A Cambridge Approach to Marriage, Immigration, and Trust

During the past two decades or so, Rowthorn’s interests have widened even further to address major social topics of the day, such as family structure and immigration. His 1999 paper in the Cambridge Journal of Economics—once again!—is a detailed theoretical analysis of marriage, supported by extensive citations of empirical evidence. The concept that economics can say useful things about social issues such as family structure was, of course, the innovation of the Chicago economist Gary Becker. Becker obtained due recognition for this with his subsequent award of the Nobel Prize. But his work is set in the context of individual utility maximisation and essentially takes as a background the institutional structure of marriage and the family as it existed in the Midwest of the USA in the 1950s. Essentially, through marriage, agents realise the gains from comparative advantage, a concept introduced by Ricardo. Women specialise in rearing children and doing the housework, men specialise by going out to work. Of course, this is something of a caricature of Becker’s work, but, like most caricatures, it contains substantial elements of truth.

Rowthorn’s approach, in keeping with the Cambridge tradition, eschews marginal analysis and the concept of utility maximisation. His 1999 paper examines the role of marriage as an institution for providing couples with the confidence to make long-term investments in their relationship. The basic theme is that marriage should be seen as an institution for creating trust between individuals in the sphere of family life and that legal and social policy should be fashioned so as to allow this function to be effectively performed. However, many of the legal and social reforms which have been implemented in modern times have undermined the ability of marriage to perform its basic role as a trust-creating institution.

We can usefully think of the decision to marry as an example of decisionmaking under uncertainty, where the word ‘uncertainty’ is used in the Knightian sense of not knowing the probability distribution of outcomes.

In many circumstances, the idea that agents lack the capacity to gather and process information in ways which enable them to optimise was stressed by Herbert Simon in his brilliant 1955 paper already mentioned above. Keynes’s General Theory is of course replete with examples of his view that agents are often unable to foresee the consequences of their decisions, other than in the very short term. His concept of ‘animal spirits’ is essentially a psychologically based theory of how agents attempt to deal with fundamental uncertainty and are hence able to take decisions in the face of it, rather than being paralysed into inactivity.

Confronted by inherent uncertainty, Simon argued that agents use heuristics, and the concept of optimisation makes little or no sense. Rowthorn sets out a range of ways in which agents can be assisted in the process of decision-making in such circumstances. His paper is therefore not merely considerably more general than that of Becker in the specific context of marriage. It is an important contribution to the much wider and fundamental issue of decision-making under uncertainty, which mainstream economics does not really address at all.

Rowthorn was not content merely to write academic papers on the topics of family structure. He convened an active study group involving think- tankers at the forefront of the interface between research and policy on this matter. Rowthorn and I authored an article in the magazine Prospect arguing that marriage is the best family structure and public policy should recognise this fact (Ormerod and Rowthorn 2001). In doing so, we incurred the wrath of members of the metropolitan liberal elite, for whom it was a matter of faith rather than theory and evidence that all family structures were of equal merit.

The outrage has been even greater over Rowthorn’s work on immigration, and in particular his two articles in Prospect in 2003 and 2006 (Rowthorn 2003, 2006), and his recent monograph for the respected think tank Civitas (Rowthorn 2014b). Again, however, Rowthorn’s more popular, policy- oriented work is based upon sound scientific foundations, both theoretical and empirical. For example, his paper with one of the UK’s leading demographers, David Coleman of Oxford, in Population and Development Review (Coleman and Rowthorn 2004), and his own subsequent papers in the Oxford Review of Economic Policy (Rowthorn 2008a) and Spatial Economic Analysis (Rowthorn 2008b). Rowthorn has also drawn on his more theoretical work on the emergence of trust and altruism, concepts directly related to the integration of minorities, in the Economic Journal and in Evolution and Human Behavior.