How I Realized I Don’t Appreciate My Wife Enough

Or, When Being an Economist Gets Uncomfortable

I recently learned that my wife’s employers value her more than I do. This was very shocking news to me because, although I know she has a great job with great co-workers, I figured, you know, I’m her husband. But it’s actually worse than that. I value my wife’s time less than the minimum legal limit.

Okay. Let me back up. This all started with me trying to figure out what is the full monthly cost of a given residence choice. How much of my costs are purely dependent on where I choose to live? Here’s the list I came up with:

  1. Rent
  2. Utilities
  3. Income Taxes, provided that taxation is residency-based not workplace-based, so basically provided reciprocity agreements exist
  4. Personal Property Taxes on cars (we own a car). Notably, we don’t own real estate, so those property taxes don’t matter for me, and can be assumed to be capitalized into rents.
  5. Other fees for cars, like registration, inspection, parking, etc.
  6. More income taxes: these are federall deductible, so I’ve gotta compute my Federal rate!
  7. Transportation costs — different places have different commute distances to our workplaces
  8. Transportation time — Aside from $$$, commutes cost time

Doing the Romantic Math

So I sat down and computed these costs.

Rent and Utilities

First of all, for rent, we need comparable neighborhoods. It just so happens that our rent (under $1,300 for a 2-bedroom with AC, washer-drier, etc) is quite good for DC, but actually very close to the average rent for our neighborhood, according to Trulia. Zillow gives a crazy-high estimate, but still way below the DC average. Our neighborhood has good transit access, is fairly dense, is mixed-use, and highly walkable. At the same time, it is not highly urban in the sense that there aren’t lots of tall buildings. A similar-style neighborhood could be found in Alexandria’s urban core in Virginia, or in parts of Bethesda, Maryland. So I use those areas as comparisons. So, we get:

DC Rent: ~$1275

MD Rent: ~$1125

VA Rent: ~$1375

Maryland has taken an early lead! Next up would be utilities, but I’m actually gonna drop utilities, because that’s extremely house dependent, even based on which side of the building you’re on.

Income Taxes

So next up is income taxes. I’m a former tax economist, so this should be easy. Based on the standard deduction and exemption (we actually itemize and take a lot more than SD and PEs, but this keeps it simple), I get the state tax bills:

DC Income Tax: ~$6400

MD Income Tax: ~$4500

VA Income Tax: ~$5400

Once again, Maryland is really cleaning up here. Cheap rent, lower income taxes, what’s not to love?

Oh, right, Maryland also has local income taxes. Montgomery County’s local income taxes are 3.2%.

DC Local Income Tax: $0

MD Local Income Tax: ~$3000

VA Local Income Tax: $0

Maryland just lost the lead, guys.

But wait! There’s some relief! State and local taxes can be deducted from Federal income taxes! After this deductibility, the total tax burden comes to:

DC Income Tax: ~$4600

MD Income Tax: ~$5400

VA Income Tax: ~$3900

Those are, of course, annual figures. We have to make them monthly to compare to rent. So:

DC Income Tax: ~$375

MD Income Tax: ~$450

VA Income Tax: ~$325

That brings our running total to:

DC Costs: ~$1650

MD Costs: ~$1575

VA Costs: ~$1700

Cars

We own a car. Partly because I’m a cackling urbanist supervillain who does everything in his power to thwart the dream of high-density sustainable living, partly because we like to travel on the weekends, and partly because my wife’s place of work is not very transit-accessible.

The thing about owning a car is that it comes with costs. Some costs don’t depend on your location very much: wherever we live, we’ll probably get oil changes at Firestone, since we also get free alignments there. Gas, too, is fairly stable: gas prices may vary across locations, but we’re GasBuddy users, and my wife’s commute covers a good stretch of territory, so we’ll pay comparable gas prices wherever we live.

Rather, the residence-dependent costs to having a car are:

  1. Differences in insurance rates across state lines
  2. Differences in inspection/registration fees
  3. Differences in parking rules/fees
  4. Differences in personal property taxes

I looked these up, and calculated them for our vehicle, which is this beauty right here:

It turns out, the cost of car ownership varies little across states. Insurance is way cheaper in Virginia, but then there’s Virginia’s property tax on cars. Location-dependent costs of car ownership end up being $60-$70 a month in all locations, with Maryland the cheapest, coming in about 50 cents under DC.

Commuting

Finally, we get to commuting. And here’s where it gets fun. All the locations I selected have essentially the same commute cost for me, and very similar commute times. Plus, since I commute by train with no transfers, length of commute is kind of a moot point for me. I plug in a Podcast or audiobook and I’m good for 10 minutes or 60 minutes; just doesn’t matter that much to me. The potential commutes facing me are all about the same cost in time and money.

But my wife drives. When I compare the three locations, I find monthly time/money costs of commuting as follows:

MD: $175/mo, 33 hours total

DC: $85/mo, 22 hours total

VA: $40/mo, 11 hours total

This, then, can be added to the total costs I’ve been putting together. So here it is, the total cost of residency in my three equivalent neighborhoods:

Maryland: $1,815/mo, and 33 hours of Ruth’s time

District of Columbia: $1,810/mo, and 22 hours of Ruth’s time

Virginia: $1,815/mo, and 11 hours of Ruth’s time

To be clear, these three neighborhoods are close to equivalent in all the measurable categories that matter to Ruth and me. We are opting for the cheapest choice. But if we wanted to save my wife 11 hours a month, which let’s be honest that’s a lot of time, we could move to Virginia and pay… $5 more per month. By not moving I’m saying that I value having those $5 more than I value my wife’s time in the car. Which means I value my wife’s time at or less than $5/11 hours… that’s $0.45/hr.

All this to say… economics proves that I’m a bad husband.

Conclusion

Aside from being a humorous exercise in econometrics, this post has a point. First of all, cost of living is not easy to calculate. My assessment could be radically different if we had to account for school quality or cost, taxes on land and property, if we both drove to work, if these states didn’t share reciprocity agreements for income taxes, etc. Likewise, I had to make guesstimates: shopping for insurance in particular is not extremely easy, and the cross-border relationships can vary widely based on the specific vehicle. I also assumed my vehicle would pass every state’s inspection, but the reality is that some states are more lenient than others.

In other words, to actually calculate cost of living, people have to have a large amount of information and do a lot of math. Perhaps the most amazing thing to me was that my three neighborhood choices all ended up with total cost of living within $5/mo of each other. Cheaper rent meant long commutes or high taxes or expensive insurance. You end up paying somehow.

That doesn’t mean cost-of-living is irrelevant, however! It means costs have a different kind of impact. People who can afford to shop around for a long time looking for deals will bear a lower cost. Picking an average-price place wherever you go in a local area means you probably won’t save any money, because, on average, cost factors tend to adjust. But if you can find a deal, or some kind of asymmetry or failure of sellers to price appropriately, or if you have unique preferences, then you can actually gain by moving.

Put bluntly, the story on cost-push migration is way more complicated than it seems at face value.

PS- My Husband Is Not a Bad Husband

But He’s Also Just An Economist

Hey blog readers! Ruth here, Lyman’s wife. I felt like this post needed a comment from me to make a few things clear. First of all, Lyman’s not a bad husband! When we told me that “we could spend $0.50 to save you an hour in traffic” what I heard was, “I earn our family $0.50 every hour I spend in traffic.” THAT’S AWESOME! I took some economics courses too, and what Lyman doesn’t mention is we’re both salaried workers: on the margin, our cash income isn’t sensitive to time at all! But we do have fixed cash expenses like rent or student loans, or just buying food. Because he ignores fixed costs and rigid earnings with respect to time, he misses a key part of the calculation.

Plus, he ignores the main reason we live where we live: we’ve got family on our street, especially a newborn nephew! Money’s not all that matters; we also stay for family and friends in the area. To put it in language my husband would understand (he doesn’t really process “emotions” so well), we (I!) derive utility based on my residential proximity to specific people. My life-utility function is, then U=F(Income, Proximity to Family, Leisure Time). And while I would love to boost the leisure time part of that function, I don’t want to lose the proximity to family part of it! More broadly, this kind of arbitrariness is what Lyman means when he says that general theories about migration have tons of limitations. Some people will move away from DC for family, but others move to it for family: and there are a million other unique reasons for moving.

Anyways, I’ll leave my husband to his usual blogging now, but I just couldn’t let the Internet think my husband’s a bad guy!

Check out my Podcast about the history of American migration.

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I’m a graduate of the George Washington University’s Elliott School with an MA in International Trade and Investment Policy, and an economist at USDA’s Foreign Agricultural Service. I like to learn about migration, the cotton industry, airplanes, trade policy, space, Africa, and faith. I’m married to a kickass Kentucky woman named Ruth.

My posts are not endorsed by and do not in any way represent the opinions of the United States government or any branch, department, agency, or division of it. My writing represents exclusively my own opinions. I did not receive any financial support or remuneration from any party for this research. More’s the pity.

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