Setting Relative Pathnames as Default in ArcMap

By default ArcMap stores absolute pathnames to data sources. By inserting this script in the Normal template (normal.mxt), ArcMap will store relative pathnames by default.

Instructions
Open a blank ArcMap document, then open the Visual Basic editor (Tools->Macros->Visual Basic Editor, or Alt+F11). Under Normal (Normal.mxt), select This Document, then View->Code. Paste in the following code:

Private Function MxDocument_NewDocument() As Boolean
 Dim pMxDoc As IMxDocument
 Set pMxDoc = ThisDocument
 pMxDoc.RelativePaths = True
End Function

The Editor should look like this: