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Monday, December 16, 2013

Are Gay Men Really More Affluent?

Are gay men really more affluent? That's the subject of the latest Freakonomics podcast ("Are Gay Men Really Rich?"), which was prompted by a question from a Freakonomics listener:
A Freakonomics Radio listener named Danny Rosa recently got in touch with us. He’s 22, recently graduated from the University of Chicago. He works as a youth advocate at the Los Angeles Gay & Lesbian Center. Danny himself is gay, and he has a question for us.
"Hey, Freakonomics. I’m Danny Rosa and I’m wondering why gay men are so affluent and successful. If you walk down neighborhoods like West Hollywood in Los Angeles, the Castro in San Francisco, and Boystown in Chicago, they are all very well-kept, expensive, and highly sought after. So, I’m thinking, what is it about gay men and the gay culture that makes them so wealthy?"
But are gay men really men more affluent and successful? At first glance it appears that they are:
According to some analyses, median household income for heterosexual couples is about $86,000. For gay male couples, meanwhile, median household income is…$105,600, or nearly 20 percent more. And, for what it’s worth, lesbian couples have lower median income than heterosexual couples, about $84,000. So... gay men do seem to earn more. So the next logical question is… why? 
Why indeed? Lee Badgett, who is an economist at the University of Massachusetts-Amherst, says it appears that gay men tend to have higher-than-average education levels, and education and income are highly correlated with one another.  Moreover, men typically earn more than women, so having two working men in a household also helps. And then there's kids, or the lack thereof. Gay male couples are the least likely couples to have kids:
In the U.S., 43.5 percent of straight couples are raising kids under age 18. Among lesbian households, that number is 22 percent. And only 10 percent of gay male couples are raising a child. So a straight couple is more than four times as likely as a gay male couple to be raising a kid.
And when couples don't have kids, they have a lot more disposable income. In fact, one estimate found that American parents spend an average of nearly $175,000 per kid from birth to age 18, which means that childless couples can spend that money in other ways.

But, the data are not always what they seem, and in this case they are probably not very good because they aren't representative of the wider gay population. In fact, a recent study (with better data) found that if you took two observationally equivalent men (i.e., two men with the same background, same education, and so on), the gay man would earn less than the straight man. Moreover, it appears, that gay men and women are more likely to live in poverty. Why? That question (and more) is tentatively answered in the latest Freakonomics podcast, which can be downloaded from iTunes or listened to at the Freakonomics website ("Are Gay Men Really Rich?") (where you can also find the transcript of the podcast).

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