# For Love and/or Money: Financial Autonomy in Marriage

Saturday, April 13, 2013
By Bethany Soule

This is a guest post by Bethany Soule with assistance from Daniel Reeves.

Prescript: We realize how crazy this all sounds! Nonetheless, we’re perfectly serious, and do actually pay each other to put our kids to bed and whatnot. We think we have quite clever mechanisms for deciding who does what and keeping things exquisitely fair, efficient, and resentment-free. And separate finances — i.e., financial autonomy — is a prerequisite. We tried it with our own fiat currency — yootles — and that didn’t work so now we just use dollars. [1] Some of this bears uncomfortable resemblance to the kinds of things two raving Libertarian nutjobs [2] would say. (It’s not like that, baby, we swear it.) Nonetheless, this being the single most demanded article by you, Dear Readers, we are finally caving to the pressure.

Merging all finances upon getting married is still the de facto standard in the modern world. Each contributes according to their ability and takes according to their need. Which is fine. It’s not fundamentally unreasonable for a relationship. Marriage is about becoming a team, becoming life-partners, and, yes, sharing your resources. But we also feel particularly strongly about maintaining autonomy even in a life-long committed relationship. Psychologists will tell you that perceived level of autonomy is a prime predictor of happiness with your life and situation. [3] Partnership and resource sharing may seem at odds with autonomy but I’m here to argue that they need not be!

Danny and I have been married for six years now, and we have two kids and a burgeoning startup that we co-founded. We work literally side by side every day. We fancy ourselves a pretty good team. Being financially autonomous [4] helps us do all that. I should emphasize that none of this has much to do with the fact that we’re business partners in addition to being life partners. We were financially autonomous for years before founding Beeminder — in fact, we always have been, since we never merged finances in the first place. I mention it only as evidence of our commitment and ass-kicking teamwitchery. [5]

## Philosophical assumptions

Before we get too far into extolling the benefits of separate finances, let us explain how we operate on some basic shared philosophical assumptions.

Egalitarianism
Everyone’s happiness is fundamentally equally important.
Autonomy
People are free to make their own choices, their own mistakes, and have their own utility functions.
Fairness
Everyone in a team, contributing equally, should share equally in all the rewards of the teamwork.

I get a little giddy when I read that list. Seriously, we named our daughter Faire because we like fairness so much. It’s my litany against being mean. When I start to get het up over some perceived injustice, it almost always goes away when I stop to examine what underlying assumption I’m violating. “I can’t believe you…” oh wait. They’re an autonomous agent. Their happiness is just as important as mine. Stop being such a judgmental Bee!

Furthermore it may be the case that separate finances are a natural consequence of these three principles. If we pooled finances, I would benefit from Danny’s hard work, even when I don’t do anything. That certainly violates fairness. If I use joint resources to buy a banjo, Danny’s resources got allocated in a way that he didn’t choose, violating autonomy, and leaving room (and hours of my practicing) for resentment to build.

## Benefits of separating finances

First, we find there is much less stuff to fight about. We’ve eliminated a wide array of guilt trips and I-always-and-you-never!-s from even being possible. There’s no arguing over how you spent our money. And if you are complaining about how your spouse is spending their own money, assuming it is not dangerous or self-destructive, excuse me but you’re being kind of a jerk. You’re probably either questioning the correctness of their utility function, or you’re just devaluing their happiness.

Aside from making it much harder to fight about money, thinking of your partner as an autonomous agent is a great innoculation against any sort of argument that starts with “but you should have…” You stop making assumptions about their utility, their thoughts, their emotions, and you do a lot more active communicating and wind up frustrated and disappointed much less.

Second, with separate money we’ve got a whole new class of conflict resolution. We still debate, negotiate, argue, and occasionally even plead (OK rarely; if you’ve hit pleading you should probably move on to a different resolution mechanism). But any decision has a fallback resolution method as definitive as voting would be if there were an odd number of us. That’s right, we use auction-based decision-making in our family. Where’s my nerdcrown?

Third, since my money is my own money, if I pay Danny it is actually meaningful. Transferable utility is pretty exciting! It means that any outcome can be made fair after the fact. You know, by paying each other. Without financial autonomy, conflict resolution often winds up at compromise (nobody is happy), or sacrifice (one person gets all the happy). By paying each other we’ve opened up a whole middle ground of less bad outcomes! For example, let one person have their way, but then transfer half their surplus utility to the person who lost out.

#### “All preferences are quantifiable in terms of money. If you think like an economist (and do we ever), that is obvious to you.”

Of course, these second two benefits rely on the assumption that all preferences are quantifiable in terms of money. If you think like an economist (and do we ever), that is obvious to you. But if you have never practiced quantifying your preferences before, it might seem impossible to put a price on, e.g., making sure your kid gets registered for school. It is true that coming up with valuations for nebulous things is hard and can sometimes seem arbitrary. However you can improve with practice, and we even have an exercise [6] utilizing binary search to help you home in on a reasonable value. Sometimes trying to quantify your preferences is little better than pure randomization, but it is still slightly better than actually flipping a coin. Plus, afterwards you make a payment to help the loser feel better. The more important the decision, the better idea you have how much you care, and the less like a coin flip it is. The closer your utilities are or the more arbitrary your assignment of utility, the more like a coin flip it is, but the less egregious that is.

## Mechanisms for decision making and resolution of conflicts

The most general form of decision auction that we use works like this:

There are n participants, each with some share — i.e., some fraction — of a decision. Everyone submits a sealed bid, the second highest of which is taken to be the Fair Market Price (FMP). The high bidder wins, and buys out everyone else’s shares, i.e., pays them the appropriate fraction of the FMP.

