Love and the Dismal Science

Economics and love have had something of a dysfunctional relationship. Which is to say, economics keeps sending texts while love is so over economics already.

Scholars of love have always looked at economics with skepticism. In “On the Present Age”, the 19^th century Danish existentialist Søren Kierkegaard lamented the modern preoccupation with money over love. Personal growth could come only from love and spirituality, nor the worldly pursuit of wealth. The 20^th century philosophers McCartney and Lennon concluded along similar lines that “money can’t buy me love.”

In their personal lives, economists have certainly not shied away from romance. The eminent Harvard economist Joseph Schumpeter once claimed that his three goals in life were to be the greatest economist in the world, the best horseman in all of Austria, and the greatest lover in Vienna. Later in life, Schumpeter said that he’d achieved two out of the three—and that there were far too many good equestrians in Austria.

But in the realm of theory, outside of kinked demand curves and the Slutsky equation, economists have largely avoided romance. The economics of fertility is a growing and important field, but there has been comparatively little study of the process that makes fertility possible. Could the most joyful of human activities benefit from some analysis by the dismal science?

From the standpoint of Homo Economicus, the romantic market is inefficient. Love is dependent on the mutual coincidence of wants. Person A may like person B, but if B isn’t interested in A, there can be no romantic exchange. (It probably does not take a Harvard economics degree to realize this.) In other words, love is a barter economy. Introducing a common currency, tradable for affection, would theoretically increase the number of transactions and improve aggregate utility.

But alas, human beings form specific and often exclusive preferences. Anyone who has felt the pangs of unrequited affection, or been the object of such attention, knows that love for one and love for another are rarely substitutes. Such a currency would fail miserably.

If economic theory cannot improve the structure of the romantic marketplace, maybe we can improve the decision-making capacity of individual actors.

Finance may have some lessons for romantic choice. Romance, like investment, should be forward-looking. Exes and old flames are sunk costs; dwelling on them is not only illogical but also counterproductive. Also, with uncertain knowledge of the future, diversification is key. Playing the field may protect an agent from unforeseen shocks to the dating market (perhaps Tinder was invented to fill this need for low-cost variety). By the same logic, infatuation is suboptimal, the romantic equivalent of putting all your savings in gold. Both positions are immature, irrational and shortsighted.

For anyone who has felt love’s joys and sorrows, probably none of this article’s observations are new—they have just been reframed in the technical language of economics. When caught in the heat of the moment, it is difficult to see anyone calculating marginal cost and marginal benefit. Advice about love is easy to give, difficult to receive, and even harder to implement. When that advice is given in terms of utility functions and portfolio choice, it is unlikely to be stimulative.

What makes romantic love worthwhile is its inexplicability. Love is not rational, and so it cannot be reduced to the bloodless equations of utility maximization. In the realm of romance, Homo Economicus—the author, not the concept—will freely admit that he is a sucker. He can aspire to none of Schumpeter’s three goals, and not just because he bombed his last economics midterm and can’t ride a horse.

Some things deserve to be outside the realm of economics. Homo Economicus can remain happily confused.

Oliver W. Kim ’16, a Crimson editorial writer, is an economics concentrator living in Leverett House.