Homophobia is bad for the economy

There is a very simple economic case for same-sex marriage: discrimination destroys value by suppressing human capital.

UBS recently re-circulated a 2013 note from its global economist Paul Donovan, who explained the economic argument for same-sex marriage when England and Wales legalized it back in 2013.

He says that discrimination "wastes or even destroys human capital," which is obviously a bad thing for the economy in the long run. On the flip side, taking measures toward anti-discrimination adds value in an economy.

Here's Donovan:

Economists passionately oppose discrimination, because it wastes or even destroys human capital. An economy that discriminates against a group in its society is explicitly devaluing that group's human capital. In 2004, the US General Accounting Office reported that marriage granted 1,138 federal benefits, rights and privileges to heterosexual married couples, but denied those rights to same-sex couples. The difference of treatment is a clear message to same-sex couples that society views them as somehow less valuable.

Over fifty years of studies have shown that repeated discrimination changes the way people behave. If a group in society are told again and again that they are less valuable, they are likely to be less ambitious and to underachieve academically or in the workplace. That robs the economy of human capital it would otherwise have had.

Thus, newly legalized same-sex marriage could provide a boost to the US economy, even beyond the obvious increase in spending on traditional wedding-related consumption. It makes a certain amount of intuitive sense: People who don't spend time worrying about being discriminated against have more time and brain power to worry about actually producing things for an economy. If that amounts to a significant enough portion of the population, this actually moves the needle on economic growth.

But wait! If the argument is that ending discrimination against the LGBTQ community is good for the economy, the same-sex marriage victory at the Supreme Court is just the very beginning.

The fight for gay rights is far from over. If Americans were really serious about maximizing human capital we'd get serious about the dozens of states that still don't protect sexual orientation and gender identity in the workplace.