Around Valentine’s Day, the world turns its collective attention to love. Love is ethereal, difficult to pin down, but essential to the purpose of existence. Men live and die for love. But here is a different take on the subject. Like food and locomotion, it is a human need. Like most other products and services, it is a scarce resource. Like all economic goods, it helps man in his quest for happiness. Since economics focuses on allocation of scarce resources and the cost-benefits thereof, surely there is a strong foundation for an economic theory of love.
Our theory begins with the needs served by love. Firstly, love serves our emotional needs—for companionship, sharing, safety and esteem. Behavioural studies have shown that people who perceive they are truly loved display greater self-esteem, greater self-assurance and a sense of security. Secondly, love also helps serve material needs. This includes primary human needs such as sex, procreation and food. Indeed, some of these primal impulses are entirely possible to fulfil without love, yet love makes them so much easier and guilt-free to experience. Love also addresses our hedonistic needs, which are neither emotional nor material, just sheer amusement. And finally, as Sufis have expressed through rapturous music, love addresses our spiritual needs, in the rare state where we become one with the person we love.
Therefore, the four distinct economic pay-offs which love gives us are emotional, material, hedonistic and spiritual. It is possible to associate an economic value with each of these pay-offs by understanding the trade-offs which we will actively make to seek these benefits. For instance, are you willing to forgo a holiday to Egypt for a special first date with someone you might love? Such a first date has hedonistic and, possibly, material pay-offs, though emotional and spiritual pay-offs are still a far cry.
But if the special date is with someone you have madly loved for years and is also on the anniversary of your marriage vows, then would you be willing to forego that business visit to Switzerland? Here, a high quantum of emotional pay-offs is likely to dominate the decision, versus the hedonistic and material pay-offs of a first date. As we understand these trade-offs, we can establish a basis for “pricing” love and its constituent elements.
In practice, such pricing will always be infinitely more challenging than the pricing of equity or petroleum or prostitution because there is no public marketplace for true love; therefore, imperfections in information or exchange are likely to be very high.
The alternative to market-driven pricing is the familiar territory of cost-plus pricing. We consider here six costs of love. First, the cost of search—as singles aim to find their “true love”. The cost of search is the cost of time and energy spent in networking, visiting singles bars and information seeking, among other practices. Second, there is the cost of dating and courtship. This is once again a time-cost, and the recurring cost of restaurants and movies. It also includes the cost of possible distractions from career or studies (we will ignore the collateral cost of being pounced on by lumpen elements such as the Sri Ram Sene). Third, there is the cost of rejection, which includes the high emotional cost of being dumped. Fourth, we have to consider the cost of maintenance once the love affair has taken a more serious tone. Again, there is significant time-cost but also the cost of gifting and the cost of emotional commitment and peace of mind. Fifth, we must consider the cost of long-term partnership, which is often the natural culmination of love. Here, apart from explicit costs, there is the opportunity cost of giving up one’s freedom in pursuing another potentially exciting partner, as well as the opportunity cost of career and life adjustments. The sixth, and final, cost of love is the cost of a potential incompatibility and break-up, including the inevitable mess that accompanies such separation.
Some of these costs are direct (such as the cost of restaurants) and some are indirect (the cost of distraction from one’s career). Also, some of these costs are immediate and quantifiable with known and high probability (the cost of gifting), whereas others are distant and unquantifiable, with unknown probability (the cost of eventual break-up). Individuals will normally consider direct, immediate and quantifiable costs while arriving at their decisions. They tend to pay little attention to indirect, distant and unquantifiable costs—simply because they are too difficult to process.
As men and women set off these costs against the economic pay-offs of love, they arrive at decisions regarding their individual pursuit of lovers and love. If likely pay-offs exceed likely costs, they go ahead. There is one rider, though. On this rational economic framework, we must layer the long accepted beliefs that love is blind, that love is a choice of the heart and not the mind alone. The impact of both these beliefs is an immediate exaggeration of some specific economic pay-offs, and a disregard for several of the economic costs detailed above. And so we plunge in, even if the real costs exceed the real pay-offs. Which is why the wise men say, “We love in haste, and repent at leisure.” Happy Valentine’s Day.
Harish Bhat is chief operating officer, watches, Titan Industries Ltd. These are his personal views. Your comments are welcome at firstname.lastname@example.org