The Economics of Modern Relationships


“It’s not you, it’s me”

Now this is the universally acknowledged break up siren. How many of us have wanted to be swallowed by mother earth before ever being at the receiving end of this seemingly profound statement? The weeks that follow are harder on our family and friends with music blaring from our speakers (Ranging from ‘Asleep’ by Smiths to Pink’s ‘So What’) and a peculiar crankiness that can only be temporarily cured by comfort food as ice cream and chocolates. You sickeningly pour over every possible detail to figure out where you went wrong. We hardly ever come up with anything because relationships are just as hard as trying to figure out Sheldon Cooper’s brain. (Many people would say Sheldon is the easy choice

What I mean to do here is try and understand our love lives (or lack of it) by applying the rules of Economics. The theory that people have a market value, rather than an intrinsic value has been around for centuries. The 17th century philosopher, Thomas Hobbes, developed the theory which says that we are essentially worthless and our value is determined by what others think of us. In short we are prey to the forces of the market. One day the market might want short hair, the next long. The short and long will see their price vary accordingly.

In the world of Romance, internet dating is probably the best example of market principles, but the evidence is everywhere. We’ve often used the phrases “back on the market” when we want to date after a relationship has ended or “damaged goods” after a traumatic break-up experience.

Also we are all familiar with the idea of playing hard to get. This is perhaps more complicated than it looks. Now according to market logic, when we try to sell something, and don’t get the buyers, our natural response is to cut the price until we find a buyer. Playing hard to get, however results in increase in price, not decrease.

Goods are divided into two categories broadly: luxury goods and essential goods. We generally prefer essentially goods to be as cheap as possible. This is not the case, however, for luxury items. For example, a Rolex would not tell a different and better time from, say, Timex. Its value is not only derived from its quality but also its exclusivity. Rolex makes a very few watches, and charges a lot for them. If Rolex started making more watches, the price of watch would fall. So playing hard to get is like a Rolex watch, it’s like being a luxury good. We brand and market ourselves as someone who only the very best could be with. But this will only work till second or third date, as demand is sufficiently inelastic to tolerate.

Why do we mourn the loss of our relationship so much (especially if it’s a long one)? The most common answer to this question is “I have put so much into this relationship”. Now imagine a situation where you spend three hours queuing to get into a restaurant/club. Each time you think about leaving, you say to yourself “But I have already put in half an hour into this, so it would be a waste of time if I left now” Economically speaking, being in a relationship cost you time, money and emotional investment. It also cost us things like not being with friends, not meeting new people. Those missed things are what are known as, in economic terms, the opportunity cost.
You should disregard the time already spent on queuing; it was a sunk cost. What you should’ve asked yourself is “Where do I want to be right now?”

So we need to think rationally and realise that break up is nothing but liquidation of the investment and buying a place back in the market. So as they say “Break up is not the end of the world”; it’s the start of a new, perhaps, more exciting investment.


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