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(Last updated 5/27/03)

Previous stories pertaining to Dr. Zagorsky's research:

"Young Baby Boomers Build Wealth Slowly and Steadily, Study Shows," 7/28/99.

 

HUSBANDS, WIVES DON’T AGREE ON THEIR FINANCIAL STATUS, STUDY FINDS

COLUMBUS, Ohio – One reason married couples argue about money may be because they don’t even agree on how much of it they have, new research suggests.

The typical husband says the couple earns 5 percent more income and has 10 percent more total wealth than the wife reports, according to a nationwide study.

Meanwhile, the typical wife says the family’s debts are about $500 more than reported by her husband.

And both husbands and wives report that their spouses earn less than their spouses say they do.


One reason for the disagreement is that both husbands and wives discount how much their partners earn in income. Both men and women reported their spouses’ earnings as about $3,300 to $3,500 less than reported by their spouses themselves.


The study couldn’t tell which spouses were more accurate in reporting family finances, said Jay Zagorsky, author of the study and a research scientist at Ohio State University’s Center for Human Resource Research.

But the differences in perception are very real.

“There’s quite a gap between husbands’ and wives’ reports of their financial status,” Zagorsky said. “These differences may have significant impacts on everything from a couple’s relationship to national reports of economic statistics.”

The study is published in the May 2003 issue of The Journal of Socio-Economics.

The study is based on data from five different groups who participated in the National Longitudinal Surveys, which is funded primarily by the U.S. Bureau of Labor Statistics. The NLS is a nationally representative survey of people nationwide conducted by Ohio State’s Center for Human Resource Research. The groups in this survey were separated by age and sex and were interviewed many times over the course of nearly 30 years on a variety of topics including health, education, training, finances and marital history, to name only a few topics.

Zagorsky used data concerning 1,195 couples who answered questions over many years concerning income and wealth.

“The results showed that many couples have large disagreements about the status of their family’s finances,” he said.

Half of all couples stated income values differing by more than $5,000 a year. And 10 percent of the couples’ income figures differed by more that $15,000 a year. Usually it was the men who thought the couple earned more – the typical husband said the couple’s income was $1,000 to $2,500 more than his wife reported.

One reason for the disagreement is that both husbands and wives discount how much their partners earn in income. Both men and women reported their spouses’ earnings as about $3,300 to $3,500 less than reported by their spouses themselves.

“The reason many couples are reporting dramatically different total family income is that each partner overstates his or her own income and understates his or her partner’s,” Zagorsky said.

While couples have very different views about their income, they agree even less about their total net wealth. Among older couples surveyed, half differed in their wealth estimates by more than $14,700, and 10 percent differed by more than $113,000. Among younger couples, who have had less time to save, half differed in their wealth estimates by more than $7,000, and 10 percent differed by more than $31,000.

“Couples’ wealth disagreements arise because men report higher values for the family assets, while women report larger values for the family’s debts,” he said.

One possible reason for the differences in how couples view their finances may be because men are traditionally seen as taking care of the family’s finances, leaving their wives in the dark about money issues. However, the survey results suggest this isn’t the case. The couples tended to agree that husbands paid the bills in their family about 40 percent of the time, and wives about 60 percent. While bill-paying is just part of a couple’s financial life, Zagorsky said these results suggest that the disagreements couples have are not due to a lack of knowledge among women about family money matters.

The gap in couples’ beliefs about their financial situation has several important implications, Zagorsky said. For one, it may affect their relationship. Data from the NLS surveys shows that among young baby boomer couples, money ranks as the first or second most often argued-about topic (depending on the year of the survey).

And Zagorsky found that couples he studied who did not divorce disagreed less about their financial status than did couples who divorced or who dropped out of the survey. Zagorsky cautioned against making too much of this finding – it may be that disagreements over finances is a symptom of other problems, such as a lack of communication, and not a cause of divorce. Still, the result is suggestive, he said.

“Helping couples understand that most husbands and wives do not share similar views of the family’s finances is a first step in reducing conflicts surrounding money issues,” he said.

These findings may also have economic implications, he said. One example involves the Current Population Survey, which the federal government conducts and uses as a basis for calculating poverty statistics. About two-thirds of the CPS respondents in March (when income information is gathered) are women. Given men provide higher estimates of the family’s income, if more men answered the survey, official poverty rate measures would probably be slightly lower, he said.

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Contact: Jay Zagorsky, (617) 713-4447 or (614) 442-7332; Zagorsky.1@osu.edu
Written by Jeff Grabmeier, (614) 292-8457; Grabmeier.1@osu.edu