Divorce and Gold Coins: A Case Study of Iran

The increasing divorce rate has become a major social concern for policy makers in the Islamic government of Iran. The price of gold coin is an important factor in cost-benefit analysis for individuals in their marriage and divorce decisions in Iran. Dowries (Mehrieh) are usually in the form of gold coin and a wife has a legal right to them upon both parties signing the marriage contract. Increasing the price of gold coin may intensify the internal stress and struggles within families, leading to a higher probability of divorce. We investigate the long-run relationship between real price of gold coin and divorce rate for the case of Iran over the period 1980-2014. Controlling for other factors, our regression results show that there is a positive and significant long-run relationship between real price of gold coin (as well as unanticipated changes in real price of gold coin) and marital instability.