SAME SEX MARRIAGE LAWS AND THEIR EFFECT ON WEDDING EXPENDITURES Alison Marie Winter B.A., California State University, Sacramento, 2009 THESIS Submitted in partial satisfaction of the requirements for the degree of MASTER OF ARTS in ECONOMICS at CALIFORNIA STATE UNIVERSITY, SACRAMENTO SPRING 2012 SAME SEX MARRIAGE LAWS AND THEIR EFFECT ON WEDDING EXPENDITURES A Thesis by Alison Marie Winter Approved by: __________________________________, Committee Chair Suzanne O’Keefe, Ph.D. __________________________________, Second Reader Jonathan Kaplan, Ph.D. ____________________________ Date ii Student: Alison Marie Winter I certify that this student has met the requirements for format contained in the University format manual, and that this thesis is suitable for shelving in the Library and credit is to be awarded for the thesis. __________________________, Graduate Coordinator Jonathan Kaplan, Ph.D. Department of Economics iii ___________________ Date Abstract of SAME SEX MARRIAGE LAWS AND THEIR EFFECT ON WEDDING EXPENDITURES by Alison Marie Winter Same sex marriage laws have recently been a topic for debate in many states in the U.S., with some states legalizing same sex marriage and others banning it. This research attempts to find the effect if any that same sex marriage and civil union/domestic partnership laws have on state-level wedding expenditures per capita, number of weddings per capita, and average wedding cost. This question is analyzed using OLS regression analysis and controlling for year and state specific characteristics with year dummy variables and state fixed effects. The results show that wedding expenditures per capita and number of weddings per capita increase but average wedding cost decreases for states with same sex marriage laws. The results for civil union/domestic partnership laws are similar except it is unclear what their effect is on average wedding cost. These findings imply that same sex marriage may be a valid topic for discussion when states are looking to increase revenues. _______________________, Committee Chair Suzanne O’Keefe, Ph.D. _______________________ Date iv TABLE OF CONTENTS Page List of Tables ........................................................................................................................... vi List of Figures………………………………………………………………………………..vii Chapter 1. INTRODUCTION .............................................................................................................. 1 2. LITERATURE REVIEW ................................................................................................... 5 3. THEORETICAL AND EMPIRICAL MODELS ............................................................. 13 4. DATA ............................................................................................................................... 17 5. RESULTS ......................................................................................................................... 26 6. CONCLUSION .................................................................................................................. 37 References ............................................................................................................................... 39 v LIST OF TABLES Tables Page 1. Descriptive Statistics…………………………….………………………...... 2. Descriptive Statistics for States with Same Sex Marriage Laws ……………..24 3. Descriptive Statistics for States with Civil Union/Domestic Partnership Laws 25 4. Wedding Expenditures Per Capita as Dependent Variable…………………….33 5. Number of Weddings Per Capita as Dependent Variable…………..………….34 6. Average Wedding Cost as Dependent Variable………………………………..35 7. Natural Log of Wedding Expenditures Per Capita as Dependent Variable ...…36 vi 23 LIST OF FIGURES Figures Page 1. Shock to Supply Side………………………….……………………………….16 2. Shock to Demand for Weddings…………….………………………………. 16 vii 1 Chapter 1 INTRODUCTION Same sex marriage is a topic that creates heated debates on a daily basis. Questions and concerns arise over the definition of marriage, privacy issues and religious and moral ideals. Because increasingly more people are becoming tolerant of homosexuals, the question of marriage equality has entered the political arena. A few states have recently adopted laws allowing same sex marriage and some states have adopted bans on same sex marriage. As of June 2011, six states and the District of Columbia allow same sex marriages, meaning they issue marriage licenses to same sex couples. These states are Connecticut, Iowa, Massachusetts, New Hampshire, New York, and Vermont. California allowed same sex marriages beginning mid-June 2008 but then banned them with an amendment to the state constitution in November 2008. The marriages performed before the ban are still considered legal. Massachusetts offered same sex marriage throughout the years observed, and Connecticut, Iowa, New Hampshire and Vermont added same sex marriage laws between the years 2005 and 2009. New York did not legalize same sex marriage until after 2009. Although some states are debating the legality of same sex marriage, there are also states that allow civil unions or domestic partnerships for same sex couples. These unions or partnerships allow same sex couples to have similar or limited rights to those that married couples have. The states that allow civil unions are Delaware, Hawaii, Illinois, New Jersey, and 2 Rhode Island1. The states that allow domestic partnerships are California2, Hawaii, Maine, Nevada, Oregon, Washington, and Wisconsin and the District of Columbia3. When considering the effects same sex marriage has on society, one area that may be affected is the wedding industry. It is estimated that 22% of same sex couples in the U.S. have formalized their partnerships since same sex unions have been legalized. Of that 22%, around 36% of these couples have married (Badgett & Herman, 2011). Legalizing the ability to have a wedding for same sex couples may create increased demand for wedding vendors. This would in turn lead to higher wedding expenditures for the state allowing same sex marriage. Civil unions and domestic partnerships may or may not have the same type of effect. One question to consider in the cases of legalized same sex marriage and civil unions or domestic partnerships is whether same sex couples would have a wedding or only a civil ceremony. Since there are no studies to demonstrate which occurs more, this would be a great study for further research. Another important factor and one of the questions asked here would be if same sex couples decided to have a ceremony and reception, how much would they spend, and would their spending significantly add to wedding expenditures. This research examines the effect same sex marriage has on wedding expenditures, number of weddings, and average wedding cost at the state level. This is an important topic for states to look into because it can add revenues in a time when revenues are needed, even if it is a small portion of GSP. Wedding expenditures make up 1 Hawaii and Illinois allow both same sex and different sex couples to obtain civil unions California allows both same sex couple and different sex couples over 65 to register domestic partnerships 3 The District of Columbia grants domestic partnerships to unmarried couples 2 3 only 0.38% of GSP on average but the average wedding cost makes up 46.4% of GSP per capita on