Love or money: Couples who disagree on savings, investments twice as likely to divorce

SAN DIEGO, Calif. — It may be a good idea to compare stock portfolios and investment strategies on your next first date. Researchers from the University of California-San Diego find that differences in financial risk preferences are a major driver of divorce. In other words, if you and your significant other don’t see eye to eye on how much financial risk is acceptable, according to these calculations, your marriage is twice as likely to end in divorce.

These findings were possible thanks to risk preference data originally collected on 5,300 German couples between 2004 and 2017 as part of the German Socio-Economic Panel. The survey asked each person how much they were willing to risk across a variety of life areas including sports, finances, career matters, and driving.

Even after accounting for a long list of potentially influential factors including education, cultural background, and religion, researchers still conclude that differing risk preferences are the number one long-term predictor of marital separation. In comparison to couples who largely agree on risk-taking, those with the biggest differences in risk thresholds are twice as likely to divorce. In the long run, study authors say differences in financial risk preferences are the biggest predictor of marital separation.

“Arguing about money is typically cited as a reason for divorce, but a main potential driver of these fights is differences in risk attitudes,” says study author Marta Serra-Garcia, associate professor of economics and strategy at the Rady School, in a university release. “Risk attitudes determine investment decisions, such as housing for the family. If spouses have different risk preferences, they will often disagree on common and very important investments in the marriage.”

Couples become more alike over time

Additionally, couples who can’t agree on investments and savings decisions are also less likely to own a home or renovate a home.

“On one hand, households share common goods, such as housing, and for that similarity in risk attitudes is optimal,” Serra-Garcia adds. “On the other hand, households share two sources of income and income is typically risky. Since spouses pool their incomes, if one has a less a reliable stream than the other, differences in risk attitudes can be optimal because they can ‘insure’ each other, but this can also be a source of tension for marriages.”

It’s also worth noting that the research suggests couples tend to become more like one another as time goes by. With this in mind, study authors say financial attitudes and risk preferences are rarely ever set in stone. More specifically, the data indicates that many couples aligned their financial views and became more cost-conscious around the recession of 2009. Those same couples were also less likely to divorce later on.

“Preference assimilation could be a mechanism for resolving conflict within marriages,” the professor says. “As a result, these couples have a stronger likelihood of staying together.”

Discussing finances while online dating?

The research team ponders if their work may prove useful for the dating apps of the world. Perhaps such platforms should include a section on financial opinions.

“Online dating websites often design algorithms that attempt to find the optimal match,” Prof. Serra-Garcia concludes. “If such websites suggested matches between individuals who are similar in their risk attitudes, that could decrease the likelihood that if a couple forms, it will dissolve in the future.”

The study is published in The Economic Journal.

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