Yeah, looks like they’re going back to being Brad and Angelina. But what’s the big deal?

Well, this is not your run-of-the-mill celebrity divorce. According to reports, there’s more than half a billion dollars at stake, thanks to their personal wealth and various business enterprises.

That’s a lot of money.

Forbes estimates that Pitt and Jolie have generated nearly $600 million in pre-tax earnings since they started seeing each other in 2004. The kitty includes fees from their work in Hollywood, overseas endorsements, and other businesses. Since their marriage in 2014, Brangelina have earned nearly $120 million before taxes and fees. In fact, Pitt made about $77 million. Some reports suggest Pitt has a personal networth of $240 million, while Jolie has $160 million.

Now, will they split the pie in half?

Not sure. As things stand, Jolie hasn’t asked for support from Pitt. All she wants is custody of their six children. Analysts are speculating how this whole drama will end given the money and star value of the participants, and also for the fact that divorces are bad news not just for the families, but for the economy as well.

The economy?

What’s interesting is how this divorce will contribute to the study of the economics of divorce. Policymakers find divorces worrisome as they impact collective economic well-being. Studies have shown that married people tend to be much better off financially. Further, those who have fewer assets and more debt early on are less likely to marry or have stable marriages than those who are more financially secure.

What does that mean?

There are several studies that looked into the impact of marriage and separation on wealth creation and human well-being. The most cited among these, arguably, is a 2005 study by Jay Zagorsky —‘Marriage and Divorce’s Impact on Wealth’.

Zagorsky, now with the Ohio State University, analysed data that tracked US citizens in their 20s, 30s, and early 40s. He found that even though ‘single’ individuals slowly increase their networth, married respondents saw their networth increases more than 75 per cent over single respondents.

Which means marriage, if works out, can help you get richer and a divorce can actually pull down your fortunes. And that’s why each divorce, including that of Brangelina, poses an economic problem — well, sort of.

Interesting!

According to these studies, couples can take advantage of economies of scale. For instance, the wife might use the husband’s health insurance or vice versa; and so on. This helps them build wealth faster than their peers who are single, divorced or living together.

So, one can say that a country where most people are married will do better financially than one with more singles, right?

Such are the chances. However the trend is not that bright across the globe. According to a Pew Research Center study, the number of married households plunged from a peak of about 72 per cent in 1960 to 50.5 per cent in 2012. The number of married households has fallen even more among the less educated. Which makes matters worse.

What about India?

We don’t have enough data. But divorces are catching up among our new generation couples, and as a recent news report said, Kerala leads the States; it sees five divorces every hour. Which also means this might soon leave a dent on the larger economy as well. So, keep the knot tied, folks; it means business.

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