But she ain’t messin’ wit no broke...

This Wednesday the Law Commission announced that pre-nuptial agreements could become legally binding with a few years. This is a landmark decision that could change the face of British society as we know it. Currently, “prenups” have no legal standing in the United Kingdom while they are quite common in the United States and Canada. Today I am going to examine the prenup as a merit good, and offer a policy imperative which may be rather brow-raising.

“’Till death do us part” is still a popular phrase in wedding vows. But with one in three first marriages ending in divorce, and half of second or third marriages hitting the skids, it’s quite apparent that that some of us are suffering from information failure when walking up the aisle. A prenup is the perfect cure to this myopia, which has far-ranging consequences, usually ending in a long and bitter dispute about the division of assets. The most infamous divorce is of course the Mills v McCartney case, where the former Beatle had to pay £24 million to his second wife after he refused to sign a prenup on the grounds that it was “unromantic”.

Well we now have the hindsight of exactly how much his rose-tinted romanticism cost him. I can understand exactly why Sir Paul did not want to sign a prenup: it still has the social stigma attached to it as if it’s a direct accusation of your other half being a gold-digger. However, the simple point is that when entering into a marriage, many people are simply deluded and wrong about what the future will hold, and are too stubborn to realise this. Al Roth has written a brilliant paper on repugnance as a constraint on markets, in which he highlights our shift in attitude towards life insurance: previously seen as a ghoulish reminder of death, now seen as a helpful consideration towards your family. So if we are sanguine enough to sign contracts on life and death, why not holy matrimony?

The suggestion I make in order to lift this taboo is to change from an opt-in system to opt-out. As Dan Ariely observes with regards to kidney donation, we can alter the output values simply by reframing the “rules of the game”. Under this system, I foresee the take-up rate skyrocketing as it will then become the socially acceptable thing to do. I must stress the point that my Le Grand-esque libertarian paternalism does not force anyone into a prenup if they wish not to: the choice is still yours. In fact, some couples may well choose to throw their caution to the wind and make the grand gesture of ripping up their prenup, and I wish them the best of luck. But I do see some merit in this for the rest of us who would wish to minimise regret (I’ve already written briefly about the economics of regret) and not have such a difficult time in popping the second question.

Now of course as always, there are winners and losers in this. With prenups becoming the industry standard, there will be a rise in unemployment within the gold-digging sector. With the exact division of assets clearly transparent, it will be less costly to get a divorce (both in financial and emotional terms), and if we regard divorce to be a normal good (as opposed to an inferior good) there may be an increase in divorce rates. But this may be a good thing or a bad thing: some marriages simply needed time and counselling rather than a hasty divorce, these couples will lose out. But other couples are much better divorced than in a hateful union. The effects (both positive and negative) are amplified when children are thrown into the equation.

And there can be some fairly imaginative acrobatics written into a legal contract too. I applaud Catherine Zeta-Jones for designing the most ingenious prenup for her former sex addict husband Michael Douglas, in which if they split up, it would give her £1 million for every year they had been together plus £3 million for every woman with whom he had been unfaithful. Broken down into mathematical symbols, he is facing a huge marginal disincentive for every woman he sleeps with apart from his wife, and the longer the marriage goes on for (and the older she gets, therefore less likely to earn money and more likely to need it) the greater the sum paid. She might’ve looked criminally hot with an épée, but who knew she was also a masterful economist?!

In the end, this is still the mere bud of an idea and faces many complications. It will be costly to implement for the government (a prenup written into every marriage contract) but I can foresee it being outsourced into the private sector where competing law firms will drive down prices and continue to innovate with regards to terms and conditions. But hey, maybe I just want to make myself feel less guilty for wanting a prenup, and my way of getting about it is to change the law instead. But if you still need convincing, here are Naomi Alderman’s thoughts on the romanticism in a prenup.