What is the relationship between property rights and economic progress? What is the relationship between property rights, corruption, and economic progress?
Importance of Property Rights Economics
Explain why protecting property rights is essential to a market economy. Marriage is commonly accompanied by bride price paid by either the groom or the groom’s family. This sort of payments has a great impact on the economic lives of couples.
While marriage payments such as the bride price are not part of the marriage institution, one may see marriage itself as an inherent price. When a man and a woman agree to get married, they do so understanding the terms of commitment they are subjecting themselves to (Hammond, 2011).
These commitments are like the duties each is expected to perform, the free hand each will have with the common funds. However, an individual may think that marriage terms correspond to the bride price and have the same functions as the explicit price in other markets.
This paper seeks to come up with a theory of why people would prefer ceremonial marriage over common law relationships.
Common Law Relationships and Marriage
Common-law relationship can be described as the union of two people that has not been customarily formalized as required by the law. In a common law relationship, marriage agreement is usually followed by cohabitation.
Marriage on the other hand is a socially or religiously sanctioned union of persons committed to each other to form an economic and a familial bond. Most people would prefer marriage over common-law relationships.
Coase theorem tries to explain why many people would prefer marriage over common-law relationships (Hammond, 2011).
According to the Coase theorem, there is a conflict of property rights. Involved parties can negotiate or bargain beneficial terms for both parties than the outcome assigned to properties.
Coase theorem also emphasizes that, for an agreement to take place, these negotiations must be costless (Hovenkamp, 2009). However, if there are costs associated with negotiations, the outcome will be affected. Therefore, involved parties do not consider how the property rights are granted if they can produce a mutual advantageous outcome.
Unlike the common law relationship, marriage has commitment attached to it (Hovenkamp, 2009). This commitment is basically seen when the couples sign a commitment contract.
Unlike the common-law relationships, marriage as a social institution confers many rights, incentives (both practical and legal).
These incentives vary from state to state and they incentives include; government benefits such as the social security and disability benefit, employment benefits such as obtaining insurance benefits, death benefits such as counselling after-death procedures and exterminations, estate planning benefits, housing benefit, tax benefits among other incentives (Hovenkamp, 2009).
However the most common inventive that come alongside matrimony are increased financial stability and shared employment benefits.
Increased Financial Stability
Apart from the cost of a destination wedding, Marriage matrimony can double the couples earning power overnight. Marriage creates additional opportunities by lowering cost of expenses (Hammond, 2011).
While marriage should not be perceived as quick way to gain riches, it has more economic advantages than disadvantages. When spouses come together through a marriage contract they will have high earning power.
Married spouses are in a better position to support their partners when financial trouble strikes. This is one of the great benefits of having a marriage contract. When one partner is not in any income generating activity, a possibility of earning is always there (Matouschek & Rasul, 2008).
A share of employment Benefits
The most celebrated incentive of marriage agreements is the easy and instant access to employee health benefit plan. Marriage is considered to be one on the few events that don’t require long waiting to process medical covers.
The registration process, gaining life, disability and health coverage may be possible within 30 days of the oaths. When both parties are covered, merging their medical covers offer a greater saving advantage.
Most insurance companies offer aggressive discounts to their employees. Therefore, married couples have a greater bargaining advantage to get these discounts (Hovenkamp, 2009).
Marriage has a good outcome. It delivers the expectation of the parties involved. When couples marry, their economic expectation is it to give birth to children who will take care of their financial life when they are old.
Similar to business firms, the family is treated as a productive enterprise in the new home economics. The family pools inputs to produce sales for the market for its own for its own consumption (Matouschek & Rasul, 2008).
Children are considered to be both durable consumer goods and capital goods. Parents promote investment inhuman capital when they provide moral training, education and sustenance to their children.
Just like entrepreneurs, parents invest in their children with a great expectation of great returns in the future. When children go family business or firms or support their parents in their old age (Matouschek & Rasul, 2008).
When forming marriages, an economist assumes that equals are created in a competitive marketplace, equivalent to the matching of workers and employees in the labor market.
People choose to marry given the limitations of available partners to maximize on their effectiveness (Matouschek & Rasul, 2008).
Unlike in the common-law, there are no provisions for such utilities. People choose marriages if their expected nonmarket non-market income will yield the expected utilities.
Although most marriages are between a man and a woman and are sanctioned, neither of those conditions is essential.
How property laws have evolved to benefit both society and business
At the centre of every relationship and marriage practice lies the attempt by spouses to safeguard their children’s future in a secure environment.
Taking this into consideration, marriage is of greater advantage than the common-law relationships. This is because, although marriage comes with many responsibilities, it offers a greater advantage with the rising economic standard.
Incentives offered to the married people offer a greater advantage for couple to have better saving power hence financial stability.
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References on Property Rights and Economic Growth
- Hammond, J. D. (2011). Strange Bedfellows: Fr. John A. Ryan and the Minimum Wage Movement. Journal of the History of Economic Thought, 33(4), 449
- Hovenkamp, H. (2009). The Coase theorem and Arthur Cecil pigou
- Matouschek, N., & Rasul, I. (2008). The economics of the marriage contract: Theories and evidence. Journal of Law and Economics, 51(1), 59-110.