Regardless of opinion, gay marriage is now the law of the land and the nation must begin the difficult task of sorting out the various legal, financial and other implications inherent in the Supreme Court’s decision.
The focus here will be on the potential economic impact of legalized gay marriage, particularly as it relates to the hedge fund industry. Before the scope of any impact can be assessed, it would be helpful to have some sense of how many of our fellow Americans identify as gay, lesbian, and bi-sexual.
Best Available Data
The most current credible statistics on the subject develop from a National Health Interview Survey (NHIS) in 2013 given to 34,557 adults aged eighteen and above. The results of this survey were released in July, 2014 by the Centers for Disease Control and Prevention (CDC). The survey reveals that only 1.6% of the adult population self-identifies as gay and lesbian, while .7% self-identify as bi-sexual.
Running the Numbers
The total adult population in the U. S. stands at 209,128,094. The NHIS survey suggests that 1.6% of this number is gay and lesbian, which translates to 3,346,048 men and women. Another .7% of the adult population is bi-sexual which computes to 1,463,897. Taking some liberties, we will estimate that one-half or 731,948 of this bi-sexual group have the potential to enter into a same-sex marriage. This results in a total universe of 4,077,996 gay, lesbian and bi-sexual individuals that may or may not choose to marry.
While it is difficult to determine what percentage of the gay, lesbian and bi-sexual community will opt for marriage, the adult U.S. population in general marries at the rate of 52%. Therefore, it is probable that of the total gay, lesbian and bi-sexual population, only 2,120,558 might be expected to marry if we assume a similar statistical rate.
Impact on Hedge Funds
Since we are viewing this subject through the prism of hedge funds, we have to consider the financial parameters of a qualified investor and how this relates to the number of gay, lesbian and bi-sexual members of the country. Of the 4,077,996, the demographics suggest that 4.2% will have a net worth of $1 million or greater. That would be about 171,276 potential hedge fund clients. But, and this can’t be stressed too strongly—these individual would be potential clients regardless of the Supreme Court’s decision because this statistic addresses individual probabilities … not couples.
Those from the gay, lesbian and bi-sexual community entering into the marriage contract may, by virtue of combined income and assets, become qualified investors. But even this difficult to quantify subset, is not likely to exceed 42,411.
Impact on Hedge Fund Jobs
If we accept the low end of the estimates on the number of hedge fund firms in the United States and peg the number at 7,000, this suggests a maximum of 6 new investors for each hedge fund in the nation. Sadly, this is hardly a number that will trigger a hiring spree among the nation’s hedge funds.