Recently, Larry King divorced for the 8th time. You would think after a few times he would get a hint. On April 14 Larry filed for divorce from his wife Shawn of 13 years. It should be pointed out that he is 26 years older than her. Mr. King has a net worth of around $144 million. He did not have a pre-nuptial agreement with his wife which could cost him big time. Let's examine this from an economic point of view. Larry for over a decade got the company of a much younger and attractive woman. Shawn got to be with a well known TV personality who was worth big bucks. Since they are divorced now they will get zero utility from the other person. Most likely Shawn will get at least half of Larry's estate which would be around $72 million. Remember this was for being with Larry for 13 years. Do you think more women would have done this if they had known the payout? A payout of $72 million would equal $5,538,461 per year, $106,508 per week, $15,215 per day, or around $634 per hour. Clearly, this is a large sum of money. However, it should be pointed out that in a sense Shawn is an outlier because Larry can only pick one woman out of many thousands to be his wife (okay maybe a few thousand - 7). At a rate of $634 this is clearly more than most conventional jobs and is probably more than a prostitute. However, prostitution is illegal and marrying trophy wives isn't. Both groups have incentives to engage in this type of behavior and their function is pretty similar yet one is legal while the other puts people in jail. How can we tell people it’s wrong to buy an hour of "fun" yet it’s okay to marry someone that you will have to provide "fun" for many years?
Thursday, April 22, 2010
Markets in Everything: Trophy Wives
Recently, Larry King divorced for the 8th time. You would think after a few times he would get a hint. On April 14 Larry filed for divorce from his wife Shawn of 13 years. It should be pointed out that he is 26 years older than her. Mr. King has a net worth of around $144 million. He did not have a pre-nuptial agreement with his wife which could cost him big time. Let's examine this from an economic point of view. Larry for over a decade got the company of a much younger and attractive woman. Shawn got to be with a well known TV personality who was worth big bucks. Since they are divorced now they will get zero utility from the other person. Most likely Shawn will get at least half of Larry's estate which would be around $72 million. Remember this was for being with Larry for 13 years. Do you think more women would have done this if they had known the payout? A payout of $72 million would equal $5,538,461 per year, $106,508 per week, $15,215 per day, or around $634 per hour. Clearly, this is a large sum of money. However, it should be pointed out that in a sense Shawn is an outlier because Larry can only pick one woman out of many thousands to be his wife (okay maybe a few thousand - 7). At a rate of $634 this is clearly more than most conventional jobs and is probably more than a prostitute. However, prostitution is illegal and marrying trophy wives isn't. Both groups have incentives to engage in this type of behavior and their function is pretty similar yet one is legal while the other puts people in jail. How can we tell people it’s wrong to buy an hour of "fun" yet it’s okay to marry someone that you will have to provide "fun" for many years?
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment