Love and Economics
- A Book Review of Everything I Ever Needed to Know About Economics I Learned from Online Dating, by Paul Oyer.
- Match.com, eHarmony, and OkCupid, it turns out, are no different from eBay or Monster.com. On all these sites, people come together trying to find matches.
- —Paul Oyer, Everything I Ever Needed to Know About Economics I Learned from Online Dating (2)
Love: what’s economics got to do with it? As a young, female economist who used online dating apps in perhaps the most ‘famous’ dating scene—New York City—I was always eager to apply the economic way of thinking to help me explain the various patterns I observed in the online dating world. I recall sharing my experiences with other economists, and we discussed the many amusing ways that concepts in economics infiltrated yet another subject matter: love.
It was thus an absolute pleasure to read Paul Oyer’s book, Everything I Ever Needed to Know About Economics I Learned from Online Dating. In a charming and simple manner, Oyer explores the world of online dating through the lens of economics. The best part of this book is that you do not have to be an economist to understand and explore what economics has to do with love. In fact, Oyer jumps on this opportunity to introduce economics to the non-economist by captivating the reader with one of most interesting and relevant topics: dating markets.
Since the book provides a clear and easy introduction to economic concepts, it is ideal for a general readership. Trained economists will also appreciate the analyses, insights, and applications of economic concepts and research to online dating. Finally, it’s an intriguing read for anyone merely curious how one can possibly receive dating advice from an economist. In fact, each chapter of the book concludes with a one-sentence piece of dating advice that is grounded in the discussion of the concepts covered in that chapter.
Among Oyer’s most relevant parallels to dating markets is labor markets, and this connection is explored throughout the entirety of the book. Given Oyer’s expertise in labor economics, his widely cited research, and his role as Editor-in-Chief of the Journal of Labor Economics, the book provides an excellent opportunity to explore not only dating markets, but also labor markets. Oyer is so deeply in-grained in labor economics that he once became a certified driver with Uber. When asked why he chose to be an Uber driver, he simply responded: “I’m a labor economist and I often study specific groups in the labor market.” To better understand the gig economy, Oyer became a part of it.
Similarly, Oyer’s discussion of online dating markets is illuminated by the fact that he took part in them. This hands-on approach adds an appealing and personal flavor to the text as the reader is exposed to specific, “on the ground” examples and can often genuinely relate to Oyer’s own experiences. Unlike the motivation for becoming an Uber driver, however, Oyer developed an interest in analyzing online dating only after he had become a part of it:
- After spending twenty years learning about and studying markets, as well as watching them develop in the modernizing ‘information economy,’ I had suddenly been thrust back into one of the most fascinating markets that exists—the market for life partners. (2)
It’s remarkable how much the stigma against online dating has lessened and how much online dating “took off” in the last few decades. Zero percent of heterosexual couples who met prior to 1995 met online. By 2017, thirty-nine percent of heterosexual couples reported meeting their partner through online dating. Online dating is now the most common method of meeting your life partner, and it has replaced all the traditional, primary methods: bars and restaurants, friends, family, co-workers, church, school, or college.
Chances are, either you or at someone you know met their significant other through an online dating platform. If you consider yourself a “picky person” who has trouble finding a potential partner, you likely benefit the most from the broader choice set provided by online dating sites.
In the first chapter of the book, Oyer applies the concept of search theory to dating markets. Search theory models help us understand the trade-offs that people face when deciding whether to accept the best available option at the moment or to continue searching. In the context of dating, you might consider this: “Should I use this time to continue looking for another potential match or stick with the one I’m with now?” This is similar to a decision you might make when job-searching: “Should I use this time to continue looking for another potential match [an employer] or stick with the one I have now?”
