Published on 11/29/2013.
I received lots of feedback on how my blog apparently has “shifted gears” towards more serious issues. This is an attempt to illustrate the beauty of economics, and tie it to something completely unexpected. This post will describe the algorithm in economics that describes the optimal way to finding your husband/wife, step by step! Don’t worry; I’ll keep it short this time.
The topic of love has been addressed by economics before, see this famous post for ways economists express their love. Additionally, while searching for the background for this topic, I stumbled upon this post, which is quite funny, how kids decide whom to marry!
First of all, let me emphasize that the underlying theory of this algorithm (Screening Theory - Wikipedia Article, Original Paper by Joseph Stiglitz). Screening theory is utilized in many areas of economics, and you use it yourself when you buy an airplane ticket, a car, finding a job (or a manager looking to hire someone), or even dishwashers! I will explain the role of this theory in more serious applications in the upcoming post. Even though I will not explain it directly, but hopefully you’ll see the similarity between finding the best husband/wife and the best dishwasher you want to buy.
You’ll see at the end of this post that such decisions in love (and analogously all decisions) are all subject to the holy grail of economics: Cost vs. Benefit! I’ll list the steps via a story about our favorite character Joe, who wants to get married.
Step 1: Let’s say our recurring character Joe just finished his university degree, and by a miracle has an amount of money sufficient to support the major expense of getting married (wedding party, inviting millions of people, buying a house, a car, etc…). Joe is about to enter the dating market (yes it is a market, and economists study this; Article 1, Article 2). He has no prior preferences regarding his ideal wife, or the person that he loves. He’s just dating in hopes to find someone to marry.
Step 2: Joe’s friend introduces him to a mutual acquaintance, Julia. Joe and Julia go out on a few dates but then Joe decides to end things early. He found out that Julia is racist towards a particular ethnic group and therefore, he breaks up with her.
Now let’s look at this decision economically. Joe spent a month of his life dating Julia. The cost of dating Julia was time (the month he spent dating her) and money (financial expenses associated with dating). Note that emotions can be considered as a cost as well, but I’ll neglect that for the sake of simplifying the argument. So in dating her, he incurred a cost. OK, what is the corresponding benefit? Well, since Joe didn't have any prior preferences regarding his ideal wife, he simply gained a piece of information, in that he doesn't like racist women! This is a huge benefit for Joe; he really doesn't want to date racist women! Note that the benefit of knowing she’s a racist and that he doesn't like that, outweighed the cost of dating Julia.
Step 3: Joe is single again, and enters the dating scene. He meets Jennifer while buying groceries. And after thorough screening of her Facebook, Twitter, Instagram, Pintrest, Linkedin, and other social sites (yes, privacy is dead), he knows that Jennifer is not racist, so he decides to date her.
Joe and Jennifer date for a while, but Joe realizes that Jennifer is shallow and rude to people. So he decides to break up with her. Again, what’s the economic decision making here? Joe spent a couple of months dating Jennifer, spending time and money, but broke up with her after finding out that he doesn't like being with shallow and rude people! Again, the benefit of Joe knowing that he doesn't like rude and shallow women outweighs the cost of dating Jennifer.
I hope that by now, you’re noticing a certain trend.
Step 4: Joe keeps on dating women, where the next woman he dates, Joe makes sure that she doesn't have the bad qualities that caused him to break up with Jennifer, Julia, and others. So he basically filters the women he dates by the qualities (information) the he knows that he doesn't like about women! This behavior doesn't continue indefinitely though.
Step 5: At some point, Joe is single, he’s been dating for a couple of years now, and he meets Brittany and decides to date her. Joe knows that Brittany is not racist, shallow, rude, arrogant, or any other qualities that he doesn't like about women.
Step 6: After dating Brittany for a couple of years, he notices that when she eats, she uses the fork with her right hand (weird…). Joe is irritated by this, but now that he knows he is irritated by people using forks with their right hand, is that benefit large enough to justify the cost of dating Brittany for a couple of years (and all the money he spent)? Probably not!
Step 7: Joe decides that he is not going to break up with Brittany; she passed through all the filters (thereby eliminating several qualities that he doesn't like about women) that he has. What does he do now? He proposes and hopefully she’ll say yes!
That’s it ladies and gentlemen. Finding your husband/wife follows the same procedures when you want to buy a dishwasher. You keep screening around for different types, subjecting every subsequent item you look at to the qualities that you don’t like about the previous item, until you reach a point where you find a near-perfect item that fits all of your criteria. You decide it’s not worth to keep looking around for more, so you decide to go with it!