Another Valentine’s Day is on the horizon. I know what you’re thinking: time to crack open those aging notes from Prof. Pfennigvogel’s economics class back in freshman year and brush up on your utility- maximizing skills for that most romantic of days. Forget chocolates and champagne. What else is Valentine’s Day if not an opportunity to exploit the balance between supply and demand? Come to think of it, chocolate and champagne might have an awful lot of utility in that case.
If your notes are indecipherable – or, perhaps you were absent that day – consider Paul Oyer’s new book Everything I Ever Needed to Know About Economics I Learned from On-Line Dating. Fortunately, Oyer includes a chapter on the utility of lying (or exaggerating) because if the title were true he probably wouldn’t be a professor of economics at Stanford’s graduate school of business. Or, if it were that easy, I’d be applying to Stanford for my next job.
What he really means to say is that as an economist, he recognizes many of the concepts he already knows operating in the sphere of online dating. But that’s a much longer and less provocative title.
Broadly speaking, most of us could stand to know more about economics and how its theories manifest in daily life. Take the idea of cheap talk – an actual economic concept. It describes the kind of claim you might make that you used to date Scarlett Johansson, and then dumped her, when you are certain that you’re in a No Fact Checking Zone (most bars qualify). A cheap talk framework considers “when and if it is sensible to hide information or lie outright.” If you’re trying to impress your friends, the Scarlett Johansson story might make sense, if they are gullible enough. In the case of online dating, white lying about your height and weight improves your chances of being selected and is minor enough to be overlooked when you meet. Claiming 100 pounds when the number actually refers to just one of your thighs will backfire. The concept also applies to situations like political campaigns, padding your résumé, and eBay. What’s interesting to know is that since minimizing or maximizing the facts to your advantage has become the norm, telling the absolute truth – in some situations – works against you. If I say that I’m average height, people will assume I’m short. If I say that the car I’m selling online needs “some” work, people will assume it’s a junker since the assumption is that we all pad the truth.
In the case of online dating, it’s not all just cheap talk. There are network externalities to consider, or more simply stated: demand causes demand. “A product has network externality,” Oyer explains, “when one added user makes the product more valuable to other users.” The more people who use a dating site, the more desirable that site becomes because, as Oyer points out, being the only member of an online dating site doesn’t work very well. Signaling, another useful concept, has to do with demonstrating special interest, for example in someone you want to date, by giving up something costly (like money). Members of one online dating site had the opportunity to give virtual roses (at a hefty surcharge) to people they were interested in dating. Acceptance rates for those who gave roses went up. I think the principle works pretty much the same with non-virtual roses as well.
For the completely uninitiated (either in economics or online dating), I recommend Oyer’s book as a good read. Each chapter comes with a handy, if at times too simplistic, summary of important concepts and applications. Most of us realize that finding our ideal mate is very unlikely, and while I’ve never seen great value in applying economic rationality to situations that are not purely economic, I appreciate Oyer’s efforts to show the workings of these theories in their everyday clothing.
Special Note: If you’re convinced that everything you need to know about economics can be found in Oyer’s book, watch for my next book: Everything I Need To Know About Life I Learned on a Beach in Belize Sipping Margaritas With a Really Yolked Out Guy Next to Me. QCBN
By Constance DeVereaux
Leave a Reply