The Indiana General Assembly is considering a resolution known as HJR-3 that would ask voters in November to define marriage in the Indiana Constitution as between one man and one woman. The opposition to this resolution has been fierce and is at least partly based on the belief that there will be negative economic effects of the constitutional change. There is every reason to believe that the economic effects of either passing HJR-3 or rejecting it will be negligible. Moreover, appealing to economics trivializes both sides of this debate.
The Indianapolis Chamber of Commerce argues that, "The proposed marriage amendment does nothing to help show the nation that Indiana is a place that welcomes all, not just some. And we must be mindful of how actions such as this will impact our competitiveness on a national and global level.” Not surprisingly the Bloomington Chamber of Commerce argues that, “Amending Indiana’s constitution to include a provision that already exists in state law is unnecessary and detracts from the important economic and workforce development challenges that need attention in 2014.” The testimony from executives of Eli Lilly and Co. and Cummins Inc. is that the amendment will hurt their ability to recruit young professionals to the state.
What evidence do we have that these assertions are correct? Neither chambers nor the executives have presented any facts or studies supporting their contentions. Furthermore, we do not know how many members of the chambers or employees of the companies agree with the opinions.
The facts that do exist indicate that same-sex marriage is simply not an economic issue. The Kinsey Center at Indiana University reports that the males who self-identify as homosexual are between 2 and 4 percent of the population while females who self-identify as homosexual are 1 to 2 percent of the population. The primary measure of economic output is gross domestic product, which is tabulated by the federal government on a national and state level. You can think of this as the income for the state. The number is widely reported but most economists understand that it is computed with a substantial error. For the national figure, the error rate in estimating GDP is roughly 4 percent. For state numbers the error rates are certainly the same or higher. To measure the economic impact of a policy, this is the primary measure, and the number of homosexuals are simply too small to have a measurable impact.
To see that measurable direct effects are unlikely, suppose that HJR-3 fails and a judge rules that the current law against same-sex marriage is unconstitutional. According to the executives at Lilly and Cummins, this will increase their ability to recruit. How big does this have to be to move GDP? It has to be much larger than either company’s workforce. If 4 percent of the Indiana workforce is homosexual and they contribute more than 4 percent to GDP, let’s say double the average worker, rejecting HJR-3 would have to increase the workforce by more than 64,000 people. Cummins and Lilly combined have about 84,000 employees. Does anyone at Lilly, Cummins or the other firms behind Freedom Indiana think this is remotely possible?
As long argued by The Economist, same-sex marriage can have a direct economic effect another way by increasing the stability of same-sex relationships. This has surprisingly not come up in the statewide discussion of the amendment and has more grounding in economic theory than the claims made by Indiana business executives, but the numbers again are too small to be measured.
What about an indirect effect of passing HJR-3 on heterosexuals? Certainly the negative publicity must take its toll? We have had many negative “tweets” about HJR-3 (#HJR3 is trending on Twitter) and the national press is not portraying the discussion in a positive light, to say the least. It seems clear that some employers may be affected and firms will have examples either way. But these are anecdotes, and anecdotes are not data nor are trending Twitter hashtags. Indiana has a $255 billion economy composed of a workforce of 3.2 million people in 143,000 businesses. If economists can agree on one thing, it is that people generally act in their economic interest and many studies surprisingly show that publicity has little effect on economic interests. This suggests that people will not change their economic activities in any significant manner based on the whether marriage is redefined or not.
The discussion of indirect effects simply reflects the bias of people on this issue and hardly constitutes evidence. Those against HJR-3, and in favor of a redefinition of marriage to include same-sex marriage, argue that when this occurs, Americans will feel that Indiana is no longer in the “backwater” of U.S. culture and not being embarrassed on social media will help recruit new, imaginative people increasing productivity in the labor force. Those in favor of HJR-3, and against the re-definition of marriage, argue that the state support for traditional families will attract hard-working people with the values that “built America.” These are opinions, not facts, and there is simply no way to determine who is correct.
Finally, the debate about same-sex marriage is a demand for respect by homosexuals who ask heterosexuals to fundamentally change an institution that is thousands of years old. This is a moral and legal debate and not an economic one. The business executives and Chambers of Commerce arguing against HJR-3 are taking one side of a moral debate and trivialize the discussion by trying to assert economic effects. Gay marriage is either right or wrong regardless of its economic effect.
Charles Trzcinka is the James and Virginia Cozad Professor of Finance in the Kelley School of Business at Indiana University Bloomington. His piece was first published in the Journal & Courier, Lafayette.