average. Therefore, although wedding expenditures do not make up a large share of GSP, the cost of a wedding takes up almost half of a person’s income. If the effect is positive, supporters of same sex marriage can use this in their argument. If the effect is negative, groups opposed to same sex marriage can use this in their argument. This research will add to the little research related to same sex marriages and civil unions. Insights from this research can provide us with a better understanding of the effects that same sex marriages have on society. One method used to see the effects of same sex marriage laws and civil union/domestic partnership laws on wedding expenditures is raw difference in difference estimation. This raw difference in difference is calculated for each dependent variable. Then, OLS regression analysis is used to estimate the relationships between same sex marriage laws or civil union/domestic partnership laws and wedding expenditures while controlling for other factors, such as time fixed effects and state specific characteristics. This research finds that same sex marriage laws and civil union/domestic partnership laws have a positive and significant effect on wedding expenditures per capita and number of weddings per capita. It is also found that same sex marriage laws have a negative and statistically significant effect on average wedding cost. It is unclear how civil union/domestic partnership laws affect average wedding costs after viewing the results. These results show that there is an effect from same sex marriage laws on wedding expenditures and states that are debating whether to allow same sex couples to marry should include this knowledge in the debate. 4 In the following chapter, literature relating to and helping frame this research is discussed. Chapter three describes the economic theory and empirical models associated with this research. This is followed by a chapter describing the data. Then, chapter five illustrates the results obtained. Finally, the last chapter concludes with a discussion about the implications of the findings and future research possibilities. 5 Chapter 2 LITERATURE REVIEW Section 2.1. Introduction Because same sex marriage is a relatively current topic of debate, not much research has been performed to study it. There are no studies that could be found showing the relationship between same sex marriage laws and wedding expenditures. The literature displayed below illustrates the research that is available. The next section shows studies relating to attitudes towards same sex marriage. The reason for these being presented is to give a background to same sex marriage and to frame the issue present. This section is broken down into studies that use survey data and studies that use observational data. The final section describes studies more closely related to the research here. These studies examine the effect of same sex marriage on multiple topics important to society. Section 2.2.1. Survey Studies on Attitudes Recent research has focused on what predicts attitudes towards same sex marriage. Schwartz (2010) looks at demographic variables to determine what predicts attitudes toward same sex marriage, adoption by gays and lesbians, and what the demographic differences are between the two. He uses data from the News Interest Study from the Princeton Survey Research Associates International for the Pew Research Center for People and the Press. The demographic variables he looks at are sex, age, 6 education, political ideology, and frequency of attendance at religious services. Schwartz uses multiple regression analysis and ANOVA to test his model. When using same sex marriage as the dependent variable, Schwartz finds that age, education level, political ideology, and frequency of attendance at religious services are statistically significant. The younger and more educated are more likely to look favorably on same sex marriage. The less religious and more liberal a person is the more likely they will look favorably on same sex marriage. When looking at adoption by gays and lesbians as the dependent variable, all of the demographic variables are statistically significant. The coefficients for sex (with 1 indicating female), education, and political ideology are positive. The problem with all the variables but sex is that Schwartz does not convert categorical data into dummy variables. For example, the political ideology variable is measured by assigning a 1 to individuals who state they are conservative, a 2 to individuals who state they are moderate, and a 3 to individuals who state they are liberal. This does not estimate the model very well because the categorical values are viewed as continuous data when running the regression. The results would change if the researcher changes the coding for the categories and this makes the analysis invalid. Instead, dummy variables should have been created for all but one of the categories. The final question Schwartz looks at is that of the difference in demographic patterns showing attitudes between same sex marriage and adoption by gays and lesbians. Using ANOVA, he combines the two original independent variables into a “gay rights” dependent variable. His results show that there is a significant difference between the two topics and that religious attendance shows different attitudes towards same sex 7 marriage and towards adoption by gays and lesbians. Although there are flaws to this research, it provides insight into what might shape attitudes toward same sex couples. Brewer (2003) looks at how shifting public opinions have affected the current views on gay rights. He tests two theories on why the American public has become more supportive of gay rights. The first theory is that changes in predispositions, such as attitudes towards gays and lesbians, moral traditionalism, and ideology, are the cause of changes in policy opinions. The second theory is that changes in how the public uses these predispositions to think about gay rights are what changes support for gay rights. Brewer uses data from three pooled cross-sectional surveys, which are the 1992, 1996, and 2000 National Election Studies. He uses the responses to two questions to create a seven-point index of support for gay rights which ranges from -1 (opposes gay rights) to 1 (supports gay rights). The first question is “Do you favor or oppose laws to protect homosexuals against job discrimination?” The second question is “Do you think homosexuals should be allowed to serve in the United States Armed Forces, or don’t you think so?” Brewer uses both OLS regression and ordered probit to estimate his model. His results show that both theories play a part in the changing public opinion about gay rights. Olson et al. (2006) analyzes the effect of religion on opinions about same sex marriage. The data they use is from a telephone survey done by Greenberg Quinlan Rosner Research, Inc. The dependent variables being looked at are support for same sex marriage, support for civil unions, and support for bans on same sex marriage. The main independent variable Olson et al. want to study is religious affiliation but they also 8 include control variables such as variables indicating moral values and political ideology. They use a logistic regression to find that religious variables show a greater effect than only demographic variables on attitudes towards same sex marriage. Individuals that participate