Tim* and I met at an economics class in university. Though we didn’t know it at the time, two things would bring us together by the end of the semester – our near-identical timetables and a mutual fascination with Adam Smith. For him, it was Smith the economist – author of Wealth of Nations and the father of modern economics. For me, it was the newspaper astrologist – author of the lesser known (but no less powerfully titled) Saturn, Fatal Attraction.
Smith, the astrologer Smith, the economist
Growing up, I looked forward to reading my weekly horoscopes the way old people would lust after their new TV guides. At the back of every Sunday paper was a colourful preview of my seven-day forecast. It always sounded so busy and hopeful (“Friends and family will need your counsel.” “Bold Mars clash with flirtatious Venus!”), making the comparative tedium of my actual week somehow more bearable.
But on the Sunday before my first week of uni, Smith offered no hint that I was about to get into my first real relationship. Nor did he foreshadow that because of a new crush, I was going to – despite my morbid fear of numbers – start looking forward to the economics lectures.
Eventually, I realised that the other Adam actually had much better advice when it comes to navigating the nuances of love. Here is what some of the most common relationship dilemmas might look like through the eyes of an economist:
ON BEING SINGLE
Scarcity: Also known as the “basic economic problem”, economists are forever trying to allocate limited resources to satisfy infinite wants and desires. But the same conundrum also extends to the dating economy. One economist thinks the odds of finding real love is no more than 1 in 280,000 in London (for himself, at least), while another thinks it’s about as likely as being kicked in the head by a horse. This could account for the booming market of literature advising bitches ladies to settle for Mr Good Enough – but does it mean you should you ‘settle’ for less?
Not according to Smith. In fact, by pursuing our self-interest/ Ryan Gosling (as opposed to settling for a ‘bad equilibrium’), Smith argues that we will be “indirectly promoting" the greater good. Bottom line? Let the market’s ‘invisible hand’ guide you.
OPEN (CASKET) RELATIONSHIPS
Bad equilibrium: Presumably the cause of “open casket” romances– which is to say, relationships that are healthy-looking apart from their being dead. A bad equilibrium is defined as “a strategy that all the players in the game can adopt and converge on, but it won't produce a desirable outcome for anyone.” According to Dan Ariely, author of Predictably Irrational: The Hidden Forces That Shape Our Decisions, this can also apply to first dates where we automatically default to making boring small talks in order not to appear too eager or intrusive.
“It's easy to talk about our views on the weather or food,” writes Ariely, “But while that may guarantee that we don't fail on this date, it does nothing to get us closer to success, as it provides us little useful information on whether we are a long-term romantic match.”
Cognitive dissonance: Ever wondered why some (usually intelligent) people stay with men/ women who treat them like rubbish? Apparently, this may have something to do with cognitive dissonance – a psychological phenomenon that describes consumers who are keen to feel good about past decisions – even if it’s a likely mistake.
“There is considerable evidence in psychology that people like to view themselves as being smart, and in particular, as having made correct decisions in the past,” writes economists Larry Epstein and Igor Kopylov, “Thus they may change beliefs after taking an action and become more optimistic about its possible consequences, in order to feel better about having chosen it.”
It also goes some way to explain why ‘playing hard to get’ works on some people: to justify all the effort, they will rationalise it by deciding it’s because “they really like you”.
WHY NO ONE WANTS TO SAY 'I LOVE YOU' FIRST
Game theory: Thanks to Russel Crowe, most of us are now well-versed in how game theory works, if only in a pick-up situation. At its simplest form (i.e. Prisoner’s Dilemma), the theory helps you decide on the “best course of action following your opponent’s choice” – with one important caveat: it doesn’t necessarily yield the ‘best’ possible outcome, just the most logical. (Say, what now?)
So for example, in the case of whether or not to say ‘I love you’ in a new relationship, according to Nobel-prize winning economist John Nash, the dominant strategy (ie. one that leads to minimal loss no matter what the other person does) is to stay silent (lest one person confesses their love and gets rejected). Even though the “best possible outcome” is actually for both parties to take the plunge and say how they feel.
The law of diminishing returns: As Alain de Botton explains in Essays in Love, "Happiness with other people seems bounded by two kinds of excesses: suffocation and loneliness.” The law of diminishing returns states that the more you consume of a good, the less satisfaction you’ll derive from the next unit of consumption. (Eg. the first slice of pizza will always taste better than the second, and so on. Even if you weren’t drunk) This can also apply to dud dates, or the amount of ‘couch time’ with your partner each week.
Sunk cost vs opportunity cost: When it comes to deciding whether to stay or go, economists say we shouldn’t be held back by ‘sunk costs’ – in other words, losses that have “already been incurred and cannot be recovered”. One of the most common reasons for staying in a dysfunctional relationship is the fear of “losing everything you’ve invested” in it. But in doing that, argues Smith, we are missing out on the future opportunity of happiness.
After the first semester, Tim and I went on to share many more economics classes. By the end of uni, we’d been together for two and a half years which, up until that point, had been 83 per cent of my adult life. And because we socialised together, at least 90 per cent of our friends were mutual. In other words, the ‘sunk costs’ were relatively substantial.
But at 21 and not having really dated anyone else, were we really ready to settle down? Our economics forefathers taught us no. So after some tearful discussions, we decided it was time to let each other go. It wasn’t easy to say goodbye – but Adam would’ve been proud.
*Names have (of course) been changed