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Positive economic outcomes of marriage are often explained with a higher future orientation of married individuals who are assumed to plan their finances for a longer period than the nonmarried. Using data from the Household, Income and Labour Dynamics in Australia Survey (2001-2014; N = 4,819 individuals), the authors provide the first longitudinal test of whether individuals change their financial planning horizons when they change their partnership status using fixed and random effects regressions. Results show that the financial planning horizon increases as individuals enter cohabitation. No further changes in financial planning horizons are found when they transition into marriage. Changes in horizons are similar for women and men. These results indicate that longer financial planning horizons and marriage are likely outcomes of couples' long-term commitment, which develops during cohabitation. The symbolic and legal institution of marriage is not additionally associated with individual financial planning as a dimension of future orientation.
Key Words: Australian/New Zealand families, cohabitation, family economics, longitudinal, marriage.
Marriage has been linked to positive economic outcomes such as less poverty, more income, and more wealth (Waite, 1995). One prominent explanation provided for these positive outcomes is that the transition to marriage increases the future orientation of spouses when compared with the nonmarried (Knoll, Tamborini, & Whitman, 2012). In this article, we examine if the married are more likely than cohabiting couples to make financial plans for their shared future lives and consider a longer time window in their plans, for instance, because the marriage contract insures both partners against a total loss on their joint investments (Brines & Joyner, 1999). The married may then be more likely to forgo current consumption to save, make long-term investments, and accumulate wealth (Wilmoth & Koso, 2002). We complement our analysis by comparing single individuals' financial planning horizons to cohabiting individuals.
The explanation for the positive economic outcomes of marriage through more future orientation has not yet been directly tested using adequate longitudinal methods. In addition, as the prevalence of cohabiting unions has increased in recent decades and cohabitation has been legally institutionalized in diverse contexts such as Australia (the country case of the current study), the United States, and Western Europe (Kroeger & Smock, 2014; Popenoe, 2009), it is important to ask whether increased...