in a religion are more likely to oppose same sex unions. However, religious variables do not play as big a role in predicting support for same sex marriage bans. These three papers are good building blocks to understand the roots of support for same sex marriage. These three papers are good building blocks to understand the roots of support for same sex marriage. They all give some insight into why same sex marriage is an important topic for debate. The more we know about a topic the better we can understand it and make the best decisions for society as a whole. Section 2.2.2. Observational Data Studies on Attitudes Research has also looked at the variables influencing bans on same sex marriage. Soule (2004) looks into the factors giving rise to same sex marriage bans from 19732000. She obtains her data from multiple sources. The dependent variable is the probability of a state adopting a same sex marriage ban. This data is obtained from the National Gay and Lesbian Task Force Policy Institute. The author includes many different independent variables, such as laws relating to homosexual relationships, political environments, and social characteristics. By using discrete time event history analysis, she finds that interest organizations, citizen ideology, and previous policy environments influence the adoption of these types of bans. Although this paper adds to the research mentioned previously to further understand the debate of same sex marriage, 9 some of the aspects of the study do not fit economic modeling very well. The data source for Soule’s independent variable may be biased because they represent the gay and lesbian community and the analysis method is not a familiar one in the economic research world. This observational study helps add knowledge to the previous three studies looking at attitudes towards same sex marriage and other gay rights issues. When looking at a law’s or a policy’s effect on society, it is important to know why it is important to society in the first place. When certain characteristics of society, such as religion and political views, shape attitudes towards an issue, studies like these can help to add information to the debate. Section 2.3. Studies on the effect of same sex marriage Research more closely related to the research presented here has been done on topics other than the effects of same sex marriage on wedding expenditures. Alm et al. (2000) investigate the impact of same sex marriage on income taxes. Based on the fact that some married couples face a marriage tax when paying income taxes, the authors propose that by allowing same sex marriage, income tax revenues should increase. The marriage tax occurs due to the structure of the current tax system. It affects couples that have similar individual earnings. Conversely, couples with a one income household tend to face a marriage subsidy. The structure of today’s society makes it possible for heterosexual couples to have either one or two income households. Stay-at-home moms and dads are still a common occurrence in heterosexual couples. Whereas, Alm et al. (2000) find that same sex couples tend to have two income households possibly due to 10 the fact they are not allowed the same legal rights as heterosexual couples. Same sex marriage grants same sex couples the same rights given to different sex married couples. Marriage helps protect individuals that are not earning incomes if faced with divorce due to alimony and child support. Alm et al.’s (2000) research is similar to the research done here because of the investigation into same sex marriage effects on a flow of cash into the government. The study presented here is looking at wedding expenditures instead of tax revenue but both concern the changing flow of money. By first estimating how many same sex couples would marry if given the chance to do so and then looking at the income characteristics of these couples, Alm et al. find that allowing same sex marriage would increase federal income tax revenue by approximately $0.3 billion to $1.3 billion. They note that some same sex couples may decide against marrying their partner because of this marriage tax but that most couples do not ponder this when considering marriage. This study helps the research being presented here by adding to the information available about same sex marriage. Langbein and Yost (2009) investigate if same sex marriage poses a negative externality on society in the form of negative impacts on marriage, divorce, abortion rates, the amount of children born out of wedlock, and the amount of children raised by single women. Proponents of same sex marriage bans mainly use the argument that gay and lesbian couples getting married break down traditional marriage through these types of negative externalities. Most of the data used is from the U.S. Census and the remaining data on the legal recognition and forbiddance of marriage rights is from the 11 Human Rights Campaign. The authors find through regression analysis that laws allowing same sex marriage do not adversely affect marriage rates, divorce rates, abortion rates, the amount of children born out of wedlock, or the amount of children raised by single women. The coefficients are statistically significant for same sex marriage’s effect on the marriage rate, the abortion rate, and the percent of children raised by single women. The marriage rate is increased and the abortion rate and the percent of children raised by single women are decreased with laws allowing same sex marriage. This study suggests these negative externalities may not exist. This study shows how same sex marriage can affect society, which is similar to looking at its effect on wedding expenditures because that is also showing an effect on society. Dee (2008) studies the effect of same sex marriage on the prevalence of sexually transmitted diseases (STD), specifically syphilis, gonorrhea and HIV. He chose these three because they are particularly common among homosexual males. Dee also looks at the effect of same sex marriage on tuberculosis and malaria infection as a control. He obtains the data for his research from the World Health Organization. The data is an unbalanced panel of 25 nations in Europe during the years 1980 to 2003. By using a twoperiod model, Dee finds that coefficient for syphilis rate is statistically significant and negative. The coefficients for gonorrhea and HIV rates are also negative but not statistically significant. A decrease in infection rates for STDs that are common among gay men could help push the passage of laws allowing same sex marriage due to the high social and financial costs associated with treating these diseases. 