Unanticipated Consequences of Changed Relationship Legislation

Abstract

Relationships are formed, operate and are dissolved “in the shadow of the law”. There have been major changes in family law over the past forty years, with both Australia and New Zealand going down a similar path to other western countries. This paper outlines the changes in relationship property legislation drawing on the New Zealand experience. It considers how, from an economics perspective, these are likely to change behaviour and the nature of society. Risks and returns from relationships have changed, with potential transfer of assets being greater and occurring with more and shorter relationships. This can affect relationship formation and dissolution, as well as behaviour and bargaining positions within relationships. Only a limited range of possible implications were considered in the New Zealand parliamentary debates leading to the legislative changes. This was largely due to narrow framing of the issues. Additional possibilities can readily be predicted using basic economics reasoning. These relate not just to relationships and families, but also to decisions on education, career and lifestyle. Broader perspectives can also be taken. There are contradictions between aspects of family law, the policy objective of inclusion, concerns about population aging (including issues of care of the elderly), and aspects of happiness research. While policy changes may be generated through political movements, informal adaptations to the changed environment will also occur. These will result in both anticipated and unanticipated consequences. Consideration of these raises additional questions. Standard economic analysis based on theory and within a tightly specified set of assumptions gives some insights, but it is important to also remember Keynes’ warning about additional reserves, qualifications and adjustments that are necessary for real world application. The paper attempts to present a broad perspective.”