Wednesday, February 13, 2008

An Economist's take on online dating


I had been out of the dating market long enough to have had comfortably forgotten about its time-consuming hit-and-misses and its exasperating “market failures.” But months now into Singlesdom, and with Valentine’s day promising yet another consolation box of chocolates by Mother, I said “Time for action!”

I have always been skeptical of online dating, for the simple reason that the whole concept reminds me of an IKEA catalog. But in light of my self-imposed urgency, I recently decided to conduct a little “field research” to see whether the World Wide Web can provide solutions to the failures of the dating market in the real world.

Now, let me clarify… I’m not talking about “failures” of the type: “Spending two years of your life with someone as emotionally deep as a sack of potatoes.” I mean, c’est la vie! It’s “market failures” I’m talking about. But what are these?

On Dates and dates: Think of the market of “Dates” (as in “hot guys and chicks”) similarly to the market of any commodity—say “dates” (as in “dry fruit”). There is supply, demand and a clearing price. Now, by virtue of my single-female status, I will focus here on male Dates and female prospectors, but I promise you the terms are interchangeable.

So let’s say you’re a single, 30+ male professional, 5’ 9’’, a few extra pounds, occasional back pains, middle-of-the-road, Yankees fan, etc etc; and you walk into a party full of women. Suddenly, heads are turning, hormones rising, females compete for your attention; you’re a hot commodity! Put plainly, your “price” has risen.

More generally, you can think of the price of a Date as the amount of effort needed to catch him. The latter includes anything from make-up, high heels, cleavage and botox to painful hours on the treadmill, training in courtship and table manners, even some college education.

The perfect world: Now transport yourself to an economist’s perfect world: The world of perfect competition! It’s beautiful world with many delightful features, of which I will mention three: First, there is “free entry” and exit. Remember that party a short while ago? Well, my friend, you no longer can enjoy a monopoly. The party is open and any Date can come in, check out the market, play, flirt, eat, shoot and leave.

This brings us to a second feature of this beautiful world: Dates have no market power. They can’t set their own price. So you, the 30+ male with the few extra pounds at that party can’t really tell me “Show me more cleavage or I won’t talk to you” because, sorry, that guy behind you (also 30+ with a few extra pounds) seems to be eyeing happily the 7 inches I’ve already revealed.

Critically, this is a world where information is complete and almost perfect. All females at the party know the rules of the game—what you’re up to, how you respond to fishnet stockings, etc. They also know what each and every male guest will want in exchange for a party chat. And they can figure out more or less what you’re worth: Incipient streaks of white hair, a hint of flab around the waist, a couple of witty chat-up lines and that Yankees logo on your hat.

The outcome of all this is a world where everyone finds their perfect match at the lowest price feasible. Markets clear and we all live happily ever after!

In your dreams… Economists will privately confess that perfect competition does not exist in the real world. Like most markets, dating is fraught with “market failures.” Entry is not free, some players have market power and information is far from complete, let alone perfect. But what about the cyber world?

Granted, online dating is a leap forward towards achieving free entry. Anyone can walk in, put up a profile and express themselves at the cost of 20 bucks a month—hardly a barrier to entry. It also goes a long way towards reducing the market power of a city’s boisterous socialites, who dominate the party scene leaving little room for a low-key newcomer from, say, Wichita, KS. I mean, this Wichita guy could be my soulmate but, with no way of meeting him, I keep wasting my energy in trying to crash the Oscars, 3,000 miles west, so that I can finally meet Matt Damon!

The known unknown: But what about improving the information problem? Sure, with just one click I can find out your height, body type, profession and annual gross—let’s say with 70% probability it’s true. Scroll down and I now have a hint of whether you’re a family guy, a pet lover, a sushi aficionado or a chain smoker. But that’s pretty much what I would have found out about you after a ten-minute chat at that party...no? Same info, yet no high heels, no martinis, no frisson; rather, a lackluster Monday night in front of a computer screen. Hmmm.. you pick!

More fundamentally, online dating goes nowhere near addressing the lack of (what economists call) “excludability” in the dating market: That’s your limited ability to stop your Date from succumbing to other prospectors. Sure, that’s what makes Dates far more fun and challenging than… dates! But it’s a problem in so far as it stops potentially beneficial “trades” from happening because of a mutual lack of trust, a lack of signals.

If anything, online dating makes this worse: Why should I bother with a second “wink” when I see you—you who sent me that syrupy email the other day—online, most likely copying and pasting that same syrupy comment to the woman three entries below me? And by the way, is there anyone out there who thinks that winks are NOT utterly lame?

So I remained unconvinced. And after my brief free-trial period, I’m going back to Mother’s good-old courting techniques.. high heels, table manners and all. Besides, Matt Damon is waiting for me... though he doesn’t even know it! Yes, it’s an imperfect world…

Glossary: Perfect competition, free entry, market power, market failure, excludability, Wichita KS, Matt Damon.



11 comments:

Deanna King said...

You may ever thought of buy a newly launched car and keep in front of your home as a status symbol. Sometime, you plan of running a transport business by buying some lorry, truck or any other heavy vehicles. But each and every time, there will be one hurdle standing in between you and your dream. And that hurdle is financial crisis. But, there is solution to overcome it by taking loan from any financial firm. But if you are tagged as bad credit holder in financial market then also you can easily take help of auto loans for no credit people To find cheap oloans,instant auto loans visit
http://www.nationalautoapproval.com

praxis22 said...

The FT have been thinking the same thing:
http://www.ft.com/cms/s/0/b53bc866-da9f-11dc-9bb9-0000779fd2ac.html

I hope you find what you're looking for, but I can recommend getting to know the brain before the bod, I met my wife that way :)

Anonymous said...

Nice Valentine's Day column, Chevelle!

I think your conclusion is somewhat more romantic (rather than seeing your ad and winking, the person saw you across the room - at least there might be eye contact!), but I'm not sure it works from the economics perspective. Not that it should, by the way, because I don't think anyone really wants to reduce love to merely an economic transaction!

Anonymous said...

Deanna, this might be the stupidest advice I have ever heard! For someone with no money to spend the fruits of what little credit they might be able to muster to buy a car as a status symbol and keep it in front of their home? A status symbol that loses 25% of its value the day it is purchased and then continues to depreciate while, in your formulation, not even being used! Chevelle, I don't know where you get these people!

Anonymous said...

Nice one Chev, I like your approach! I disagree though in that I don't see winking as lame. I've been a fan of "poking" (see Facebook) and I've managed to close a few "trades" this way.. And one does have to "wink" to the woman "three entries below" as a means of "hedging mechanism", in case the first "trade" defaults and unfortunately there's no Clearing House in the Dates market. As for the trade price itself, because of the "party, shoot and leave" way that Dates work, it seems to be unpredictable, following Brownian-motion (i.e. future independent of past).. Perhaps there's some truth in "women (and men occasionally, I'd add) don't know what they want and they won't be happy until they have it".. ;-)

Online Dating - Confonder.com said...

I found you awesome on relating online dating to Economy. And it's a big applause for you as you successfully relate it with your great examples.

webmaster said...

http://www.You4Dating.co 100% Free Dating website!

1.Our Website - is a great way to find new friends or partners, for fun, dating and long term relationships. Meeting and socializing with people is both fun and safe.

2.Common sense precautions should be taken however when arranging to meet anyone face to face for the first time.

3.You4Dating Free Online Dating ,You4Dating is a Free 100% Dating Site, There are No Charges ever. We allow You to Restrict who can Contact You, and Remove those unfit to Date.

4. You4Dating is Responsible for Creating Relationships per Year proving it is possible to Find Love Online. It will Quickly become a Leader in the Internet Dating Industry because of its Advanced Features and matching Systems,and most of all,Because is a 100% Free-There are No Charges Ever.

5. You4Dating is an International Dating Website Serving Single Men and Single Women Worldwide. Whether you're seeking Muslim,Christian,Catholic, Singles Jewish ,Senor Dating,Black Dating, or Asian Dating,You4Dating is a Right Place for Members to Browse through, and Potentially Find a Date.
Meet more than 100000 Registred Users

6. Multy Language Dating Site.

http://www.You4Dating.com
-------------------------
http://www.You4Dating.com
-------------------------
http://www.You4Dating.com .

Anonymous said...

Check out another but unique 100% free online dating at http://www.promatching.com/

milf said...

1。那混合物是更缓慢的 ... 但是 Lexus 的即将到来混合版本 ' 将是比气体气体更快的唯一的版本如好地有多马力。不要自夸速度,但是我被吸引轮流开送行为 90,是警察给我一次休息。
2。那不是很
... 只是通过在城市乘公交车往返我储蓄过来 $ 5000/yr 与我的以前的汽车,吉普车切诺基相比。超过 5 年,会是 $ 更不用说会进一步增强我的储蓄的最近的比率远足的 20K。这样除非你是在你的父母的地产上吸的一个浪费的儿子,你的声明是一束公牛。

milf said...

3. 45 (90 r/t)
45mpg 天是 2 我的车上> 8 加>>比。那每天是 6 >仑的一笔>蓄, 120 月, 1440 每年者 5040 (根 3.5 元/) ... 加上它发表 1/10th CO2。多愚蠢是它不要骑一个,去算进今天和年龄。
4.缺少了解 ... 是真的,实际上我个人这样那样喜欢它我可能享受所有鼓励;税,合伙用车,免费停车米, prius 业主之间的秘密的信号,等等;这样自私地说那我真地在那里在享受在所有气体汽车业主上的所有权那没有一个想法多少我这辆汽车有的嬉戏。我 junked 我的 SL,郊区对我的 Prius ... 你应该也。

Rajesh said...

It is a stunning post. Exceptionally valuable to me. I preferred it .Swipe Your Credit Card And have Immediate cash With Cheapest Costs.
Provide Your ID Card Photo Copy As A Document Resistant.If you Want more details spot cash on card