12 Ash and Badgett (2004) look to see the effect on health care coverage enrollment if same sex partners are allowed the same coverage as heterosexual married spouses. This is similar to looking at how same sex marriage would affect health care coverage enrollment. This would present a cost to employers but a benefit to those that may be without health care coverage otherwise. Ash and Badgett use the Annual Social and Economic Supplement to the Current Population Survey to acquire their data. By using a linear probability model, they estimate the dichotomous insurance-coverage outcome. They find that a typical employer can expect an increase in enrollment of same sex partners of 0.1% to 0.3%. This is a relatively small increase for employers when looking at costs imposed on them. Since federal, state, and local governments bear the burden of covering uninsured people, they would benefit from more people enrolling in health coverage. When looking at federal estimates, the authors find that homosexuals enrolling in their partner’s health plan could present a significant savings for the federal government on health care expenditures. These last four papers are all similar in the respect that they look at the effect of same sex marriage on another important topic. Because there is relatively no research done on the same topic performed here, these are the closest papers to build upon. These papers show different ways of looking at same sex marriage and its effects. One can see through these papers that same sex marriage does affect society as a whole and they each touch on one aspect present in society. The research presented here hopes to add to the small amount of research present on same sex marriage. 13 Chapter 3 THEORETICAL AND EMPIRICAL MODELS Supply and demand is one of the most basic theories in economics, yet it is the basis for most studies observing people’s behaviors. In this research, supply and demand is at the heart of the question at hand. One would expect the demand for weddings to increase if the number of people allowed to marry increased. The theory of supply and demand shows there is an equilibrium price and quantity for all goods and services sold in the marketplace. This equilibrium price and quantity is set simultaneously by demand and supply. The demand is determined by consumers and supply is determined by producers. Shocks to supply or demand result new equilibria. For example, a decrease in input prices would be a shock to supply and because it is making it cheaper to produce the item, supply shifts outwards. This can be seen in Figure 1. This would cause a decrease in equilibrium price and an increase in equilibrium quantity. Shocks can occur on both the supply side and the demand side. Laws allowing same sex marriage would be like a shock to the demand for weddings. If a state makes it legal for more of its population to marry, one would expect there to be more people demanding weddings. If there are suddenly more people demanding weddings, the demand for weddings would shift outwards. This can be seen in Figure 2. This would cause the price of weddings to increase and the quantity of weddings to increase. Because states are able to tax spending on weddings, tax revenue 14 would increase if wedding spending increased. If the government is interested in raising revenue, then understanding how same sex marriage laws affect expenditures would allow policy makers to weigh legalizing same sex marriage among their options. Although the theory leads to supporting same sex marriage due to the expected increase in demand for weddings, there are other factors that may not lead to the anticipated results. There may be differences between the types of weddings performed that lead to different results than expected. As seen in California, when same sex marriage was legalized, many homosexual couples went straight to the courthouse and obtained marriage licenses without elaborate wedding ceremonies. If this happens more often than not with same sex couples, we may not see a large increase in wedding expenditures at all. In addition, if wedding venues are not used in order to have same sex weddings, we may not observe the increases in expenditures. Another possibility is that same sex couples that want to formally celebrate their unions have commitment ceremonies even in the absence of legally authorized marriage or civil unions. In this case, celebration expenditures would not change when marriage is legalized. According to the theory of supply and demand, if same sex marriage is legalized, we should see an increase in the number of weddings and an increase in the average cost of weddings. This would lead to an overall increase of wedding expenditures in states that legalize same sex marriage, relative to those that do not. For the research done here, the regression equation is: πππ‘ = πΌπ + π½1 πππ‘ + π½2 πππ‘ + π½3 π·π‘ + πππ‘ 15 Where πππ‘ is the dependent variable being analyzed in time t and state i. πππ‘ is a dummy variable for either same sex marriage laws or civil union/domestic partnership laws depending on which one we are analyzing in time t and state i. πππ‘ is the remaining control variables such as GSP per capita and population in time t and state i. πΌπ represents state fixed effects and π·π‘ is the year dummy variable. πππ‘ is the error. 16 Figure 1. Shock to Supply Side Price Supply P1 P2 Demand Q1 Q2 Quantity Figure 2. Shock to Demand for Weddings Cost of Wedding Supply P2 P1 Demand Q1 Q2 Number of Weddings 17 Chapter 4 DATA For this research, the dependent variables of interest are wedding expenditures per capita, number of weddings per capita, and statewide average wedding cost. The first two dependent variables are in per capita terms to control for states with large populations. The independent variables are GSP per capita, unemployment rate, population, population density, percent of the population with Bachelor’s degrees or higher, percent of the population ages 18 to 34, and dummy variables for same sex marriage laws and domestic partnership laws. Population is only used when average wedding cost is the dependent variable because population is controlled for with the other two dependent variables. These independent variables are used because they are expected to help explain the variation in wedding expenditures. For example, one would expect wedding expenditures to increase if GSP per capita increases because individuals would have more to spend on a wedding. The data includes all 50 states. The District of Columbia was left out because it was an outlier for most of the variables being investigated. The state level data covers the years 2005 to 2009 and are from multiple sources. The data on wedding expenditures per capita, number of weddings per capita, and average wedding cost are from The Wedding Report, Incorporated website4. Both wedding expenditures per capita and average wedding cost have been converted into real 4 The Wedding Report, Incorporated website can be found at http://www.theweddingreport.com/ 18 2010 dollars. The data for state laws on same sex marriage and domestic partnerships come from the website for National Conference of State Legislatures5. These data are recorded as discrete variables with 1’s indicating that a state has laws allowing same sex marriage or laws allowing civil unions/domestic partnerships. The state level data on GSP per capita and unemployment rate are from the Federal Reserve Economic Database. GSP per capita is real and is measured in 2010 dollars. The unemployment rate only portrays those actively looking for work. The state level data on population are from the 2010 U.S. Census Population Estimates. Population is measured in thousands. Population density is created by dividing the total population of the state by the total area in square miles. The data for the percent of population with Bachelor’s degrees or higher and the percent of population ages 18 to 34 were obtained from the American Community Survey6. The descriptive statistics for the entire data set are in Table 1. The overall average wedding expenditures is $1.106 billion. This may seem like it would be a large part of a state’s