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Couples with joint bank accounts ‘spend differently’: Professor

University of Colorado at Boulder Assistant Professor of Marketing Joe Gladstone joins Yahoo Finance Live to discuss the correlative nature between couples with shared finances and overall happiness.

Video Transcript

DAVE BRIGGS: But is the secret to marital bliss a joint bank account? Could be. Let's talk about this with Joe Gladstone, Assistant Professor of Marketing at the University of Colorado at Boulder-- as I remember it, the greatest place on the planet. Good to see you, sir.

So your numbers show 65% of couples have joint accounts. 12% keep them separate and 22% have sort of a combination thereof. How does it impact happiness?

JOE GLADSTONE: Yeah. So we studied thousands of couples and looked both at their transaction data, as well as surveys over many years studying their relationship satisfaction. And what we found is that couples who have joint accounts, they stay together longer. They're more satisfied in those relationships. But they also spend money differently, in that they tend to spend more on, like, sensible utilitarian stuff and less on hedonic kind of fun stuff. So yeah, you're right that, basically, joint accounts seems to be a predictor of happiness in couples.

SEANA SMITH: Now, Joe, my question here is that people, the couples that pooled their money together, were they happier maybe at the get-go? Is that why they were more confident and were therefore pooling their accounts, whereas some others who maybe were on the rocks weren't exactly diving in head first?

JOE GLADSTONE: This is a tough thing to get at, to tease out causality of what's going on here. But because we're able to follow couples over decades and years, we are able to look at the kind of pre, post ideas-- so what happens just before and just after couples decide to pool money. And it does seem to be the case that it's not that these couples are just different from each other, that it is the act of pooling money itself that seems to be driving this effect on happiness.

DAVE BRIGGS: Now, how do you quantify it? Is there data that would support that hypothesis, that happiness?

JOE GLADSTONE: Yeah. I mean, I think that, obviously, relationship satisfaction is complicated and multiply determined. So I'm not saying that, like, you're going to save your marriage by pooling your accounts. But it is a very consistent, if somewhat small, effect.

And I think what the interesting part here is that when couples decide to pool their finances, they're probably not thinking about what effect that's going to have on their happiness, right? They're thinking, like, oh, I want to pool money because it's convenient or because we're getting married and this makes a lot of sense. But there might be these downstream consequences to happiness that they haven't really thought about.

So I don't have a single metric to represent that. But it is a meaningful, significant, and consistent effect.

SEANA SMITH: Joe, what about some of the other factors at play-- I guess how long a couple has been married for or a couple has been together, whether or not they have children-- how did that factor in?

JOE GLADSTONE: Yes. We control for all of those things in the analyses. There were loads of different things that we're able to hold constant in these big regression models that we run. And yeah, we're able to say that holding all those things constant, we still find this effect of pooling on relationship satisfaction. But those things matter too.

Like, we've known for a really long time that there are some, like, four things that predict relationship health. So things like how interdependent you feel with each other, how much you rely on each other, and things, like, obviously, things like income also predicts relationship satisfaction, because you're not stressed and arguing about money.

So we find all the normal things you would expect. But on top of that, we find that pooling money seems to predict relationship happiness.

DAVE BRIGGS: Did you study any potential downsides to sharing your finances, sharing your accounts-- in particular, the potential for divorce-- what happens if a couple is divorced?

JOE GLADSTONE: Yeah. So we actually haven't looked at the messy act of having to disentangle people's finances at the time of divorce. That would be a really cool thing to look into in future. But in terms of consequences, like I said, one thing we found from an earlier study was that couples who pool their money spend it differently.

So basically, if you have a pooled account with your partner, you're less likely to buy, like, fun, frivolous, hedonic things because you've got to, like, justify your spending to your partner, right? So that means that people tend to spend money more sensibly. So you could argue that--

DAVE BRIGGS: Boring.

JOE GLADSTONE: That could be a bad thing-- like, some couples don't buy enough fun, nice things. So it could be bad. But at least in terms of people's financial well-being, probably good. But that's not the same thing as what brings us joy and happiness.

DAVE BRIGGS: Yeah. That's what I was wondering-- if that would make you boring if you're not able to buy those, in your words, fun things. But this is a very interesting topic-- wonderful work you guys have done. Oh, and by the way, congratulations on Deion Sanders, the new Colorado head football coach. I'm a little bit biased-- Joe Gladstone, good to see you, sir. Thank you.