MONEY IN THE BANK - TRANSACTION COSTS AND THE ECONOMIC-ORGANIZATION OF MARRIAGE

Although most husbands and wives pool their assets, others hold money back from the common pot. The choice between ''collectivized '' and '' privatized'' financial organization depends, in part, on which is more efficient - which minimizes transaction costs in organizing marital e xchanges. Insights from the ''new institutional economics'' suggest th at segregated assets are associated with lower expectations for marita l continuity, fewer investments unique to the relationship, and ease i n measuring contributions to the marriage. Data from the Survey of Inc ome and Program Participation support the notion that couples organize their finances in order to minimize the transaction costs of married life.