GSP but the average percent of a state’s GSP made up by wedding expenditures is only 0.38%. The average cost of a wedding in the U.S. is $24,132.96, with the lowest state’s average cost being $14,329.25 and the highest being $37,166.13. In the U.S., 4.0% of the states have same sex marriage laws and 13.2% have civil union or domestic partnership laws. The average GSP per capita in the U.S. is $53,138.41, with a low state GSP per capita of $35,595.85 in Georgia in 2005 and a high state GSP per 5 6 The National Conference of State Legislatures website can be found at http://www.ncsl.org/ The American Community Survey can be found at http://www.census.gov/acs/www/ 19 capita of $89,682.01 in Alaska in 2008. We see a huge range of GSP per capita across the states. The average unemployment rate in the sample is 5.47%. The lowest unemployment rate is 2.5%, which was in 2006 in Hawaii. The highest unemployment rate is 13.4%, which was in Michigan in 2009. The high unemployment rate in Michigan has a lot to do with how hard Detroit was hit with the recession and failing Americanmade auto sales. In this sample, 24.3% of the U.S. has a bachelor’s degree or higher. Massachusetts has the highest educated adult population with 35.11% having Bachelor’s degrees or higher. This sample shows that 30.3% of the U.S. population are between the ages of 18 and 34, which is the age group most commonly seen having weddings. Because this research is looking at same sex marriage laws and civil union/domestic partnership laws, the data were broken down to look at the descriptive statistics for states that have same sex marriage laws and states that have civil union/domestic partnership laws. In states that allow same sex marriage, as seen in Table 2, the average total wedding expenditures is $1.302 billion. This is higher than the overall U.S. average by $196 million. This definitely makes it seem as though laws allowing same sex couples to wed increase wedding expenditures but other factors (especially population) need to be considered through regression analysis. The average number of weddings and average wedding cost are also higher in states allowing same sex marriage but once again, regression analysis will include other factors to help reduce any bias in these comparisons. When looking at states that allow civil unions or domestic partnerships, Table 3 shows that average total wedding expenditures and average wedding cost are higher than 20 averages for both the entire sample and states allowing same sex marriage. One can also see that the mean GSP per capita is higher in states with civil union/domestic partnership laws than in both the entire sample and in states with same sex marriage laws. Therefore, the increased average wedding cost could be due to factors related to income and not the laws allowing same sex couples to obtain civil unions or domestic partnerships. The regression analysis will control for these factors by including independent variables such as GSP per capita and show if the relationship between same sex marriage or civil union/domestic partnership laws have a significant impact on wedding expenditures. Another way to determine the effect of same sex marriage laws and civil union/domestic partnership laws on wedding expenditures is to calculate a raw difference in difference for each dependent variable. This is done by first calculating the average for each dependent variable in three separate groups in 2005 and in 2009. The first group is states that adopted same sex marriage laws at some point in the time period being observed. The second group is states that adopted civil union/domestic partnership laws at some point during the time period being observed. The third group is all other states which do not have same sex marriage laws during the time period being observed or states that had same sex marriage laws during the entire observed time period. After finding the averages for each dependent variable in each group, the percent change from 2005 to 2009 is calculated for each. The raw difference in difference for same sex marriage laws is calculated for each dependent variable by subtracting the percent change in the third group from the percent change in the group adopting same sex marriage laws. The raw difference in difference 21 for wedding expenditures per capita is 0.0270, so the percent change in wedding expenditures is 2.7% higher in states adopting same sex marriage than in states that had no change to their laws. When wedding expenditures are broken down, we see the raw difference in difference for average wedding cost is -0.0006 and for number of weddings per capita is -0.5607. This is showing contradictory values. The percent change in the average wedding cost and the percent change in the number of weddings per capita decreases with the adoption of same sex marriage laws, but the percent change in wedding expenditures per capita increases. This contradiction can be clarified with regression analysis. Similarly, the raw difference in difference for civil union/domestic partnership laws is obtained by subtracting the percent change in the third group that has no change from the percent change in the group adopting civil union or domestic partnership laws for each dependent variable. The raw difference in difference for wedding expenditures per capita is -0.0739. This shows a decrease of 7.39% in wedding expenditures per capita in states adopting civil union/domestic partnership laws compared to states with no change in laws. When wedding expenditures is broken down, the raw difference in difference for average wedding cost is -0.0007 and the raw difference in difference for number of weddings per capita is -0.1062. Both the number of weddings and the average wedding cost decreases when states adopt civil union/domestic partnership laws, which lead to decreased wedding expenditures. This is interesting to see that less people would get married if civil unions and domestic partnerships are legalized. This may be in part due to the fact that in California, for example, different sex couples over the age of 65 are 22 able to register domestic partnerships but the number of couples over 65 actually forgoing marriage and obtaining domestic partnerships may be relatively small. Further research would need to be done to see why people are changing their behavior in this way. 23 Table 1. Descriptive Statistics Mean Total Wedding Expenditures (in millions) Wedding Expenditures Per Capita Number of Weddings Number of Weddings Per Capita Average Wedding Cost Same Sex Marriage Law Civil Union/Domestic Partnership Law GSP Per Capita Unemployment Rate Population (in thousands) Population Density Percent of Population w/ Bachelor’s Degree or Higher Percent of Population Ages 18-34 Observations: 250 Minimum Maximum 1106.44 Standard Deviation 1285.72 70.68 7270.38 199.35 166.08 67.98 1532.60 43547.06 45683.11 4280 247022 0.0082 0.0063 0.0040 0.0580 24132.96 5200.92 14329.25 37166.13 0.0400 0.1964 0 1 0.1320 0.3392 0 1 53138.41 0.0547 10042.83 0.0201 35595.85 0.0250 89682.01 0.1340 6013.34 6615.34 506.00 36887.61 161.12 200.23 1.01 996.76 0.2434 0.0468 0.1544 0.3511 0.3031 0.0268 0.1766 0.4267 24 Table 2. Descriptive Statistics for States with Same Sex Marriage Laws Mean Standard Minimum Maximum Deviation Total Wedding 1302.48 1647.39 87.95 5812.20 Expenditures (in millions) Wedding 158.27 36.20 107.15 211.06 Expenditures Per Capita