Like dating markets, labor markets are also two-side searches where both parties (the employee and the employer) face trade-offs between continuing to search or accepting the best option available at the moment. Oyer unpacks this connection:
- Both sides of the ‘market’ find it costly to go out and look for a partner (or, in the job context, an employee or employer) and both sides know that, if they keep looking, something better might become available. So people looking for jobs are reluctant to settle, just as people looking for partners are. And in both cases, there is a substantial penalty for being picky: life partner seekers who refuse to settle end up lonely; job seekers who refuse to settle end up unemployed. (17)
“We should, of course, always leave it to the ruthless pragmatism of economists to so concisely burst the bubble of the hopeless romantics.”
In other words, “we don’t spend an unlimited amount of time looking for a perfect match. We settle.” This is because the strategy of meeting every potential mate until you find your one “soul mate” (who may be in a remote village in India, as Oyer suggests), is too costly in terms of time and effort. We usually settle with our best alternative available. Oyer even has a subsection dedicated to: “How Do I Know When to Settle?” We should, of course, always leave it to the ruthless pragmatism of economists to so concisely burst the bubble of the hopeless romantics.
Oyer also tackles one of the most well-known problems in online dating: what if users are lying on their profiles? Should you ever lie on your profile—and if so, how much, and about what? Should you lie about your looks? Or whether you have children?
Game Theory, by Avinash Dixit and Barry Nalebuff, in the
Concise Encyclopedia of Economics.
He connects the problem of lying on your dating profile to lying on your resume. In which ways can you lie on your resume? Only in similar ways as you do in online dating sites. Through the lenses of cooperative game theory, Oyer explains why we see certain types of lying on dating profiles and on resumes and why these lies tend to be minor. In contrast, a different game theory model is used to understand sites like eBay. Oyer provides an explanation for why eBay has built-in mechanisms to help curtail lying (i.e. user ratings), while OkCupid and Match.com do not. A thoughtful discussion of lying on dating sites is found in Chapter 2 on “Cheap Talk.”
Is it better to be a big fish in a small pond or a small fish in a big pond? Oyer applies the concept of thick versus thin markets to highlight the decision considerations of whether to look for your life partner on a broad and generalist dating site like Match.com or more narrow and specialized ones like JDate (Jewish Singles) or VeggieDate (Vegetarian Singles), or merely join a local book club where the male-female ratio might be in your favor (if you’re a heterosexual male). In fact, the decision in choosing a dating site in this manner is similar to individuals choosing where to set up a storefront business: “Rather than thinking about where to get a date, think about where to get customers if you are setting up a store” (119). Storefront business owners must also choose to either locate in more competitive, “generalist” areas that have more customers or in a specialized area where your store would be a “big fish in a small pond.” So what can economics tell us about which strategy is better? Oyer unpacks this in Chapter 6 on Thick vs. Thin Markets.
Throughout the book, Oyer continues to expose the hidden economics in the world of online dating and to highlight how seemingly unrelated topics are in fact connected through economic concepts, frameworks, and ideas. For example, how is spending an extravagant amount of money on the first date similar to Honda offering a more generous warranty than Jaguar? Both of these are united by the concept of signaling in economics, which is covered in Chapter 4. Or, how is being an online dating site user similar to being a Volvo driver? Oyer introduces the concept of adverse selection to draw a connection between online dating sites and the “market for lemons” in Chapter 7.
Other economics concepts covered in the book are network externalities and the Facebook event (Chapter 3); statistical discrimination and stereotypes in online dating, job searching, buying car insurance, and shopping for neighborhoods (Chapter 5); positive vs. negative assortative mating (Chapter 8); the returns to education and good looks (Chapter 9); and negotiating at home and what economics can tell you about the interplay in long-term relationships (Chapter 9).
While the list of concepts and research covered in this text are extensive, Oyer’s book also provides fertile ground for further explorations of economics and dating. As one example, it seems there may be interesting research questions examining the ways in which adverse selection problems in online dating have been mitigated.
Overall, you should read Oyer’s book to uncover the world of online dating through economics, and of course, to find out whether Oyer did end up meeting his life partner online. It is a light-hearted, insightful, and enjoyable read that illustrates the broad and powerful applicability of the economic way of thinking and demonstrates how you can see economics everywhere.