incur higher costs for Federal programs that determine eligibility based on marital status, but again, this isn't what I'd call a bad thing from an equal rights standpoint. What's more, a CBO study from back in 2004 suggests that the costs and revenue changes in Federal budget would ultimately even out and actually result in a small net savings of $1 billion over a 10 year period. 

I'm not saying that legalizing gay marriage is a panacea for our economic ills. But the evidence shows that it probably would help to stimulate the economy. This is, of course, in addition to all of the other reasons it should be legal. Conservative opposition to this has always baffled me; if they're so motivated by the idea that everyone has the right to liberty and freedom, then why shouldn't same-sex couples have the freedom to get married like everyone else? How do they reconcile those two things? 

Somebody? Anybody?