Tuesday, February 10, 2009

Looking for a Valentine: A Directed Search Model with Search Frictions

So you’re in your thirties, gifted, energetic, romantic and all that, yet somewhat disconcerted with the thought that the people you have fallen for recently have invariably turned out to be “involved with a half-sibling”, “self-absorbed egomaniacs”, “the emotional equivalent of a sack of potatoes” or “die-hard Republicans".

And as your flustered mother pleads “Fine about the potato.. but what’s wrong with Republicans?!!”, you rush to me for some real advice. An economist’s advice! So here we go… My 2009 Valentine’s Special!

The search for a soulmate is a process best captured by the so-called “search models” that economists use to answer burning questions about the labor market. No, I’m serious… Check this out:

Why do the unemployed sometimes choose to stay unemployed, e.g. by turning down job offers? What determines the length of time a person will stay unemployed? How can we have both unemployed workers and unfilled positions at the same time? Importantly, can we do anything to make the search process more efficient and increase welfare?

See? All you have to do is replace “unemployed” with “single”! In fact that’s exactly what I’m going to do, to see what these models tell us.

So say you’re that single, gifted, romantic and “all that” individual and you’re looking for “The One”. Beauty is in the eye of the beholder, of course, so “The One” can be anything from “romantic and caring” to “intellectual genius” to “filthy rich” to "Matt Damon" (/"Scarlett Johansson”). More often than not, it can also be an abstract concept.

But while you’re looking, life as single doesn’t exactly s**ck… there is a certain “utility” in those wild weekends in Vegas after all. Call it singles’ bliss.

Every now and then, say N times a month, a guy (/woman) calls you up to ask you on a date. [OK, for simplicity I’ll stop this man/woman thing and focus on a woman’s perspective. Guys, just replace everything with “Scarlett Johansson”!]

Anyway, so you think “I might as well” and off you go to “sample” the offer. A while later you’re done with sampling (and vice versa) and you render your verdict: “Self-absorbed!” “Sack of potatoes!” “Fun, but not quite…”

So here is the dilemma… You can either say “I do” and advance to a life of “married bliss, but not quite;” or you can press “delete” and move on, albeit at the cost of yet more searching, more samplings, more verdicts!

Search models have something to say about which one you’ll go for. It boils down to this: The more impatient you are to find the“one”, the more likely you accept. In contrast, the more picky you are, the more likely you remain single!

(I suppose one doesn’t need a model to come up with that!)

Moreover, there are several factors affecting how picky you are: You’ll tend to be pickier if you keep being bombarded with offers; if you kind of enjoy your single’s bliss; or if you’re not that in a hurry to take the plunge.

So nothing wrong staying single then, right?

Well, yes and no. You see, in the world of economics, having unemployed workers and job vacancies at the same time is a missed opportunity to produce output! The dating world is similar, arguably…

I mean, some things in life are more fun a deux, from candlelit dinners, to games of scrabble, to that groundbreaking paper you can co-author! Let alone the obvious… Certainly that’s how your mother sees it, citing, in passing, reports that Republicans’ sex life is superior to that of Democrats. Either way, collective utility/value-added would increase, if more people found their match.

So what can you do?

Well, one option is to outsource the search process to a Planner—your mother for example—whose sole objective is to find you a partner, no matter what. She is certainly up for the challenge, so she rushes to her yoga class, asks around and, soon enough, she’s found your 97% match: A single guy in his thirties, gifted, romantic and all that, and a lovely individual, only Republican!

So the arrangement is made, the transaction goes through, “unemployment” reduced. Only that, as it turns out, you love to dance, he likes walks, you like fire, he loves snow, so you spend the rest of your life in the lukewarm in-between, devoting your most passionate moments to debates about the future of the Republican Party. That’s more or less the difference between “maximum employment” and “maximum welfare.”

Alternatively you can try resting on “market forces” to deliver you the best (welfare-maximizing) outcome. Only you might have to make a bit of extra effort.

For example, you may be receiving very few offers each month… or maybe your social circle is such that you only meet potatoes and egomaniacs. In which case you’d better take the extra step of “advertising” who you (really) are and what you (really) expect from the other side.

So, if you’re looking for a geek, say, you could start hanging out at the Apple store (a singles’ hotspot I am told)! Or, if you’re dying for an erudite, sensitive type, you could start frequenting happy hours for fans of Victorian poetry. Alternatively, you can move to Miami and groom yourself into a pretty bartender to get the Matt Damon type.

All this might be tiresome but it may well pay off. The other side now knows who you are, as well as your expectations and constraints. If they like what they see, they’ll make an offer, and one that you can’t refuse (else they wouldn’t make it in the first place). The deal closes, mother stays out of it, but all three of you happy…

ever after? Well, there’s a catch: Even in this “best” world, partners can fail to deliver… your geek might have a knack for dismantling your appliances; your poet might be lousy at scrabble; and your Matt Damon might “see the light” and devote himself to a life of abstention and spiritual healing. It’s even conceivable (a minute possibility!) that you fail to deliver, being the rash, “delete-button” breed of your Facebook generation (and mine).

So what then… call up your mother?!!

Maybe.. though, before you pick up the phone, let me tell you one more thing.. According to those search models, being picky is a good thing.. It means that you’ll take your time, wait for “the” offer, end up much happier and, therefore, less likely to engage in “on-the-job search.” A desirable outcome for everyone!

Better yet.. If you do screw up, you’ll be at peace knowing it was you who made the choice!

Glossary: search models, on-the-job search, planner, Republicans, Democrats, potatoes


Anonymous said...

Chevelle, tell your mother that Republicans' reports of a superior sex life probably have to do with how frequently they do it. So for the collective utility argument to apply they must continue to eclipse! Great post! Adam-

Jacob Funk said...

Chevelle - entertaining, but ultimately the wrong economic paradigm! Unemployment search models would invariably have to take cyclical considerations - i.e. Valentine's Day in this crisis year really sucks! Think rather Joe Stiglitz' claim to Nobel fame and asymmetries of information.... the lemons issue.... and the massive let-down, when it turns out that your date with the previously overpaid, now merely government-employee banker, ends with you having to pick up the tap, as his bonus has been cut by Chris Dodd's amendment (Coodoo;'s for trying senator Dodd, but its' too little too late.... and you'll end up having to nationalize the lot anyway!)

Anonymous said...

Funny, Republicans are the ones always getting caught with their pants down...Porn on gov time, molesters etc...