DOES LOVE MAKE ANY ECONOMIC SENSE?

Economics in it’s simplest form is the study of the 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.

I am entwining the emotion of love with the science of economics. When I considered the relationship between these not-so-related elements, I was surprised at, how perfectly it makes sense to connect them. 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 absolutely rational in their economic choices working towards self-interest, people can absolutely be both rational and irrational regarding love because, after all, it is love in question. Nonetheless, humans always assume that, they are supposed to be rational. They discount irrational emotion, and sometimes love, as feelings of lust, empathy or infatuation. But, it is quite a rational need for love. Economics and love do intertwine. Just like the legs of anticipatory lovers.

Now, let’s talk about the basics, we need to understand, how “falling in love” starts. In the market, there are always many choices, hence competitive prices and therefore every other Tom, Dick and Harry can have a similar product to yours. And that is absolutely a big “NO” when it comes to love of your life. You want someone exclusive. And that is where the differentiation comes in which makes the supply restrictive. The differentiation could be in many forms. When you meet someone in a different setting, it connects you with them in a different way and therefore distinguishing them from the other people you meet. So, how you meet that one person can vary. In this process of reaching the decision of buying from choosing, the amount of time you spend with the loved one never diminishes — an exception to the economic theory of law of diminishing marginal utility, which states that, 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 a person within the first few moments of your meeting. Your gut feeling is generally accurate. And it is not just to say. It does work it’s magic. That is probably why algorithms and profiles don’t matter in making the match. Interactions matter. The conversations matter. The human to human interface matter. That becomes the seed to a connection’s beginning. Hence, these are the other factors which apply when we keep “ceteris paribus” aside from our every other economics definition. Makes sense, eh?

In the free market of desirable commodities, one keeps negotiating the value until the market clears at an equilibrium price — satisfying both the buyer and the seller. And simultaneously in theory the graph of demand and supply keeps fluctuating up and down, and as a result the prices and quantity fluctuates too, leading to a strong pumping heart-beat x-ray like shape. It mimics how, in the 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 both completes you and breaks you. It burns your heart and fills your heart. It makes you happy and can tear you apart. Ultimately creating a beautiful complicated heart pumping graph, making you realize that, if at times there is no equilibrium then at least there is no straight line which could mean 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 the emotional well-being of the human mind. Every-one wants to make an investment there, in expectation 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 altruistic tendencies 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 that, 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 argues that, invested money can render higher profits only if subject to the possibility of being lost. It is quite possible that is mirrored with love because 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 don’t come off as a big shock.The loss shouldn’t ruin you but make you a stronger risk-taker who understands the significance of volatility while seeding the relationship. Wouldn’t that make this universe of love more beautiful had everyone understood it?

The last factor to consider while making an investment in love is, liquidity. Many economists will always prefer to convert their investment into 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 turn 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 the love same as it was when sparked. You don’t always have to work hard in life. Let some things be simple. And then the peace you achieve can 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 due to several reasons. At times there is lack of information, or there are hidden costs or perhaps sometimes we don’t want to accept the information that is clearly available. In love, this 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 stock and heart. At the end of the day, it is all the magic of the human mind’s calculation. Realistic expectations is a vital factor to that calculation. It should always have it’s value tied with both, 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 the former and investment is the motivation of the 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, so 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.