We’re usually in the special case of two players and 50/50 shares and we call that case “even yootling” or just “yootling”, in reference to our ill-fated currency, the yootle. It works like this: Each person simultaneously states how much they’d pay. [7] The person with the higher number wins and pays the loser the loser’s bid.

We may do this multiple times per day, whenever there’s a good that we have shared ownership of and one of us wants to offload their shares onto the other person. The goods can be anything, e.g. the last brownie, but they’re more often “bads” like who will get up in the middle of the night with a vomiting child, or who will book plane tickets for a trip.

As for simultaneously stating bids, we do that by each sticking our hands behind our back and holding up a configuration of fingers to represent / commit us to our number and then we reveal on a count of three. We’re very loose with how we represent numbers with fingers. We might hold up two fingers to represent $20. Or a 1 on one hand and a 3 on the other to represent$13. It wouldn’t really be hard to cheat and make up a new advantageous interpretation of one’s finger configuration upon learning the other’s bid, but we trust each other not to be cheats and jerks. That’s true love, baby. [8]

We find this an elegant means of assigning loathed tasks. The person who minded least winds up doing the chore, but gets compensated for it at a price that by their own estimation was fair.

We almost always use 50/50 yootling to make decisions and allocate shared resources but once in a while we’ll use other kinds of auctions. One variant is the special case of the general decision auction where the shares are 100/0. In other words, plain old bilateral trade: you have something, I want it. If we can agree on a price, the good changes hands, if we can’t, no trade occurs. It’s an insanely useful transaction, and it’s not possible if you share your finances.

To see how it’s a special case of the general decision auction, take the case of me wanting to buy Danny’s old monitor. I say how much I’d pay, Danny says how much he’d sell for, and if we overlap then I buy it at the price he named (the lower price, which, recall, is taken to be the Fair Market Value). If we don’t overlap — if my willingness to buy was lower — then Danny buys my 0 shares for 0% of the Fair Market Price. I.e., nothing happens and he keeps his monitor.

Once in a while the trick with simultaneously revealing our fingers is too cumbersome. In that case we’ll use a mechanism we call PandA — for “Propose and Accept”. In the case of 50/50 shares, it works like this: One person names a price, and the other must choose to either pay the price and get the good (or get out of the chore), or accept the price and relinquish their share of the good (or do the chore). We don’t use this mechanism often, and we’ll leave it as an exercise for the reader whether you should prefer to be the proposer or the accepter. Seriously, this is homework. Get out your mechanical pencils and figure that shit out and tell us in the comments. Points will be awarded.

Besides the easier coordination, an advantage of PandA is that only one person has to pull a price out of thin air. Our squishy human brains are much better at saying yes or no to a given price than deciding how much something is worth, with nothing to anchor on. It can be agonizing to decide how much you care about running an errand, or doing some dishes or whatever. Of course we’ve gotten pretty good at that. [6]

### Joint purchase auction

The decision auction and variants are about allocating shared or partially shared resources to one person or the other, or picking one person to do something. Once in a while you have the opposite problem: deciding on a joint purchase.

Suppose Danny thinks we need a new sofa (this is very hypothetical). I think the one we have is just fine thank you. After some discussion I concede that it would be nice to have a sofa that was less doggy. Danny, being terribly excited about getting a new sofa does a bunch of research and finds his ideal sofa. I think it is a bit overpriced considering it is going to be a piece of gymnastics equipment for the kids for the next 6 years. Conflict ensues! I could bluff that I’m not interested in a new sofa at all and that he can buy it himself if he wants it that badly. But he probably doesn’t want it that bad, and I do want it a little. If only we could buy the sofa conditional on our combined utility for it exceeding the cost, and pay in proportion to our utilities to boot. Well, thanks to separate finances and the magic of mechanism design, we can! We submit sealed bids for the sofa and buy it if the sum of our bids is enough. (And, importantly, commit to not buying it for at least a year otherwise.) Any surplus is redistributed in proportion to our bids. For example, if Danny bid $80 and I bid$40 to buy a hundred dollar sofa, then we’d buy it, with Danny chipping in twice as much as me, namely $67 to my$33.

## Generosity without sacrificing social efficiency

#### “The payments are simply what keep us honest in assessing that.”

If you’re thinking “how mercenary all this is!” then, well, I’m unclear how you made it this far into this post. But it’s not nearly as cold as it may sound. We do nice things for each other all the time, and frequently use yootling to make sure it’s socially efficient to do so. Suppose I invite Danny to a sing-along showing of Once More With Feeling (this may or may not be hypothetical) and Danny doesn’t exactly want to go but can see that I have value for his company. He might (quite non-hypothetically) say “I’ll half-accompany you!” by which he means that he’ll yootle me for whether he goes or not. In other words, he magnanimously decides to treat his joining me as a 50/50 joint decision. If I have greater value for him coming than he has for not coming, then I’ll pay him to come. But if it’s the other way around, he will pay me to let him off the hook. We don’t actually care much about the payments, though those are necessary for the auction to work. We care about making sure that he comes to the Buffy sing-along if and only if my value for his company exceeds his value for staying home. The payments are simply what keep us honest in assessing that. The increased fairness — the winner sharing their utility with the loser — is icing.

## Nitty gritty

That was all extremely high level. You probably want the real dirt. Like do you pay each other for sex? Or are there any legal teeth to our arrangement? No, it’s purely a gentlemen’s agreement. And in fact for whole classes of expenses, including everyday things like groceries, we do very little accounting. We used to split groceries and dinner bills 60/40, reasoning that Danny ate (or should be eating) rather more than me, being the larger one. Actually, rather than splitting the bill 60/40, when grocery shopping or eating out we’d randomize such that Danny would pay the whole bill with 60% probability and I’d pay with 40%. We’ve gotten even lazier and now we just wing it and figure it balances out over time. Or we pay each other stochastically — with 90% probability we pay nothing (and don’t even have to compute the actual transfer amount), and with 10% probability we pay ten times the amount. We wrote an Android app — Expectorant — to make that sort of thing easier. We impressed Andy Brett recently on a trip to Tahoe when I repaid Danny $100 stochastically (i.e., taking a 10% risk of owing him$1000).

