On a date with the dismal science

When apples cannot be compared with oranges, is it pragmatic to compare economics with the world of online dating? Can the adventure of finding a prospective spouse (or a date) online follow the trends of supply and demand?

If you think one must be negotiating the borders of insanity, try to swallow these questions too. Does the process of buying and selling have any correlation with the way you choose your date?

How do you think a book could be structured where there is no talk or special treatment of commodities, and economics is explained in a context where no money is being transferred?

Everything I Ever Needed to Know about Economics I Learned from Online Dating is the result of what happens when an economist who teaches economics, and sees it everywhere, sits down and correlates his experiences and observations with online dating.

Author Paul Oyer, a Professor of Economics at Stanford Graduate School of Business, has around two decades experience in economics training.

The book has 10 chapters that reflect upon different facets of online dating and economics in simple terms.

Key microeconomics concepts, such as search, signalling, adverse selection, cheap talk, statistical discrimination, thick markets and network externalities, along with apt story-telling, makes it a mellifluous read.

The author is careful enough to assert, right at the beginning, that the partner market is one where both sides have to settle for each other, just as in the job market. It’s different from grocery shopping as, in the latter, the groceries don’t have to love you back. Lying, the non-cooperative part of game theory, coupled with exaggeration is often seen on dating websites.

Factors like appearance (especially, height and weight) and income often digress from the actual, and everyone makes an effort to seem as attractive as possible and not fatter, poorer or uglier.

When talk is cheap and profile inflators have incentives to tell lies, then would you lie to beat the competition?

Without getting into the morality of this practice, and the questionable veracity of information exchanged, Oyer points out a few examples of offline verification in China and Korea that generates the right ‘signal’ for the prospect but is also an expensive process.

Well-known companies under-pricing shares at an IPO to signal quality and make themselves more attractive to investors is one such instance of the seriousness of their intent.

Demand, the most crucial concept in economics, is driven not by the product but by other users, and, hence, demand is driven by demand, and this phenomenon of network externality is best cited using the example of an online dating site where no one wants to be the lone user using the website.

A product has a ‘network externality’ if one added user makes the product more valuable to others, very similar to malls and singles bars in the physical world. And hence size of the market also matters, in what is being termed as ‘thin’ and ‘thick’ markets, where the options available also drive buyers and sellers suitably.

A wider set of opportunities leads to shopping around and the author introduces us to the sly technique of ‘exploding offers’ which can lead to some interesting dynamics.

Oyer calls the entire world of online dating a game of hidden information and ‘statistical discrimination’ — people invariably end up hiding information about themselves, which can make the reader of their profile judgmental, but he is careful to point out that people act in a manner that hurts members of a certain group though they have no negative feelings toward that group.

He cites examples in the real world — from locking your car while riding through a poor neighbourhood to racial profiling in airport security — where some sort of statistical discrimination continues to exist and can work in people’s favour at times. This is primarily due to statistical relationship and correlation rather than the individuality of the person involved. But before you cringe with the examples, Oyer cautions that the detrimental effects of stereotyping are pervasive and substantial.

The chapter on ‘Positive Assortative Mating’ is probably one of the most interesting in this book, wherein the author cites various research methods to state that the ‘best’ always pair with the ‘best’, when it comes to physical attractiveness, race, income, education, and so on, and this is essentially a non-random scheme and can be easily ordered.

Though we might end up being paired with people who are more like we are in terms of characteristics, the author gives us insights into negative assortative mating, where people at opposite ends of the spectrum might end up being productive for the organisation when paired together, as guilt and shame can come into the frame, forcing high-output from even a poor performer.

The author talks about good looks, education and higher salaries in what could be a controversial penultimate chapter and states quite bluntly that ‘it pays to be attractive’ as studies show that attractive people end up getting paid better.

The chapter has brilliant insights on how completing a year of education can actually lead to better pay and how education indeed has a big causal effect on the money you bring back home.

Oyer’s sense of humour is reflected throughout, especially in the last line of every chapter.

His treatment of the subject is highly compassionate and the light-hearted story-telling makes it a worthwhile read.

The lack of a prescription to succeed in the world of online dating and anecdotal evidence all the way from online advertising bidding wars to dynamics in homosexual couples, keeps the reader engaged even if he is clueless about dating.

The book’s multi-paradigmatic style is often seen as a winner in the contemporary milieu and the author has strengthened his analytical repertoire by cross correlating economics with other societal practices and structures.

The reviewer is a product manager with a Bangalore- based IT company

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