Number of 50081.30 70171.41 4701 247022 Weddings Number of 0.0061 0.0007 0.0055 0.0076 Wedding Per Capita Average 26140.54 6851.52 15224.70 35202.65 Wedding Cost GSP per Capita 63795.34 8304.88 47610.67 76794.44 Unemployment 0.0611 0.0143 0.0440 0.0830 Rate Population (in 7974.10 10248.09 621.44 36538.01 thousands) Population 469.15 249.39 53.46 633.99 Density Percent of 0.3193 0.0419 0.2301 0.3511 Population w/ Bachelor’s Degree or Higher Percent of 0.2919 0.0175 0.2710 0.3340 Population Ages 18-34 Observations: 10 25 Table 3. Descriptive Statistics for States with Civil Union/Domestic Partnership Laws Mean Standard Minimum Maximum Deviation Total Wedding 1513.03 2184.66 102.53 7270.38 Expenditures (in millions) Wedding 258.17 189.35 114.37 739.73 Expenditures Per Capita Number of 55520.52 76799.67 4937 247022 Weddings Number of 0.0099 0.0077 0.0053 0.0410 Wedding Per Capita Average 26726.13 5677.79 17712.85 37166.13 Wedding Cost GSP per Capita 58091.39 9773.29 44051.84 76794.44 Unemployment 0.0561 0.0235 0.0250 0.1250 Rate Population (in 8035.84 12361.90 618.80 36887.61 thousands) Population 268.07 304.89 23.87 996.76 Density Percent of 0.2804 0.0322 0.2003 0.3291 Population w/ Bachelor’s Degree or Higher Percent of 0.2860 0.0274 0.2480 0.3352 Population Ages 18-34 Observations: 33 26 Chapter 5 RESULTS In order to see the effect of same sex marriage on wedding expenditures, multiple regressions are run. The first set run is OLS regressions with wedding expenditures per capita as the dependent variable. The second set is OLS regressions with number of weddings per capita as the dependent variable. The third set is OLS regressions with average wedding cost as the dependent variable. In addition, a last set is run with the natural log of wedding expenditures per capita to determine if there is a non-linear relationship present. In this last set of regression GSP per capita is replaced by the natural log of GSP per capita. In each set of regressions, a total of six regressions are run. The first regression is run with only same sex marriage law, year dummies, and state fixed effects as the independent variables. The second regression is run with civil union/domestic partnership law, year dummies, and state fixed effects as the independent variables. The next two are run with either same sex marriage law or civil union/domestic partnership law along with year dummy variables and the other explanatory variables. The last two regressions are the same as the previous two but with state fixed effects included. State fixed effects are left out in the second two regressions but included in the last two in order to determine if multicollinearity is present. Recall from the data section that the other independent variables are GSP per capita (or natural log of GSP per capita in the log-log regressions), unemployment rate, population (only used in regressions with average wedding cost as dependent variable), population density, 27 percent of the population with Bachelor’s degrees or higher, and percent of the population ages 18 to 34. These variables all vary over time. Including year dummy variables and state fixed effects helps to eliminate any omitted variable bias that is present because of differences between years or states that cannot be measured or are not captured. For example, Hawaii may have more weddings than another state because of its tropical climate. This is captured in the state fixed effects. An example of something that would change over time that is not measurable would be changes in the business cycle. These changes are captured by using year dummy variables. When looking at the regressions run with wedding expenditures per capita as the dependent variable, the coefficient for same sex marriage laws is only statistically significant in Regression #1. These results can be seen in Table 4. The coefficient shows that for states that have same sex marriage laws, wedding expenditures per capita are expected to be $21.06 higher than in states without. This is a relatively large increase since the average wedding expenditures per capita is almost $200. Regression #4 shows that states that have civil union/domestic partnership laws are expected to have wedding expenditures per capita that are $109.18 higher than in states that do not have these laws and this coefficient is statistically significant. This is more than a 50% increase from the average for the sample. In the absence of state fixed effects, the adjusted R-squared is only 12.29%. When including state fixed effects in Regression #6, the statistical significance of the coefficient is eliminated but the adjusted R-squared increases to 92.4%. The model overall does a better job of explaining the variation in wedding expenditures when state fixed effects are included. 28 Other results worth noting in Table 4 are the coefficients for GSP per capita, unemployment rate, and education. GSP per capita is statistically significant in all of the regressions in which it is included. The effect is small though; with only about a $0.37 to $0.50 increase in wedding expenditures per capita for a $100 increase in GSP per capita. The sign for the coefficient for unemployment rate is as expected in all regressions, but it is only statistically significant in Regression #5 and #6. A one percentage point increase in the unemployment rate is expected to decrease wedding expenditures per capita by about $18. This is not a large amount but makes sense. If more people are unemployed, less people will feel comfortable spending money on a wedding. The coefficient for education is only statistically significant when state fixed effects are not included. This could be because education levels do not vary much over time for a state but vary across states. When state fixed effects are included, these differences in education levels across states are controlled for. Table 5 shows the results from the six regressions using number of weddings per capita as the dependent variable. Once again, the coefficient for same sex marriage is positive and statistically significant in only Regression #1. States allowing same sex marriage are estimated to have 7 more wedding for every 10,000 people compared to states without same sex marriage laws. Once other explanatory variables are included though, the statistical significance is gone. Although this happens, Regression #1 has a very high adjusted R-squared of 97.31%. The coefficient for civil union/domestic partnership law is positive and statistically significant in Regression #4, which is run without state fixed effects. The model in Regression #6 has a higher R-squared than 29 Regression #4, but the coefficient for civil union/domestic partnership laws becomes statistically insignificant. When state fixed effects are included, the adjusted R-squared is 97.66%, which is very high. This model explains most of the variation in number of wedding per capita. In the regressions where GSP per capita is incorporated, the coefficient is statistically significant at the 5% level but has a very small effect. GSP per capita would have to increase by $10,000 to see only an expected increase of 1 wedding for every 1000 people. Population density is another variable that has statistical significance in all regressions, but it also has a very small effect on number of weddings per capita. Once again, the coefficient for education is only statistically significant when state