For larger recurring expenses we put a repeating transfer on a ledger and forget about it. Rent, for example, we split. You could fix different rent percentages based on salary, and I believe this is what we did in NYC when I was in grad school and Danny was gainfully employed. Alternately, a joint-purchase auction about our housing options should make the socially efficient outcome happen, not least of all by encouraging us to look at our finances and make an informed decision about our utility functions with respect to housing.

Children are a joint expense, obviously. [9] If one partner is a stay-at-home-parent you pay the full-time parent something, possibly half the salary of the parent who works, if you don’t have a fairer principle to apply to pay for the parenting. A more fair principle might be to split the difference between a fair market wage for full time childcare with what they could be making if they were out working instead of staying at home to raise your (their) kids.

The most important thing of course is to come up with a principle that feels fair to both parties. Danny and I have a fun way to debate something like this. We switch sides and each argue for the other’s best interest. The spirit of our agreement is quite loving. We’re a team. We’re actually quite nice to each other. We just recognize that no matter how well we know each other, we don’t know the other’s utility function better than they do, and we shouldn’t presume to. When you make assumptions about someone else’s preferences, you fall into the trap of assuming they’re an extension of yourself, or a piece of the scenery. So let them speak for themselves. Feed your preferences into a decision mechanism, turn the crank, and trust that the optimal outcome comes out. Live the robot-mediated life!

2014-02-14: This article has struck quite a chord. NBCnews.com picked it up, which prompted a big discussion on Hacker News. Before that there was a more technical discussion on LessWrong. UPDATE: More photos and the video from the NBCnews piece: Nash Co Photography, and a version of the article on CNBC.

2014-02-15: And today we appeared on Fox News.

2014-02-17 (our 7th anniversary!): Another one, from New York Magazine.

2014-03-18: Long article about us in El Mercurio which apparently was the most read article the week it ran, and is kind of the New York Times of Chile. (We haven’t actually translated this yet so I’m not sure whether we can ever show our faces in Chile!)

2014-05-11: Another article in Spanish.

2014-08-04: GQ mercilessly mocking us and a Catholic publication doing the same.

Thanks for all the (perhaps morbid) fascination and questions! We shall try to answer them all here. Special thanks to David Yang for helping us think through this stuff.

#### Q1. Ahem, “raving libertarian nutjobs”?

At risk of redundancy: It’s not like that, baby, we swear it! Check out the footnote we added about that [2] and if you really must know our politics, Danny says he “finds libertarianism the single most abhorrent political philosophy with the possible exception of all the others” and my answer is poly-what? Like baby frogs? I’m totally pro-frog-poly-wog. Two thumbs up for amphibians. (I don’t have political affiliations.)

Danny adds: Actually, if I had to choose a political party, I’d go with Dave Pennock’s Party of Reason.

Exactly?

#### Q3. Does this depend on being above a certain love threshold?

No. Two roommates could have auctions for splitting up household chores, for example. The things that roommates might auction over is probably a subset of things that two lovers would, because they are less intimately involved, and share fewer responsibilities / decisions.

The set of decisions that you could potentially auction someone for is the set of decisions that you share a joint interest in. Two strangers standing on a streetcorner trying to hail a cab share a joint interest in getting in the first cab that stops, and could auction for who got that privilege (though if they’re going to talk to each other in the first place, I hope they can find a way to share the cab).

#### Q4. Are there some things where one person just says “this is more important to me than your happiness”?

Well, if it is not a joint decision (you don’t get to decide how often I shave my legs, for example) then sure, you can just say that you don’t care about the other’s opinion.

If it is unambiguously a joint decision and one partner stonewalls and refuses to auction for it, that’s tantamount to stealing money from your partner. Which we can all agree is not playing fair.

#### Q5. Have there been cases where this broke down and an ultimatum was issued?

Nope. If you’re issuing ultimatums you’ve probably got bigger Issues.

#### Q6. Could this help people in a seemingly doomed marriage?

Sure, if you can learn to stop worrying and learn to love your partner’s autonomy, maybe it could. But I suspect that relationships fall apart at the level of those three basic principles. If you haven’t internalized those, auctions and redistributing utility to achieve fairness are not going to help at all.

#### Q7. Remember that time I asked you to help me move and instead you paid for movers?

Well yes, that was Danny. See, he loves you a whole awful lot! Almost as much as he loves social efficiency!

#### Q8. Is this more about using prices to better communicate the magnitude of your desires or about the ability to redistribute utility using an explicit currency instead of emotional barter/blackmail?

It’s both! Sometimes it’s really useful to be able to quickly and easily learn who cares more about something and the payments are inconsequential. Other times, if we both care a lot about something, maybe when it’s hard to quantify so we both just name large numbers, then it’s really nice to have it automatically and immediately made fair(er) by having the winner directly compensate the loser.

We should also note that the alternative to this craziness isn’t necessarily emotional blackmail or anything like that. People do a reasonable job of approximating the principles of efficiency and fairness by carefully feeling each other out, and taking turns, and having informal mental point systems.

#### Q9. How will you handle things when you become fantastically wealthy?

No differently! When we notice that we’re paying each other far above market rates for things like doing the dishes then that makes it very clear that we ought to be paying a third party. And we do. Though it often has to go far above market value before it’s worth the overhead of outsourcing.

