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individuals were more likely to exhibit symptoms of depression and anxiety,
substance use, the deterioration of health and posed a greater risk of
mortality.

Other studies have also shown the undesirable economic
ramifications of divorce. Examining data in Utah in the United States,
Schramm (2006) calculated the economic consequences for the 9,735
divorces in Utah during 2001 to cost the state and federal government
nearly US$300 million in direct and indirect costs. In addition, the prospects
of low-income and interpersonal insecurity may be passed on to the
children of divorced parents, hence expanding the cycle of economic
distress (Ross & Mirowsky, 1999).

4.4 Incentives to Divorce

The Report believes that implicit in the PRH allocation criteria is an
in-built incentive that provides encouragement for unhappy couples or low-
income households to initiate divorce and remarry across the border, where
marital opportunities are relatively abundant. A low-income divorced parent
could apply for readmission to the PRH programme, often with preferential
consideration, if he or she had dependent children or remarried. The current
PRH allocation criteria favour married couples but do not discriminate
between first marriages and remarriages.

These perverse incentives further tilt the balance in favour of
divorce among low-income families and generates a penalty on children
who inevitably suffer from family breakdown. After divorce, they became
single divorced parents with dependent children. One parent was able to
remain in the PRH unit, while the other ended up renting housing in the
private rental market. This aggravates the demand for both public and
private housing where supply is limited.

Hence, because of the considerable demand for private housing,
the divorce rate in Hong Kong is both a cause and an effect of higher
housing prices and rents. Furthermore, it distorts the measured inequality
in household incomes which has been significantly augmented through
4
the PRH programme.
The public housing regime has not only failed to protect the relative
and absolute wealth position of families without property, but also, and
worse still, has created perverse incentives that have increased the divorce
rate among those who are poor. As a consequence, the combined effects
of the PRH programme are forging powerful incentives that expedite family
breakdown, worsen economic inequality, and create bad neighbourhoods
in public housing estates.

4. See Appendix II for further details on the distortion of measured inequality of household incomes.
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