Love & Finances

"For I don't care too much for money, for money can't buy me love." --- The Beatles.

With all due respect Lennon, I beg to differ. A little fiscal knowledge can do wonders for a girl’s love life, in more ways than knowing what Louiboutin stilettos to splurge on. Here’s a little exposé on the principles of economics & dating.

Economic system:  a society’s structure for making and distributing goods and services….i.e. the dating game. There are two variations on the economic system:

     [Command market] : higher authority uses power to create cooperation and resolve conflicting interests as well as allocate resources and set prices.  [mercantilism, communism] Think of this as an arranged marriage. 18^th century mercantilism used taxes and subsidies to encourage exports and kept owners of key industries from moving to other countries. The overprotective mother keeps the key assets close to home by bribing poor newlyweds with Sunday dinner, but the decisions are made for you, robbing you of the chance to compare options and shop around for exactly what you’re looking for.

     [Free market] : no higher authority dictating the economy. Adam Smith’s The Wealth of Nations introduced the concept of a free market in 1776. [used in the United States]  This allows for comparisons and the weighing of importance of qualities. This is the economic system we will we talk about today.

Principles Learned from Wealth of Nations

Self-Interest

Through self-interest, individuals seek out exchanges—both parties are made better off through cooperation.  

 Adam Smith: “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our own dinner, but from their regard to their own interest.”   Yes, this applies even if you are not dating a butcher, brewer, or baker.  Men learn quickly that taking a woman to a nice restaurant is indeed in their own self-interest; they don’t have some impelling need to spend and spend and spend. They know that it will serve them in the long run. 

Lesson:  always assume an ulterior motive. It’s human nature.

Specialization 

Adam Smith encouraged the idea of specialization. Expertise in a specific area is proven to be more efficient, increase dexterity, and save time. Application:  Know your type, and know your MO. Narrowing down the millions of fish in the sea to only ones with a quick wit, ambition, or dazzling smile will be much more effective than wasting time on losers that you know won’t work from the beginning (we’ve all done it). Specializing in a certain technique, be it the demure belle or outrageous coquette, will increase your skill. 

 Lesson: pick your poison and stick with it.

  

Law of Comparative Advantage

Every individual, group, or nation is a low opportunity cost producer of something. You specialize in producing the goods for which you have the lowest opportunity cost.  Example: You wear that special outfit only when you’re looking to get asked out, not every single day. That costs you nothing. You are applying the law of comparative advantage in order to make people want what you have to offer. 

Lesson:  Know your strengths, and play to them.

Scarcity

Unlimited wants and limited resources means you have to make choices—which is more important to me, a man with good style or a man with a sense of humor?  Scarcity implies we cannot ever find everything we want, and this requires us to prioritize. Scarce goods and valuable resources are rationed, so the market solves the problem by increasing price—the more you want a scarce item, the harder you will have to work for it.  Example: In order for the beautiful boy in chemistry to notice you, not only do you have to dress to kill, but arrive ten minutes early to class to fight off all the other girls and ensure YOU ARE his lab partner. This touches on the law of competition. 

 Lesson:  there is no such thing as perfection and not an unlimited amount of really great ones either. Fight for what you need.

The Law of Supply & Demand

Demand refers to quantity of a product desired by buyers. Supply represents how much the market can offer. The Law of Demand states that when the price of an item goes down, the demand for it goes up. When the price drops, people who could not afford the item can now buy it. The Law of Supply states that when the selling price of an item rises, more people will produce it, since a higher price means more profit for the producer. Price is a reflection of supply and demand. The equilibrium price is the point where buyers whish to purchase the same amount that sellers wish to sell (no surplus or shortage).

Consider the quanity (the x axis) to be eligibility, while demand is the of dates you are asked on.  As we see, as quantity (eligibility) decreases, demand increases, and vice versa.

 Lesson: playing hard to get is beneficial.

Opportunity Cost

Scarcity forces us to make tough decisions. The cost of any choice is the value of the best foregone alternative. Example: If you were given the choice to date either Ryan Reynolds or Ryan Gosling (cruel decision), your opportunity cost would be the value of the un-chosen Ryan.  So if you went with Reynolds, the opportunity cost would be Gosling, and you would never get the chance to be a bird with Noah Calhoun.

  Lesson: We wish we could have it all….but ce la vie, we cannot.

And thus we see....love and money are undeniably entwined.