#### Q10. How will you handle this with your kids?

I hope no one will perceive it as abusive that we’re already inculcating them with this way of thinking of things. We don’t give the kids allowances, we just pay them for things. Not just chores, but we buy their candy from them, have auctions with them about where to go on weekends, and gamble on chess games with each other.

#### Q11. In the sofa example, is it fair that one who values the new sofa less and therefore pays less still gets to enjoy it (sit on it) just as much?

That one was from my mother, who goes on to suggest that it could lead to a pattern of undervaluing purchases for the home, in order to pay less.

Danny has a good answer: I think it still beats the pooled money approach where you may overvalue the sofa. Consider the extreme where Bethany has no value for the nicer sofa. Then it’s fair that if I want it, I buy it, and no skin off her nose. If she wants it a little then she can pay a little. Note the part about committing to not buying it for a year if the bids are too low. That keeps the players (somewhat) honest, i.e., there’s a cost to just pretending you don’t value the sofa.

#### Q12. Aren’t things like paying your partner to spend time with you… objectifying? And isn’t it unfair if there’s an income disparity?

Social repugnance at paying to get your way is why we originally created our own fiat currency, Yootles, to implement these kinds of decision mechanisms. Then we got over it, cuz money works brilliantly!

We also thought that yootles would address the income disparity since we all started at 0. But we gradually stopped caring about income disparity.

It would certainly be possible to pool your money and then explicitly split it again, instead of both dipping into one pot. Which I think is a good idea even if the decision mechanisms described in this post sound too bizarre. Then the only thing to fight about would be whether splitting the money equally is fundamentally fair. Money and kids are the two most fought about things in marriage. Reducing ways to fight about it is probably a good thing.

#### Q13. Are there decisions that are too big to resolve by auction?

No way, Jose. I mean, Mother, again.

Danny’s response: As to whether we use auctions even for huge stuff like where to live or what to name our children, the answer is yes we do! Recall we even had a family-wide auction for Faire’s name. We were a bit torn between “Faire Tesla” and “Liese Murray” and placed our own small bids for “Faire Tesla” which we were both leaning towards, but we were quite willing to be outbid. Until my mom thought of “Faire” Bethany and I were about to have a quite high-stakes auction between “Locke” and “Kepler”.

I don’t think we’ve ever actually had a conflict so high-stakes that bids were in the tens of thousands of dollars but we’d absolutely go through with it if we did!

#### Q14. How do you decide on fair proportionate shares for things like childcare?

Danny again: It’s like this: Is there a really unambiguous, logical, airtight reason to deviate from 50/50? If not, go with 50/50!

Yes.

## Footnotes

[1] Bitcoins would work fine too. The volatility just makes it hard to establish an intuitive sense of the value of them. In reality we mostly use our own two-node Ripple-like system, which is to say we pass IOUs back and forth on a ledger

[2] UPDATE: We see from the comments that this came off wrong. Following the principle of Keep Your Identity Small, we thought we had constructed perfect ambiguity about whether we consider ourselves Libertarian nutjobs. The “it’s not like that, baby” can either be read as disavowing Libertarianism or simply that we’re not the raving nutjob brand. The “baby, we swear it” part suggests how far our tongues might be in our cheeks, certainly if disavowing the nutjob part. In fact, we should also be clear that none of this is parody. We are absolutely, for serious, this nutty.

[3] In particular I will link you to a study at the University of Wellington, Victoria as well as a survey in Forbes of this and other related research on autonomy (freedom) and happiness.

[4] By “financially autonomous” we mean from each other. Not to be confused with “financially independent”, by which is normally meant “filthy rich”.

[5] Yes, that’s totally a thing.

Also, some lazysearch tells me that the average length of a marriage in the US may be 11 years now. So maybe check back with us in another 3 – 5 years and see if we’re still riding broomsticks.

