How Much Do Women Really Cost?

Across history and cultures, some things remain constant. For example, men compete directly against each other for economic success. Men are overwhelmingly dominant in wealth-creating occupations. When an occupation becomes more remunerative, more men pursue it. What is the ultimate goal of all this economic activity? Attracting women, of course. Women are the commodity and men pay, one way or another, for them.

But how much does a woman cost? More exactly, how much does a typical woman cost a typical man in this time and place? Let's first make our assumptions:

• Women earn about 80% as much as men
• The average after-tax annual income is $30,000
• When a man marries a woman, their assets, income, and costs are shared evenly
• The average man marries at 29; the average woman at 27
• Women and men both work until they're 65
• The man dies at 71, the woman dies at 78
• There is a constant real risk-free return of 2%
• Both men and women receive real annual pay increases of 2%

These assumptions probably understate the actual cost; we will discuss why later. For now, they're a solid starting point. Since the real discount rate and pay increase rate are the same, we can calculate the net present value of lifetime earnings by just multiplying pay and years in the work force. Given our assumptions, the present value of a husband's earnings is about $1.20M, while the present value of the wife's earnings is about $1.01M. The cost of the woman (or CoW) is half the difference, or just about $100K. That was actually much less than I expected.

Now, of course, we can relax some of our assumptions. First, women tend to marry men who are higher on their gender-specific income ladder than they are. This is simply because, for serious relationships, women put much more weight on their partner's income than men do. So, an average-earning woman is likely to end up with an above-average-earning man. If we assume a 5% disparity due to gender-specific income ranking, the present value of the husband's earnings jumps to $1.26M, which tacks on an extra $30K to the CoW.

But that is relatively small compared to the advantages women receive from longevity. Women are likely to outlive their husbands by seven years. In those years, women will receive Social Security survivor benefits, her husband's pension (if any), his remaining retirement funds, and will of course own the house they shared. So, suppose the average couple:

• Saved 5% of their net income, growing at a 4% real rate
• Consumes 30% of their retirement savings by the time the husband dies
• Receives Social Security equal to half their working income, growing at a 2% real rate
• Receives a pension equal to half their working income, growing at a 2% real rate
• Upon being married bought a $250,000 house on a 30-year mortage and which appreciates at a real 1% rate

At the time the man dies, this confers an additional asset pool to the woman worth almost $700K. If we discount it back the forty-two years, it becomes just over $300K. This can be added directly to the CoW; it is not split, because the man is dead. But, just for the sake of accuracy, let's subtract a few thousand for the funeral, bringing the post-husband asset pool down to a present value at marriage of $300K. Adding that to the already established $130K, the true CoW for a long marriage is, on average, $430K.

Maybe it's time to bring back dowries.