The Economics of Relationships
Sunday, January 10th, 2010My parents have been bothering me a lot about getting married. I’m offended that they’re so eager to get rid of me. However, it did make me think about my aversion to relationships. It made me wonder why certain people find relationships so appealing…
Does anyone else think that it’s kind of unhealthy to be attached to any one person in the world? The first thing we learn when making investments is diversification! Relationships are like investments. Your closest friends and the people you love the most are like stocks – high returns, high volatility (b/c they are the ones who affect your emotions the most). Your 2nd tier friends are like bonds – low volatility and low returns. Your frienemies are like cash – zero nominal returns, negative real returns, but you keep them around just in case…
How can you possibly place so much trust in ONE person? That’s like putting all of your retirement money in Enron stock…OOPS.
I once told a boy that I couldn’t date him because my utility of expected value exceeded expected utility. In other words, I am risk averse. I know that I can achieve a certain amount of happiness when I’m single, but when I’m in a relationship, it’s a gamble. But I’m sure my utility function will change once I turn 30? Or 40? (I hear 40’s the new 30…)
Also, George Akerlof’s Market for Lemons paper has so many levels…
In his paper, George Akerlof explains how market failure occurs because of asymmetric information. In the used car market, a seller has good used cars and bad used cars, aka “lemons.” The seller knows which cars are lemons, but the buyer does not. Therefore, the buyer is only willing to pay the price for an average quality car. Since the seller cannot receive a fair price for the good cars, the seller will resort to selling only “lemons.” Thus, “the bad drives out the good.”
It’s the same with men. I’m assuming that most douchebags know that they’re douchebags. But it’s not like they’re going to go around broadcasting it. Even the seemingly nice ones can turn out to be complete a-holes. Therefore, I am only willing to invest so much in my relationships because there’s a pretty good chance that I am in fact, dating a lemon.
However, my friend Evelyne points out that as we get older, there will likely be more “lemons” in the market because all of the good guys will already be taken. My mother also argues that it is the girl’s responsibility to turn a bad guy (because all guys are naturally bad, of course) into a good guy – take lemons and make lemonade?
Basically, I don’t want lemonade enough to look for a “good lemon.” Or maybe I don’t have the patience to squeeze lemons until I find good lemonade.
What’s the point?
It’s only a matter of time before the principle of diminishing returns kicks in and we get tired of each other. Someone told me that human beings are only made to be “in love” for two years at a time. That’s fine. Boyfriends, and future husband, I accept that you may not love me “until death do us part.” All I ask is that you not make a COMPLETE fool out of me the way Tiger did with his wife.
It’s a crapshoot, friends. In general, the romantics will be disappointed and the pessimists will be pleasantly surprised. I suppose that’s what we would call mean reversion in standpoint…