[6] When you are unsure of your own value for a particular outcome, we find a simple binary search to be effective at pinning down your indifference point.
“Would I take that plane ticket if it were free?”
“Definitely.”
“Would I buy it if it cost $1000?” “No way.” “$500?”
“Uhh, No.”
“$250?” “Definitely.” “$375?”
“Yeah, I guess.”
“$438?” “Uhh, well…” The point where you are torn is a pretty good approximation of your true utility. [7] The amount you’d pay is technically your share (e.g., half) of the Fair Market Price (FMP) but when all the shares are the same it doesn’t matter whether the bids are FMP or half of FMP since the comparison will be the same. So with 50/50 shares it’s easier to bid half of FMP since that’s the amount that the winner will pay the loser. [8] As for why fingers are needed at all, it’s just a way to mentally commit to a bid without being influenced by the other’s bid. [9] But funny story — Danny actually paid me for the opportunity cost of having my womb tied up with child. He’s sweet like that. Yes, seriously. I was in grad school working on my master’s degree at the time and I reduced my class load to 3/4 time if I recall and so we used that as a metric to calculate roughly what the cost to me was. Then we split the cost evenly because kids are a joint expense. So I guess my womb is worth about the cost of one graduate-level course at Columbia, assuming I’m interested in bearing your kid to begin with. Tags: , , , , • jimk Doesn’t the whole world benefit when anyone buys a banjo? • Judy Soule This post is a good explanation of how you make joint decisions fairly. Thanks for writing it – although I was there as you developed this and I am still a witness, some of it has never been clear. So I’m glad to get some more insight into how you operate. Seems that the real key are your initial principles, which are a strong foundation. I jotted some questions as I read along and you answered most of them later on. One (perhaps trivial) question remained – In the sofa example, the one who values the new sofa less and therefore pays less still gets to enjoy it (sit on it) just as much. Is that fair? Seems like it could lead to a pattern of valuing most purchases for home, which actually benefit everyone equally, less and therefore paying less. I liked the way you talked about handling uneven financial resources or pay for child care. I wonder though, how you agree on a proportionate share. This seems like a really important decision – bigger than the day to day stuff, and it seems like this is outside of the decision system that you use…is that correct? Is that true in general – that some really big decisions have to be made, using your 3 principles, but outside of an auction context, or did you make those decisions via auction too? Good piece! • Stavana Strutz I have many thoughts about this system… Does this system ever run into the problem of the same person outbidding the other and unpleasant tasks continually being done by the other? If so, resentment would still set in and guilt trips could ensue. I guess the fix would be for the loser to up their bid or save up their earnings and take a whole week off. If both partners make the same amount of money the system would in all likelihood work. If both partners are broke this would not be feasible, right? Do you adjust for major life changes like job loss, disease, pregnancy, etc.? If both partners make differing incomes, would you multiply the bids of the poorer/richer partner by some factor taking into account this difference in income for same hours worked? I’m not going to lie, financial transactions like this leave a bad taste in my mouth, just the idea of continually selling one’s work or paying your partner to spend time with you seems objectifying in some way. This is my gut reaction and I’ll continue to think about this idea to see if it seems less repulsive somehow along the way. I feel like my home should be free from this sort of economic tyranny. Of course I’m not an economist/mathematician and this doesn’t seem like an entertaining way to deal with conflict for me personally. Nowhere in your post did you say this was a good solution for everyone but I had to think about it on a personal level. And then, sometimes it’s sweet for your partner to just do something for you without there being some sort of demanded trade. For one to be able to read and know what the other needs and give it to them, for there to be a fair give and take. Perhaps for poorer couples, trading off chores would work? Anyway, regardless of my disdain for this kind of trade, it was interesting to read. Are you going to pay the kids to do chores while they grow up or employ this system with them? • http://www.facebook.com/bsoule Bethany Soule Clearly there’s a lot more we could write about the subject :-) Social repugnance at paying to get your way is why we originally created our own fiat currency, Yootles, to implement these kinds of decision mechanisms. Then we got over it, cuz money works brilliantly! We also thought that yootles would address the income disparity since we all started at 0. But we gradually stopped caring about income disparity. It would certainly be possible to pool your money and then explicitly split it again, instead of both dipping into one pot. Which I think is a good idea even if the decision mechanisms described in this post sound too bizarre. Then the only thing to fight about would be whether splitting the money equally is fundamentally fair. Money and kids are the two most fought about things in marriage. Reducing ways to fight about it is probably a good thing. • http://beeminder.com Daniel Reeves You’re quite right about the sofa example! Nonetheless I think it still beats the pooled money approach where you may overvalue the sofa. Consider the extreme where Bethany has no value for the nicer sofa. Then it’s fair that if I want it I buy it, and no skin off her nose. If she wants it a *little* then she can pay a little. Note the part about committing to *not* buying it for a year if the bids are too low. That keeps the players (somewhat) honest, ie, there’s a cost to just pretending you don’t value the sofa. As for how we pick proportionate shares of things, it’s like this: Is there a really unambiguous, logical, airtight reason to deviate from 50/50? If not, go with 50/50! And as to whether we use auctions even for huge stuff like where to live or what to name our children, the answer is yes we do! Recall we even had a family-wide auction for Faire’s name. We were a bit torn between “Faire Tesla” and “Liese Murray” and placed our own small bids for “Faire Tesla” which we were both leaning towards, but we were quite willing to be outbid. Until my mom thought of “Faire” Bethany and I were about to have a quite high-stakes auction between “Locke” and “Kepler”. I don’t think we’ve ever actually had a conflict so high-stakes that bids were in the tens of thousands of dollars but we’d absolutely go through with it if we did! • David Yang This is a beautifully written piece and its originality evokes the same cognitive dissonance I experienced while reading part 4 of “Atlas Shrugged” in my younger days. I’ve spent the last several years of my life in relatively close proximity to the both of you and I have to admit that despite my early misgivings, it does pass the basic test of “it works” from my outside observations. A few thoughts/questions: 1. How much of this is dependent on the two of you being above a certain “love” threshold. Dan really surprised me once by yootling me when I asked for his help in moving and instead of helping me, paid me more than enough to hire two movers. However, it required that he was interested in helping me at all. Do you think that your “love threshold” defines a maximum utility you’d be willing to redistribute (or perhaps in layman’s terms, are there some things where one person just says, “This is more important to me than your happiness.” 