fixed effects are not included and it is negative. It may be negative because if a greater proportion of the population is attending college, they may be putting off getting married until they have finished college and started a career. Once more, the adjusted R-squared is highest when the explanatory variables and state fixed effects are included. Therefore, this appears to be the best model for same sex marriage laws and civil union/domestic partnership laws because the model explains most of the variation in number of weddings per capita. The results for the regressions using average wedding cost as the dependent variable are shown in Table 6. Four of these regressions use population as an explanatory variable in order to control for highly populated states. The coefficient for same sex marriage is not statistically significant until we include all explanatory variables, year dummy variables and state fixed effects. In states allowing same sex marriage, it can be 30 expected that average wedding cost is $914.09 lower than in states not allowing these marriages. So we see from this and previous results, that although there are more weddings in states with same sex marriage laws, the average cost is lower. The decrease in average wedding cost may be due to the fact that same sex couples may not have a big ceremony and reception. Instead, they may only be going down to the courthouse and having a civil ceremony. To find out if this is true, further research needs to be done. With states allowing civil unions/domestic partnerships, the results are unclear. In Regression #2, the effect is negative and statistically significant, but in Regression #4, the effect is positive and statistically significant. Other coefficients worth noting in these regressions are the coefficients for unemployment rate, population density, and education. The sign of the coefficient for both unemployment rate and population density changes depending on whether or not state fixed effects are included and the coefficients are statistically significant in both cases. This makes it uncertain what effect these two variables have on wedding expenditures. One would expect unemployment rate to have a negative effect on average wedding cost but it cannot be determined from these results if that assumption is true. The coefficient for education in Regression #3 and #4 is statistically significant and positive. Regression #3 shows that a one percentage point increase in percent of the population with a Bachelor’s degree or higher predicts an increase of average wedding cost of $153.33. Regression #4 shows that a one percentage point increase in percent of the population with a Bachelor’s degree or higher predicts an increase of average wedding cost of $111.80. The statistical significance of these coefficients goes away 31 when state fixed effects are included. Once again, this may be due to the fact that education levels in a state stay pretty much the same over short periods of time and the differences in education across states is captured in the state fixed effects. In the final set of regressions, the natural log of wedding expenditures per capita is used as the dependent variable to see if the relationship between wedding expenditures per capita and the explanatory variables is non-linear. Table 7 shows these results. The independent variable GSP per capita is replaced with the natural log of GSP per capita. The coefficient for same sex marriage laws is statistically significant when including all regressors, year dummy variables, and state fixed effects. The results show that states that allow same sex marriage have wedding expenditures per capita that are 5.76% higher than in states that do not allow same sex marriage. This is close to the raw difference in difference estimation of 2.7% and because the coefficient in Regression #5 is statistically significant, it can be said with some certainty that same sex marriage laws positively affect wedding expenditures per capita. Regression #4 estimates that states with civil union/domestic partnership laws have wedding expenditures per capita that are 36.28% higher than states without these laws. This is close to what was predicted in Regression #4 in Table 4. After looking at the results for the regressions run, one can see that same sex marriage laws have a positive effect on wedding expenditures per capita and number of weddings per capita but have a negative effect on average wedding cost. For states allowing civil unions/domestic partnerships, we can see a positive effect on wedding expenditures per capita and number of weddings per capita. However, it is unclear what 32 effect civil union/domestic partnership laws have on average wedding cost. These results support the adoption of same sex marriage and civil union/domestic partnership laws if a state wants to encourage wedding expenditures, in order to raise tax revenue. 33 Table 4. Wedding Expenditures Per Capita as Dependent Variable Same Sex Marriage Law Civil Union/ Domestic Partnership Law GSP Per Capita Unemployment Rate Population Density Percent of Population w/ Bachelor’s Degree or Higher Percent of Population Ages 18-34 2005 2006 2007 2008 State Fixed Effects Adjusted RSquared Regression #1 21.06** (9.97) Regression #2 Regression #3 15.92 (20.59) -66.07 (65.04) Regression #4 Regression #5 5.61 (10.70) 109.18** (34.87) Regression #6 -55.65 (49.66) 0.0040** (0.0018) -107.81 (815.86) -0.0371 (0.0344) -833.32** (421.22) 0.0037** (0.0018) -245.97 (709.57) -0.0210 (0.0334) -1072.17** (413.50) 0.0049** (0.0024) -1894.30* (1078.75) 4.05* (2.44) -259.31 (946.98) 0.0050** (0.0023) -1754.86** (865.13) 4.24* (2.36) -230.35 (955.81) -44.76 (165.00) 284.88 (184.59) -23.16 (177.36) -36.48 (184.51) 100.88** (12.97) 95.38** (11.50) 92.41** (10.83) 21.99* (12.04) Yes 95.65** (9.78) 90.16** (8.27) 89.82** (8.85) 21.57* (11.61) Yes 94.77** (32.19) 82.40** (35.18) 80.03** (38.53) 12.38 (29.92) No 96.40** (30.27) 80.65** (32.88) 75.39** (36.54) 8.21 (28.96) No 48.91** (23.32) 25.53 (33.58) 14.50 (37.04) -40.29 (29.38) Yes 51.01** (19.49) 28.21 (28.72) 19.17 (30.09) -35.96 (24.54) Yes 0.9106 0.9144 0.0800 0.1229 0.9212 0.9240 *Statistically significant at the 10% level Robust standard errors in parentheses **Statistically significant at the 5% level 34 Table 5. Number of Weddings Per Capita as Dependent Variable Same Sex Marriage Law Civil Union/ Domestic Partnership Law GSP Per Capita Unemploy -ment Rate Population Density Percent of Population w/ Bachelor’s Degree or Higher Percent of Population Ages 1834 2005 2006 2007 2008 State Fixed Effects Adjusted R-Squared Regression #1 0.0007** (0.0003) Regression #2 Regression #3 0.0008 (0.0008) -0.0011 (0.0012) Regression #4 Regression #5 0.0004 (0.0003) 0.0038** (0.0015) Regression #6 -0.0009 (0.0009) 0.0000002** (0.0000000) 0.0017 (0.0399) 0.0000001** (0.0000000) -0.0032 (0.0353) 0.0000001** (0.0000000) -0.0301 (0.0212) 0.0000001** (0.0000000) -0.0281 (0.0176) 0.000004** (0.000002) -0.0394** (0.0159) 0.000004** (0.000001) -0.0476** (0.0158) 0.0001** (0.00005) -0.0125 (0.0215) 0.0001** (0.00005) -0.0117 (0.0216) -0.0007 (0.0063) 0.0109 (0.0075) -0.0011 (0.0037) -0.0011 (0.0037) 0.0012** (0.0003) 0.0009** (0.0002) 0.0007** (0.0002) 0.0003 (0.0002) Yes 0.0011** (0.0002) 0.0008** (0.0002) 0.0007** (0.0002) 0.0003 (0.0002) Yes 0.0012 (0.0013) 0.0006 (0.0015) 0.0005 (0.0016) 0.0001 (0.0013) No 0.0012 (0.0013) 0.0006 (0.0014) 0.0003 (0.0015) -0.00004 (0.0013) No 0.0005 (0.0004) -0.0001 (0.0007) -0.0005 (0.0008) -0.0007 (0.0006) Yes 0.0006 (0.0004) -0.0001 (0.0006) -0.0005 (0.0006) -0.0007 (0.0005) Yes 0.9731 0.9737 0.0575 0.0938 0.9761 0.9766 *Statistically significant at the 10% level Robust standard errors in parentheses **Statistically significant at the 5% level 35 Table 6. Average Wedding Cost as Dependent Variable Same Sex Marriage Law Civil Union/Dom estic Partnership Law GSP Per Capita Unemployment Rate Population (in thousands) Population Density Percent of Population w/ Bachelor’s Degree or Higher Percent of Population Ages 18-34 2005 2006 2007 2008 State Fixed Effects Adjusted R-Squared Regression #1 -839.71 (561.56) Regression #2 Regression #3 -134.95 (454.17) -631.43** (303.44) Regression #4 Regression #5 -914.09** (429.31) 1770.56** (413.41) Regression #6 -455.75 (299.20) 0.0352** (0.0124) 15929.43** (7830.24) 0.0973** (0.0116) 0.0304** (0.0116) 15096.96** (7199.07) 0.0888** (0.0161) -0.0206 (0.0289) -18443.66** (7420.79) 0.3350 (0.4261) -0.0229 (0.0296) -15651.48** (7327.04) 0.2517 (0.3921) 9.70** (0.7864) 15333.38** (3297.06) 9.93** (0.8908) 11180.01** (3402.25) -137.37** (41.52) -3905.15 (9846.13) -136.22** (41.26) -5047.23 (9972.42) -2710.28 (3308.61) 2874.36 (3397.12) 2221.04 (3464.19) 834.18 (3490.98) 8804.80** (138.38) 9081.84** (140.16) 9411.92** (144.22) 1996.59** (147.17) Yes 8817.30** (138.63) 9094.33** (140.40) 9449.67** (147.46) 2013.38** (147.53) Yes 9540.20** (414.61) 9912.68** (446.33) 10156.79** (457.88) 2497.09** (379.29) No 9638.85** (380.82) 9961.08** (409.70) 10161.78** (418.96) 2480.99** (352.06) No 7682.25** (307.95) 7965.14** (310.56) 8422.08** (309.41) 1330.97** (252.25) Yes 7780.64** (298.40) 8088.08** (303.16) 8573.85** (305.29) 1433.11** (250.23) Yes 0.9868 0.9867 0.8949 0.9064 0.9894 0.9890 *Statistically significant at the 10% level Robust standard errors in parentheses **Statistically significant at the 5% level 36 Table 7. Natural Log of Wedding Expenditures Per Capita as Dependent Variable Same Sex Marriage Law Civil Union/ Domestic Partnership Law Natural Log of GSP per Capita Unemployment Rate Population Density Percent of Population w/ Bachelor’s Degree or Higher Percent of Population Ages 18-34 2005 2006 2007 2008 State Fixed Effects Adjusted RSquared Regression #1 0.0672** (0.0299) Regression #2 Regression #3 0.0406 (0.0579) -0.0049 (0.0226) Regression #4 Regression #5 0.0576** (0.0295) 0.3628** (0.0990) Regression #6 -0.0027 (0.0148) 0.5580** (0.2219) 0.5056** (0.2089) 0.7110** (0.1594) 0.7270** (0.1632) -0.2697 (2.40) 0.00003 (0.0001) -1.94** (0.8689) -0.7275 (2.02) 0.00008 (0.0001) -2.74** (0.8611) 0.5368 (0.6281) 0.0035** (0.0016) 0.9562 (0.9966) 0.4657 (0.6445) 0.0037** (0.0016) 1.03 (0.9975) 0.0150 (0.5556) 1.11* (0.5867) -0.3927** (0.1469) -0.3480** (0.1418) 0.5144** (0.0108) 0.5014** (0.0105) 0.4925** (0.0089) 0.1375** (0.0118) Yes 0.5101** (0.0108) 0.4971** (0.0106) 0.4884** (0.0089) 0.1361** (0.0121) Yes 0.4990** (0.0860) 0.4686** (0.0952) 0.4607** (0.1012) 0.1134 (0.0898) No 0.5053** (0.0784) 0.4636** (0.0855) 0.4461** (0.0921) 0.0998 (0.0847) No 0.5529** (0.0251) 0.5330** (0.0282) 0.5086** (0.0244) 0.1421** (0.0185) Yes 0.5471** (0.0257) 0.5274** (0.0286) 0.5025** (0.0251) 0.1386** (0.0195) Yes 0.9866 0.9861 0.2710 0.3442 0.9877 0.9874 *Statistically significant at the 10% level Robust standard errors in parentheses **Statistically significant at the 5% level 37 Chapter 6 CONCLUSION Same sex marriage is a hotly debated topic and in the news frequently due to states recently passing laws allowing same sex couples the right to marry. There are many different views as to why it should or should not be legal. Some argue they should not marry because of religious beliefs. Others argue that it is an equality issue and homosexual couples are facing an injustice by not being allowed to marry. Still others see same sex marriage as a threat to heterosexual marriage and that it may breakdown the traditional family. Another option available in some states for same sex couples is civil unions or domestic partnerships. These allow for some of the same rights that married couples have, such as visitation rights in the hospital and health insurance coverage. Although some rights are protected under civil unions, most committed same sex couples would like all the rights given to married couples. After seeing the results presented here, we can see that same sex marriage has a positive and meaningful effect on wedding expenditures per capita and number of weddings per capita. It also has a negative effect on average wedding cost but this negative effect is not enough to offset the increase in number of weddings per capita and therefore, wedding expenditures per capita experiences an increase. In the case of civil unions/domestic partnerships, the results show a positive statistically significant relationship when looking at wedding expenditures per capita and number of weddings per capita. On the other hand, the results are inconclusive with respect to the effect on 38 average wedding cost. When looking at the natural log of wedding expenditures per capita, state fixed effects must be included with year dummy variables and other explanatory variables to get a statistically significant coefficient for same sex marriage laws. While with civil union/domestic partnership laws, the state fixed effects must be left out to find a statistically significant coefficient, suggesting this result is not robust. Not much research exists on the topic of same sex marriage, and none that could be found has been done on the effect of same sex marriage on wedding expenditures. This research will hopefully add considerably to what is known on the topic of same sex marriage and lead to further research. Because there are only a few states that allow same sex marriage and because the passage of these laws have been very recent, we may not be able to see the full effects of laws allowing same sex marriage on wedding expenditures in this data set. It may take a few years to a decade to see these effects. Same sex couples may not be having big wedding ceremonies and receptions due to society’s views on homosexuality. These couples may opt for a small civil ceremony at the courthouse. Moreover, even if they have a dinner afterwards to celebrate, it may not be captured in wedding expenditure data because it is not at a venue for weddings. Another phenomenon that may be observed is there may be a flood of same sex couples getting married in the first few years of it being legal and then the number of weddings may taper off as time passes. As the years go by, more data can be collected to better show the relationship between wedding expenditures and same sex marriage. 39 REFERENCES Alm, J., Badgett, M., & Whittington, L. A. (2000). Wedding Bell Blues: The Income Tax Consequences of Legalizing Same-Sex Marriage. National Tax Journal, 53(2), 201-214. Ash, M. A., & Badgett, M. (2004). Separate and Unequal: The Effect of Unequal Access to Employment-Based Health Insurance on Gay, Lesbian, and Bisexual People. Retrieved from EBSCOhost. Badgett, M. V. L., & Herman, J. L. (2011). Patterns of Relationship Recognition by Same Sex Couples in the United States. Retrieved on November 26, 2011 from http://williamsinstitute.law.ucla.edu/wp-content/uploads/Marriage-DissolutionFINAL.pdf Brewer, P. (2003). 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