Testing for Utility Interdependence in Marriage: Evidence from Panel Data

This paper is the first of its kind to study utility interdependence in marriage using information on subjective well-being of a large sample of people living in the UK over the period 1991-2001. Using “residual” self-rated health to provide instrument for spouse’s well-being and allowing controls on individual fixed effects, we find strong evidence of altruism represented by interdependent relationships in the reported well-being found only among spouses, and not by partners in cohabiting union. Panel data also show that the well-being impact resulting from “caring” can be used to predict future income, unemployment, and marital status for the individuals.