2. It appears that there are two major benefits that result this: 1) increased and nuanced communication about your desires and 2) the ability to redistribute utility. Do you think 1 is significantly more important than 2? It seems that after a certain regularity in life, you can reach a certain local maxima that most couples would describe as “being in sync” or “having a rhythm.” Of course, when outside events jar that sync this can keep 3. Related to #1, have there been cases where this broke down and an ultimatum was issued? For some reason that can only be explained by “because of reddit”, I once spent a night reading many horribly sad stories in /r/deadbedrooms. Do you think this system can work for those people? 4. How will you handle things when you become fantastically wealthy? I guess at that point it’ll just make sense to hire outside help as any utility preference difference will most likely result in being able to pay someone handsomely for the same service. 5. How will you handle this with F+C? Does it basically break down to when Bethany wasn’t making money? Thanks for posting this article! It’s fascinating it and I think marriage counselors could spend years dissecting how to use these tips to help couples fix all kinds of problems! Maybe when you’re done with beeminder :) • http://twitter.com/themaveric themaveric Well, just lost a brand new potential reader who happens to be a Libertarian a “nutjob” before he could even get through the first paragraph.. too bad, I was thinking this might be a good one for me.. congrats and I wish you the best in your quest to be better than those who think differently than you do… Oh, and are you the same guys that make Beeminder? Please let me know so I know to remove myself from that too. That one’s gonna hurt, but so it goes… • http://beeminder.com Daniel Reeves You missed the “it’s not like that baby, we swear it”! We’re making fun of *ourselves* for being nutjobs. Read the post and you’ll see what we mean, for real. • bethany soule We’re like a libertarian’s wet dream, only more so. You really should read it. Lest you should think it’s an anti-libertarian parody, rest assured we’re *dead serious*. • David Yang This is a beautifully written piece and its originality of thought evokes in me a similar cognitive dissonance experienced while reading the final book of “Atlas Shrugged.” I’ve spent the last several years of my life in relatively close proximity to the both of you and I have to admit that despite my early misgivings and based solely from outside observation, this system does pass the basic test of “it works.” A few thoughts/questions: 1. How much of this is dependent on the two of you being above a certain “love” threshold. Dan really surprised me once by yootling me when I asked for his help in moving and instead of helping me, paid me more than enough to hire two movers. However, it required that he was interested in helping me at all. I admit shamefully that this was the core conceit of “yootling” that it took me a long time to understand: its brilliance isn’t in getting/avoiding favors but in pricing utility once you decided to do someone a favor. Because of this love threshold requirement, do you think that this system requires a minimum “love threshold” and conversely, does it also break when one party reaches a maximum utility they’d be willing to redistribute (which is perhaps when the system’s existence is most critical)? Perhaps in layman’s terms, are there some things where one person just says, “This is more important to me than your happiness.” 2. It appears that the two major benefits that result from a system where parties are constantly engaged in discovering prices related to personal utility are: 1) increased and nuanced communication about your desires and 2) the ability to redistribute utility using currency instead of emotional barter/blackmail. Based on your experience, is 1 significantly more important than 2? It seems that after a certain regularity in life, couples can reach a certain local maxima that most would describe as “being in sync” or “having a rhythm.” Of course, when outside events jar that harmony, this can be useful to helping restore equilibrium, but I wonder if discovering methods of improved communication can get you 80% of the way there without introducing some of the financial aspects of this system that laypeople like myself instinctively find bothersome. This perhaps can be boiled down to the idea that most people in a couple are reasonable and empathetic when they are properly presented with the other party’s desires. 3. Related to #1, have there been cases where this broke down and an ultimatum was issued? For some reason that can only be explained by “because of reddit”, I once spent a night reading many horribly sad stories in /r/deadbedrooms. Do you think this system can work for those people? This might just be a cheap attempt at me to probe more deeply into the “sex” aspects of this question. 4. How will you handle things when you become fantastically wealthy? I guess at that point it’ll just make sense to hire outside help as any utility preference difference will most likely result in being able to pay someone handsomely for the same service. 5. How will you handle this with F+C? Does it basically break down to when Bethany wasn’t making money? Thanks for posting this article! It’s fascinating it and I think marriage counselors could spend years dissecting how to use these tips to help couples fix all kinds of problems! Maybe when you’re done with beeminder :) • Simon Melhart Re: the PandA, it appears at first blush that P has the advantage by setting the anchor for the decision. i.e. if P puts forward an artificially inflated price, A’s perceived price might be higher than it otherwise would, having drawn closer to the anchor price. But that won’t change the yes/no decision; the only difference should be that A won’t see such the benefit as large as it is. The main advantage seems to go to whoever instigates the transaction (assuming P here, but that’s not necessary): by waiting for an opportune moment (e.g. A is abnormally fatigued), P can probably get A to agree to a price different from normal. • http://beeminder.com Daniel Reeves David, thanks so much for these thoughts and questions! We just updated the post to answer them all in an addendum/FAQ. • Fu’s Truly What a useful system! My house recently implemented a similar one for chores, which we’d been struggling with for years; we all bid on how much we’d be willing to be paid to have the chore done, and whoever bids the lowest gets the chore and gets paid that amount for doing it, split between the other housemates (except for a few special cases). Question: Does it make any difference if you frame it as how much you’d be willing to pay for the task vs. how much you’d be willing to be paid? (We have found that this does at our house.) • http://beeminder.com Daniel Reeves I guess I mostly think in terms of how much I’d pay to get what I want. Then I think “if I do get outbid, is this enough money for me to feel ok about losing”. Sometimes I’ll consider whether it’s more than enough to outsource to a 3rd party. I’m curious if your chore bidding ever gets high enough that the loser can outsource to a 3rd party and still make a profit (which would strike me as totally fair, for coordinating that and making sure it actually happened). • Fu’s Truly Definitely not! For example, taking out + bringing in the trash and recycling once per week has always run between$1 and $4 per sexy moth (ie five weeks, since our house meetings are biweekly but enough people usually flake out enough that we almost always have to postpone at least one meeting until the next week). Bathrooms tend to run the highest, sometimes as high as$10 for cleaning it once at some point during the sexy moth – still not worth it to try to outsource, considering how long it takes to clean a bathroom by the time we consider it a worthwhile chore.

