The Costs of Comparative Advantage

The New York Times editors ask 5 experts on marriage how Ruth Madoff, Bernie Madoff’s wife, could not have known about his fraud. Perhaps I need to get out more, but the only one that makes any sense to me is the response of the economist, Betsey Stevenson.

more traditional marriages are described by economists as “production-based” or “separate-spheres” marriages. In production-based marriages, couples benefit from dividing and conquering. One person specializes in market production, while the other specializes in raising the children and work in the home. This specialization makes these marriages more efficient and thus everyone is better off in the marriage.

Household specialization may be efficient, but it comes with ignorance of each other’s domains. Spouses who are truly surprised to discover that their partner has been having an affair or running a billion-dollar Ponzi scheme are experiencing the downside of separate-spheres marriages.

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2 Responses to The Costs of Comparative Advantage

  1. In an economy based on a complex division of labour, would it be that surprising if many spouses only had a general idea of what their partners did at work? If Mrs Madoff was say a professor of French literature, would she have any better idea of the finance industry than if she was a stay-at-home mum?

  2. cba says:

    Stevenson’s is the more clinical answer, but I’m sympathetic to some of the other explanations, e.g. living in denial. It’s hard to believe Mr. Madoff’s immoral choices didn’t show up in other aspects of his life.

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