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 An economic theory of love!!!

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rishi@nitdurgapur



Posts : 21
Join date : 2009-01-31

PostSubject: An economic theory of love!!!   Sun Feb 15, 2009 4:21 am

Pricing mechanisms, trade-offs and cost-benefit analysis can help us better understand love, dating, companionship and, subsequently, emotional well-being

Harish Bhat

Around Valentine’s Day, the world turns its collective attention
to love. Love is ethereal, difficult to pin down, but essential to the
purpose of existence. Men live and die for love. But here is a
different take on the subject. Like food and locomotion, it is a human
need. Like most other products and services, it is a scarce resource.
Like all economic goods, it helps man in his quest for happiness. Since
economics focuses on allocation of scarce resources and the
cost-benefits thereof, surely there is a strong foundation for an
economic theory of love.


.
Image: StockXpert


Our theory begins with the needs served by love. Firstly, love serves our
emotional needs—for companionship, sharing, safety and esteem.
Behavioural studies have shown that people who perceive they are truly
loved display greater self-esteem, greater self-assurance and a sense
of security. Secondly, love also helps serve material needs. This
includes primary human needs such as sex, procreation and food. Indeed,
some of these primal impulses are entirely possible to fulfil without
love, yet love makes them so much easier and guilt-free to experience.
Love also addresses our hedonistic needs, which are neither emotional
nor material, just sheer amusement. And finally, as Sufis have
expressed through rapturous music, love addresses our spiritual needs,
in the rare state where we become one with the person we love.

Therefore,the four distinct economic pay-offs which love gives us are emotional,material, hedonistic and spiritual. It is possible to associate an
economic value with each of these pay-offs by understanding the
trade-offs which we will actively make to seek these benefits. For
instance, are you willing to forgo a holiday to Egypt for a special
first date with someone you might love? Such a first date has
hedonistic and, possibly, material pay-offs, though emotional and
spiritual pay-offs are still a far cry.Since economics focuses on scarce resources, surely there is a basis for an economic theory of love



But if the special date is with someone you have madly loved for years and
is also on the anniversary of your marriage vows, then would you be
willing to forego that business visit to Switzerland? Here, a high
quantum of emotional pay-offs is likely to dominate the decision,
versus the hedonistic and material pay-offs of a first date. As we
understand these trade-offs, we can establish a basis for “pricing”
love and its constituent elements.

In practice, such pricing
will always be infinitely more challenging than the pricing of equity
or petroleum or prostitution because there is no public marketplace for
true love; therefore, imperfections in information or exchange are
likely to be very high.

The alternative to market-driven pricing is the familiar territory of cost-plus pricing. We consider here six costs of love. First, the cost of search—as singles aim to find their “true love”. The cost of search is the cost of time and
energy spent in networking, visiting singles bars and information
seeking, among other practices. Second, there is the cost of dating and
courtship. This is once again a time-cost, and the recurring cost of
restaurants and movies. It also includes the cost of possible
distractions from career or studies (we will ignore the collateral cost
of being pounced on by lumpen elements such as the Sri Ram Sene).
Third, there is the cost of rejection, which includes the high
emotional cost of being dumped. Fourth, we have to consider the cost of
maintenance once the love affair has taken a more serious tone. Again,
there is significant time-cost but also the cost of gifting and the
cost of emotional commitment and peace of mind. Fifth, we must consider
the cost of long-term partnership, which is often the natural
culmination of love. Here, apart from explicit costs, there is the
opportunity cost of giving up one’s freedom in pursuing another
potentially exciting partner, as well as the opportunity cost of career
and life adjustments. The sixth, and final, cost of love is the cost of
a potential incompatibility and break-up, including the inevitable mess
that accompanies such separation.

Some of these costs are direct (such as the cost of restaurants) and some are indirect (the cost of distraction from one’s career). Also, some of these costs are immediate and quantifiable with known and high probability (the cost of
gifting), whereas others are distant and unquantifiable, with unknown
probability (the cost of eventual break-up). Individuals will normally
consider direct, immediate and quantifiable costs while arriving at
their decisions. They tend to pay little attention to indirect, distant
and unquantifiable costs—simply because they are too difficult to
process.
As men and women set off these costs against the
economic pay-offs of love, they arrive at decisions regarding their
individual pursuit of lovers and love. If likely pay-offs exceed likely
costs, they go ahead. There is one rider, though. On this rational
economic framework, we must layer the long accepted beliefs that love
is blind, that love is a choice of the heart and not the mind alone.
The impact of both these beliefs is an immediate exaggeration of some
specific economic pay-offs, and a disregard for several of the economic
costs detailed above. And so we plunge in, even if the real costs
exceed the real pay-offs. Which is why the wise men say, “We love in
haste, and repent at leisure.” Happy Valentine’s Day.
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