• Omid

• Michael Donaghy

Would you reshare common income if one of you went back to college, or became unemployed? It seems like this system would amplify the effects of a substantial income disparity

Do you have a protocol for doing these auctions surreptitiously, for cases like “I’m bored of this party and want to leave now” where it would be socially unacceptable to do it openly?

• http://beeminder.com Daniel Reeves

We wouldn’t (and didn’t, in the past) just share income to fix an income disparity. I guess maybe we find excuses to redistribute though. Like I might start paying Bethany exorbitant rates for simple things I don’t want to deal with.

And we do indeed have a protocol for surreptitious auctions, involving holding up fingers. Or I guess texting works better than that, actually. Related: http://messymatters.com/sealedbids

• Michael Donaghy

I thought the story said you split the rent by income in the past? Was that a special exception?

• http://beeminder.com Daniel Reeves

True, yes, we did do that briefly. I had already forgotten that! It’s actually perfectly fair to do that if we have different utility functions for apartments but take it as a constraint that we’re going to live in the same one! It’s like the joint purchase auction that Bethany described in the article.

• Michael Donaghy

You could certainly auction to a fair ratio yes. Though it would seem like a suspiciously convenient coincidence if it just happened to come out the same as your income ratio.

• abromfie

Very interesting idea! I’m glad it’s working out for you. :)

You touched a bit on the issue of an income disparity, but what about an ability disparity? As an example, imagine that one of you developed a health condition that gave you chronic pain and fatigue, such that the person couldn’t hold down a full-time job any more. And not only that, but the pain and fatigue made it difficult to handle most household chores. Even if you pooled your income and split it 50/50, the disabled partner is going to place a much higher value on having someone else do chores. So it seems like you would actually need to give the disabled person significantly more than 50% of the pooled income, to make up for the physical exertion that they aren’t able to use as currency. But maybe you have a better idea… :)

• Andrew Pearson

If you don’t mind me asking, how do you handle presents for birthdays, Christmas etc?

• http://beeminder.com Daniel Reeves

Actually this one seems like a better question the other way around: how can you meaningfully buy presents for each other when you’re spending each other’s money? I do have a whole bunch of other opinions about gift-giving in general, btw: http://messymatters.com/scrooge

• http://beeminder.com Daniel Reeves

(Super uncool how Disqus ate my previous reply here!)

Bethany and I insure each other against disasters like that. Lucky for us we haven’t had occasion to think this through fully but I think the principle we’re going for is to redress any so-called Acts of God, probably with lump-sum payments to each other.

• Dan

I like the spirit of your system. However, “Oregon’s domestic relations laws provide that any assets acquired during
a marriage, including appreciation of pre-marital assets, are
considered to be marital property. This is generally true regardless of how title is held. Marital property is presumed to be owned equally by both spouses unless one spouse can prove otherwise.” ( http://www.buckley-law.com/article/marital-property-whats-mine-is-yours-may-not-be-the-case/ ). Most states have laws stating that things acquired during marriage are community property. So are you really financially autonomous or is it just a fun and elaborate game?

• http://beeminder.com Daniel Reeves

More than a fun and elaborate game: a gentlemen’s agreement!

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• Matthew Eppelsheimer

Hypothetically of course, how can one receive notifications of possible future Once More, With feeling sing-along screenings?

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• http://maybethismatters.org/ David Ernst

By “insure each other” do you mean that casually or in a formal sense?

• http://maybethismatters.org/ David Ernst

Great writeup. Very convincing.

One hangup for me recalls my own experience with roommates trying to split groceries. There were 4 of us, each with significantly different incomes and individual food budgets. Our unsophisticated system was that we’d buy our own groceries, but then if we wanted immediate access to something someone else had bought, we’d ask to buy a fraction of it from them. The buyer would always propose the price, and the seller would accept or not.

Although in theory it seemed fine, it felt uncomfortable and definitely brought a little tension. We ended up mostly abandoning it and trust that it would all sort of work out in the end (mental ledger?). I think it would have done better if we had had everyone give sealed bids, instead.

Reflecting on it all now, I’m not sure which system I preferred, but abandoning it did relocate the tension to under the rug instead of right there mid-conversation, which was definitely palpable when guests were over.

Seth Godin recently posted this related bit, which mostly matches my experience: http://sethgodin.typepad.com/seths_blog/2014/01/can-i-pay-you-to-do-me-a-favor.html . What I like about his view is it highlights opportunities to deepen trust. I do wonder how well this sort of system works for people who already know, like, and trust each other, versus those that are in the early stages of getting to know each other.

I’d be interested to hear how this went when y’all were first developing it. If it had initial growing pains or learning curve, for example.

• http://beeminder.com Daniel Reeves

Slightly formal? We have some sense of the spirit of it so we’ll formalize it retroactively when needed.

• http://beeminder.com Daniel Reeves

At risk of sounding halfway normal (and as I just replied to *another* journalist writing an article about this), Bethany and I do plenty of fuzzy accounting where we just have the vague sense that things are balancing out in the long run and call that good enough. Like I’ve been paying health insurance premiums and school tuition and Bethany’s been the default parent who first wakes up with the kids (and cooks more meals and other things) and those things feel like they all balance out fairly enough.

My thoughts on the point Seth Godin brings up, and related to your point about people in the early stages of getting to know each other, are here: http://messymatters.com/yootles/

• Aneeqa M.

Great article!

I respect you both for being able to implement this extremely practical system so well. Personally, I am a fan of your autonomous ways. In my day-to-day dealings I’d be glad to adopt a system based on principles similar to yours but I think that for this to work, all parties involved must innately agree with the act of quantifying non-objects. It’s here that many fail to realize that our economic system has already done a praiseworthy job at quantifying almost all things whether they’re objects or non-objects. Something about this quantifying does not appeal to the masses, especially when it has to be done first-hand.

What I’m curious about is how much uncomfortability there was at the beginning of ‘yootling’ from both of you. How much do you think this system is applicable (if so at all) to those in the ‘pretty uncomfortable’ part of the spectrum.

Another question that maybe you could help me understand the answer to: If circumstances arise with you two where one person needs to borrow money from the other (some extreme situation where you absolutely definitely need the others monetary help) do you then implement a simple interet-based-loan deal or do you use some other way?

And I think this is as best a place as any to let you know that I absolutely love beeminder and the concepts behind it. It has been the first of many commitment devices that has proven to work for me. There is now personal faith that I’m capable of follow-through on goals, whether they be extremely important or meh.

Thanks Beeminder, and the both of you!

• http://beeminder.com Daniel Reeves

Yay! Thank you so much for the kind words about Beeminder!

