COFF Final Report

The Taxpayer Costs of Divorce and Unwed Childbearing

First-Ever Estimates for the Nationand All Fifty States

A Report to the NationBenjamin Scafidi, Principal Investigator

Institute for American ValuesInstitute for Marriage and Public Policy Georgia Family CouncilFamilies Northwest

On the cover:

Man and Woman Splitting Dollar

by Todd Davidson, Stock Illustration RF, Getty Images.© 2008, Georgia Family Council and Institute for American Values. No reproduction of the materi-als contained herein is permitted without the written permission of the Institute for AmericanValues. ISBN: 1-931764-14-X

Institute for American Values

1841 Broadway, Suite 211 New York, New York 10023Tel: (212) 246-3942 Fax: (212) 541-6665 Website: www.americanvalues.org Email: info@americanvalues.org

M

OST OF THE PUBLIC DEBATE

over marriage focuses on the role of marriage asa social, moral, or religious institution. But marriage is also an economicinstitution, a powerful creator of human and social capital. Increases indivorce and unwed childbearing have broad economic implications, includinglarger expenditures for the federal and state governments. This is the first-everreport that attempts to measure the taxpayer costs of family fragmentation forU.S. taxpayers in all fifty states. Among its findings: Even programs that result in very small decreases in divorce and unwed childbearing could yield big savingsfor taxpayers.The report’s principal investigator is Benjamin Scafidi, an economist in the J. Whitney Bunting School of Business at Georgia College & State University. Theco-sponsoring organizations are the Institute for American Values, the Institute forMarriage and Public Policy, Georgia Family Council, and Families Northwest.The co-sponsoring organizations are grateful to Chuck Stetson and Mr. and Mrs. John Fetz for their generous financial support of the project. The principal investi-gator is grateful to Deanie Waddell for her expert research assistance.

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Project Advisors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5I. Why Should Government Care about Marriage? . . . . . . . . . . . . . . . . . . . . . .7II. How Might Marriage Affect Taxpayers? Empirical Literature Review . . . . . . .9How Much Does Marriage Reduce Poverty? . . . . . . . . . . . . . . . . . . . . . . .10Does Family Fragmentation Increase Crime? . . . . . . . . . . . . . . . . . . . . . .11III. Is the Methodology Used in This Estimate Reasonable? . . . . . . . . . . . . . . . .12 What Costs Are Associated with Means-Tested Government Programs? . . .13 What Costs Are Associated with the Justice System? . . . . . . . . . . . . . . . . .16How Are Foregone Tax Revenues Estimated? . . . . . . . . . . . . . . . . . . . . . .16IV. What Is the Total Estimated Cost of Family Fragmentation? . . . . . . . . . . . . .17 V. What Are the Policy Implications? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20 Appendix A: Testing the Analysis: Is the Estimate of $112 BillionToo High or Too Low? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22 Appendix B: Explaining the Methodology for State-Specific Costs . . . . . . . . . . .31TablesTable 1: U.S. Children Residing in Two-Parent Families . . . . . . . . . . . . . . .7Table 2: Percent of U.S. Children in a Single-Parent Household that Has... .7Table 3: Persons and Children Lifted out of Poverty via Marriage . . . . . . .14Table 4: Household Income and Usage of Food Stamps . . . . . . . . . . . . . .14Table 5: Household Income and Usage of Cash Assistance . . . . . . . . . . . .15Table 6: Household Income and Usage of Medicaid . . . . . . . . . . . . . . . . .15Table 7: Estimated Costs of Family Fragmentation for U.S. Taxpayers . . . .18Table A.1: Sub-Calculations of State and Federal Taxpayer Costs . . . . . . .32Notes to Table A.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33Table A.2: Sub-Calculations for EITC and Justice System Estimates . . . . . .35Table A.3: Total Poverty and Family Structure by State . . . . . . . . . . . . . . .36Table A.4: Child Poverty and Family Structure by State . . . . . . . . . . . . . .37Table A.5: Estimates of State and Local Taxpayer Costs of Family Fragmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38Endnotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39

Contents

The Taxpayer Costs of Divorce and Unwed Childbearing

First-Ever Estimates for the Nation and All Fifty States