Monday, 15 February 2016

The Economics Of Valentine's Day & Other Related Matters


Economists are always being accused of trying to reduce everything to money and mathematics. Critics will make assertions such as: "You can't put a price on love" and "There are more ways to analyse life than mathematically" and so on. But as one of the most well known quotes from any economic text book reminds us, economics is even grander in its claims:

"Economists are often accused of believing that everything — health, happiness, life itself — can be measured in money. What we actually believe is even odder. We believe that everything can be measured in anything."
David Friedman

When it comes to matters of the heart, perhaps the key thing that underpins it is information. Romance is about discovering more and more of a person, rather like how an explorer discovers more and more of a new country. Discovering more and more of a person is about obtaining more and more information.

A friend once asked me for some advice about a guy she was seeing: do I stick with him or cut and run? I neglected to answer, as I didn’t feel it was my place - plus I lacked most of the relevant information couples require to decide whether to stay together.

Information, of course, is the key thing about their relationship that couples have and outsiders don’t. At the point of asking for advice my friend had a trade-off between what she presently knew and what she might go on to know in the future. Being in a relationship means learning new things about your beloved every day, and this new information is bound to have an effect on whether any decision to stay or go was the right one. Given that at present she was unsure about whether her partner was the one she wanted to stay with, her dilemma was really down to one question: will future information change things for the better or the worse?

If she thought the former she may well be inclined to stick it out for longer; if the latter, now would be the time to say goodbye. The trouble is, of course, future information is by definition unknown in the present, as the present merely gives us probability indicators about future stages of a relationship.

Because information is key, and because relationships are dynamical, your relationship with your partner is, like most things in life, based on a series of probability estimates. A Valentine's Day card to your partner is, from your point of view, a way of signalling that at this moment in time the probability of staying together is greater than not. And unless you're married, the probability that you'll repeat the process next year is conditioned primarily by the information you'll obtain between now and Feb 14th 2017. In the meantime, if you want a test that's a bit edgier and intrepid, you could always try this one on for size.

 * You can, of course, send a Valentine's Day card to a prospective beloved - an act designed for those who can't charm the pants off anyone they fancy.
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