Dating doesn’t come easily to most of us. We put our egos at stake each time we ask someone out. We put our free time at stake each time we accept a date. And it can be hard to tell what someone really means when they say “I’d love to, but…,” or to know when to keep dating and when to break things off.
But economics can help! Since economics is the study of individuals making choices, the economic way of thinking can be used to understand many of the dating and relationship situations you may find yourself in.
When a date is less appealing than studying
Revealed preference is the concept that actions speak louder than words. So, if you ask someone out and they say, “I’d love to, but I have to study tonight,” what they are really saying is that the benefit of going out with you is less than the cost — the study time they would give up by going out with you.
Now, some will argue that this interpretation is too strict, but think of it this way — does the person you want to date actually have to study? I am almost positive if their Hollywood crush had asked them out, they would not have been as studious! The opportunity cost of declining a date with you might be fairly low; however, the opportunity cost of saying no to Channing Tatum or Scarlett Johansson would be very high.
Why do people date at all?
Now, the real benefits and costs that people make decisions based on are what economists call “marginal” benefits and costs. Here, “marginal” means additional or extra. And this concept can help us understand why people date each other at all.
There are, of course, various motivations. But to narrow it down, let’s assume that you’re at a stage in life where you are ready to find a spouse. In this case, dating is information acquisition.
Let’s use months as our time period. The marginal benefit of each month of dating is that it brings more information to you about your partner; each extra month also has a marginal cost such as time not spent with another person or simply being single. The optimal amount of time to date is until the marginal benefit (MB) of continuing to date is equal to the marginal cost (MC) — what one gives up. (Whether it takes months or years until MB = MC is subjective.)
When MB = MC, it may be time to consider tying the knot.”]When MB = MC, it may be time to consider tying the knot. If one partner decides to propose, no matter how romantic the setting and their words may be, what they are really saying behind those tears and poetic lines is, “The marginal benefit of dating you is now equal to the marginal cost. I don’t have perfect information, but my information is good enough. So, would you marry me?” (I would advise that, even though these words are the invisible economic subtitles at the bottom of the television screen on every season finale of The Bachelor or The Bachelorette, one should not say these words out loud.)
On the other hand, when one reaches the optimal MB = MC point, this could also be the time to break up. What the person breaking up is actually saying is, “If I continue to date you, the marginal benefit will be lower than the marginal cost. Therefore, it will be a suboptimal use of my time to keep this relationship going. Goodbye.” Usually, the letdown is much nicer, but the economic reasoning is nevertheless the same.
Are you worth a Friday dinner or just a Monday lunch?
A final example is the distinction between what I call Monday/Tuesday, coffee/lunch people versus Friday/Saturday, dinner/movie people. I think we can all agree that different nights of the week have different values. Stereotypically, our weekend nights (i.e., Friday and Saturday) are the “prime” nights either to go out with a significant other (or someone we hope will become a significant other) or to party with our friends.
Consider this example. Jack might say to Jill, “Hey, would you like to go out to dinner this Friday night and then go to a Sharks game?” Jill might respond with, “I’d love to, but I have to study this Friday night. How about we meet for coffee on Monday?”
Or Jack might say, “Jill, I’d like to take you out to a play this Saturday night up in San Francisco and then we can go to this really popular restaurant afterward,” and Jill might reply, “Jack, I’d love to, but I have to wake up really early on Sunday morning to run some errands. But how about we meet for lunch on Tuesday instead?”
Through her responses, Jill is sending a clear signal to Jack.
“You want me to give up 4–6 hours of my precious Friday night sitting in a restaurant with you?””] What Jill is really saying is, “You want me to give up 4–6 hours of my precious Friday night sitting in a restaurant and then watching a hockey game with you? I don’t think so! Let’s do coffee instead because I really don’t have much to do on Monday anyway and having a cup of coffee might take at most an hour, and I guess you’re nice enough to look at.”
Out of politeness, most people don’t say that, but economics says that the opportunity cost of a Friday or Saturday night date is too high to go out with someone we feel lukewarm about.
We choose to spend those high-opportunity-cost nights with people we really want to be with, while Mondays and Tuesdays are low-opportunity-cost days reserved for those ranked lower on our preference list. What I tell my students is that if they keep asking someone out on a Friday or Saturday night and they keep hearing, “I can’t, but let’s do some other time,” then they should have some pride and move on. The signal is clear!
Economics is one of the most important subjects that students can take in college, and people “do economics” every day of their lives whether they realize it or not.
Postscript: Don’t let the sunk cost fallacy ruin your love life
In my last Learn Liberty article, I mentioned that one of the most important concepts I teach in my principles of economics classes is sunk cost. In short, just because you’ve been dating someone for a long time, that doesn’t mean you should stay together forever. Eventually, the marginal benefit becomes less the than marginal cost.
Apparently, some readers misunderstood my point, so let me be clear — I am not advocating perpetual singleness, nor am I saying that all relationships are bad and that if you are in one, you should break up. A clear reading of what I actually wrote should clarify this mistaken conclusion. Obviously, I am not “anti-love,” “anti-relationship,” or “anti-marriage” since I am, in fact, married.
The point is that many people are in relationships that they know are wrong, or relationships that are unhealthy, but they do not break up because they feel that the time that they have invested in the relationship will have been a waste. Therefore, these individuals stay in the relationship and try to force it to work or even marry the person in order to justify the investment of time. This is bad economic decision-making based on the sunk-cost fallacy.
I have had many students thank me for teaching them this concept and tell me how it made them keenly reevaluate their situation to the degree that they actually did decide to break up with their boyfriend or girlfriend. Yes, I am proud that I believe I can claim, “No other professor has broken up more relationships or prevented more marriages.” Think of the drama, trauma, hours of therapy, and potential attorney fees that my class has prevented!