I shall try to answer the auctioning-related questions:

Interest-based loan, yes. We’ve been using 6% interest. We don’t draw up loan agreements or anything, we just hand each other money willy-nilly and record it on a ledger that automatically tracks the interest. Or use randomization tricks to avoid having to do any accounting at all but such that it still works out fair overall.

As for the uncomfortability, yes, we’ve both put in sustained effort to overcome that and to be hyperrational decision-making machines. Or something. But, yes, I now believe that this only works for us because it’s basically a shared hobby, nerding out over the math/economics behind exquisite fairness.

Like, to take a random example related to Beeminder, the fact that Beeminder has this “Exquisitely Fair Discount Slider” — http://blog.beeminder.com/fair/ — even though it violates all conventional wisdom about pricing.

• http://maybethismatters.org/ David Ernst

retroactive insurance!? lucky!

• Matt

A workmate of mine just asked if I think this would work between my wife and I. He seemed rather bullish (pardon the market term – but that’s what you’re encouraging here) on this way of promoting fairness in a relationship.

My response was “this would never work in my relationship.” Market principles don’t apply to our understanding of fairness. We aren’t truly autonomous, nor is any individual in a relationship, but we try to keep things within reasonable limits. If a spouse is going through something serious – emotionally, that should impact how the other lives his / her life, the decisions he / she makes, and the things he / she focuses on. We may not feel like changing our behavior right away, but we can start acting that way ahead of the feelings to give ourselves a head start as the gravity of a situation starts to sink in. Numbers are cold. I won’t use them for matters of the heart.

That said – if this little game helps you and your husband live life with more laughter, fun banter, and some a spirit of togetherness – more power to you. The same can be achieved with all kinds of techniques that open up communication.

Unfortunately the media attention you are getting is less about the spirit of togetherness that this technique fosters – and more about applying the myth of Adam Smith’s “invisible hand” of the market to relationships.

• bsoule

I don’t really understand what it means to call numbers cold. Numbers are… honest. I guess honesty is not necessarily considered a warm trait.

Anyway, I probably should have prefaced this whole article with a big old “Do not try this at home!” warning :-)

• Matt

I had a science professor who drew the following diagram (attached) on our whiteboard and asked the class “what did I just draw?”

The answer was the degree of certainty we can apply to these fields of study. It is quite hard to apply numbers to human behavior, and when people do, there are very real problems that come with it.

As a former teacher myself, I used to struggle with grading my lower students. Putting a low number on someone’s intelligence, for example, can be inexact and self-fulfilling. It doesn’t tell a story, which often deserves to be told.

That’s what I mean about numbers being cold. Humans are complicated. Many of us face real challenges and need help finding our way. Numbers don’t tell a story, and they don’t lead people to better understand who we are and how we feel.

To reiterate my original point – I think your little game is fun, and it’s also a perfect little shortcut. My brother, a family doctor, often asks patients to rate their pain from 1 to 10. I do that too, when I tell my wife we have to fulfill some obligation. “I would rather not go,” she might say, “can you tell me how important this is to you from 1 to 10?” These are great conversational tricks that open up a dialog, or just get right to a point and avoid over-analysis.

But this stuff should not be taken too seriously, and that’s what’s happening here. The questions being asked, the media attention, the circus here is about applying some kind of mathematical formula to fairness. That’s just full of ick. Ick Ick Ick!

By the way – the spectrum my professor created (attached) purposely excluded economics, which as a side-note was my major in college. Why? Because the models upon which most economic theories are based are only observable in perfect market conditions – which do not exist on this planet. It’s not a science.

• http://beeminder.com Daniel Reeves

Looks like the image didn’t make it!

I definitely don’t relate to the ick reaction to formalizing fairness. Reminds me of this quote from Steven Landsburg:

“Children and economists share an intense fascination with fairness that would be unbecoming in a normal adult.”

• Max

Question; is the partner still “financially autonomous” when they go bankrupt? Do you allow them to move into their cars while you lounge on the couch and eat cat food while you eat roast? Because this is what happened in my relationship; bf wanted to be “financially autonomous” so that he could continue his poor spending habits, and then when everything blew up in his face I couldn’t possibly put him out on the street without my children suffering.

This is my problem with libertarianism as well. It’s all fine and good to cut taxes and move services to private, fee based systems; but if one does this then don’t go crying when your house burns down because you couldn’t afford to pay the fees.

• http://beeminder.com Daniel Reeves

Yeah, astute question. I have no idea how to extend this to larger groups (like libertarianism tries to do) or even to pairs of people both of whom aren’t fully trustworthy.

• Justin

I’m thinking aloud here, but maybe you could help him spell out the consequences of his actions. It sounds like you’re the one that owns or rents the place, and you also mentioned food. So maybe charge him a fair market value for rent and food that you’re purchasing.

Then when he doesn’t have enough money, you grant him a monthly subsidy to make up for it. The subsidy is the amount you’re paying for your children to not suffer and because you love him. The hard part is then to come to grips that the subsidy is not infinite. Tell him that.

I realize we’re talking about the value of your children’s suffering and the value of your love, but you don’t need to have a concrete number. Like in the article, you can start to set upper and lower bounds. Like if it’s \$10, that’s no big deal since your love is worth more than that. If it’s 1,000,000 then maybe your children would be better off with the opportunity that money could buy… Then work your way down or up. Again, you don’t need to actually arrive at a number. But maybe it will drive home the point that you’re not made of infinite money and his financial autonomy has exceeded his capacity. Maybe it’ll be a wakeup call that he’s not just affecting himself with his poor decisions, it’s costing you and your children.

Or maybe instead of a subsidy, make it a loan. Charge him interest. It’ll be like forced savings.

I’m thinking the subsidy works better, mainly because it’s simpler. And being a loan collector is hard.