Does love make any economic sense?


Economics in it’s most bare form is the study of optimal and efficient allocation of scarce resources. There cannot be anything more scarce or precious than love. It is unique, vulnerable and hard to come by.

When I gave a thought to the relationship between these not-so-related elements, I learned, how perfectly it makes sense to connect these two. Firstly, like how economic theories don’t work in practice, the emotion of love makes one do something totally different than felt. Secondly, unlike how humans are expected to be rational in their economic choices, it is understood if one is irrational in their love decisions. Rationality is an assumption that falls when love is in question. However, a need for love is quite a rational and expected pull. So, economics and love do intertwine. Just like the legs of anticipatory lovers.

Now, when we talk of basics, let us understand, how “falling in love” starts. In the market, there are always many choices, hence lower prices. And that is absolutely a big “no” when it comes to love of your life. You would like it to be someone exclusive. And that is where the differentiation comes which makes the supply restrictive. The differentiation could be in many forms. So, how you meet that one person can vary. In this process of reaching to the decision of buying from choosing, the amount of time you want to spend with the loved one never diminishes — an exception to the economic law of diminishing marginal utility. It says, the more of something you have, the less is your satisfaction with that product. No doubt, it will be an exception with love. It is a different kind of monopolistic yet monopoly market, because the love you want to own has all the monopoly on you, but natural.

Malcolm Gladwell, illustrates in his book, Blink, that, you can know a lot about the person within the first few moments of your meeting. Gut feeling is generally accurate. And it is not just to say. It does work it’s magic. Probably that’s why algorithms and profiles don’t matter in making the match. Interactions matter. The conversations matter. The human to human interface matters. That becomes the seed to a connection’s beginning.

In the free market of commodities one desires, one always keeps negotiating the value until market reaches an equilibrium price, satisfying both the buyer and the seller. And simultaneously the graph of demand and supply keeps fluctuating up and down, and as a result the price and quantity fluctuate too, leading to strong troughs and crests. Similarly in a free market of desire, people negotiate their value of love with the loved one’s desire to love back. In the process of reaching equilibrium, love uplifts you and puts you down. It completes you, and breaks you. It makes you happy and tears you apart. Ultimately creating beautiful vicissitudes are better than a straight line; signifying the death of love. On other hand, in economic terms, a straight vertical line makes you more optimistic, considering other factors constant, for whatever the loved one is supplying, your demand stays inelastic. A way of saying “I Love You”, eh?

Love is an asset for emotional well-being of human mind. Every one likes to make an investment there, in expectations of a higher value in the future, in terms of the emotional prosperity required to achieve for a peaceful life. Before making any decision to invest, you consider your own wealth in terms of the physical, emotional and attitude of altruism you possess to express love. Secondly, what kind of returns you expect from that particular asset and hence you invest your time and money in it because every choice comes with an opportunity cost. On the assumption, human beings are rational, it is always true that, you would make the investment where you see the potential of profitable returns.

Interestingly, risk is the next factor that influences relationship. There is a concept called “risk-return tradeoff” in economics which says that, invested money can render higher profits only if it is subject to the possibility of being lost. Quite possible that is the cause people are scared yet at the same time dying to express love. The insecurity is the risk of hurting yourself. Hence, it is ideal to keep the risk preference diversified, so that the unexpected doesn’t come off as a big shock. The loss shouldn’t ruin you but make you a more strong risk-taker who understands the significance of volatility while seeding the relationship.

The last factor to consider while making an investment in love is, liquidity. Many economists will always prefer to convert their investment in cash as soon as possible. While investing in love you need to sacrifice on the liquidity because rushing to convert the raw feelings into anything can make the situation upside down. Hence, to be awarded the maximum profit in the investment of love, one needs to focus on nurturing and growing and keeping the feeling of love same as how it was sparked. You don’t have to always work hard in life. Let some things be simple. And then the peace you achieve could be the highest dividend of the entire investment process.

As rational beings we always tend to weigh the costs and benefits of every choice we make, analysing what derives us the most benefit. But humans make mistakes. At times there is lack of information, or there are hidden costs or sometimes we don’t want to accept the information that is clearly available. In love, such happens to be the case when we tend to put short term benefits over long term costs. Wrong decisions can crash both, the market of stocks, or emotions. At the end of the day, it is a the magic of a human mind’s calculation. Within these calculations realistic expectations must be tied with economic and love decisions because like, financial stability, you deserve mental peace too.

A bond in economics is a promise to pay later. You’re in the market to either consume or save. Satisfaction is the result of former and Investment is the motivation of latter. In the market of love, while satisfying yourself from the beautiful moments of love, don’t consume it all at once. Because you never know, when your heart can be in the need of contingent funds, hence, save some moments and feelings in order to invest them in the future in yourself to cherish and light up your happiness and mood. And keep investing in the love insurance because it is like an umbrella on a sunny day, as well as on a rainy one, and even the one that will hang above your grave.

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This article is written by Harsh Agarwal, a student at Symbiosis School for Liberal Arts, and curator of TEDx Bhilwara.

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