Bastiat's Bastions

Someone e-mailed me this article from CNN.com. I’m not sure why. I am single, but I’ll let you in a on a secret – I don’t earn enough to get invited to the event described. I checked in just a under the $500,000 line this year. Perhaps it was my supermodel good looks? I digress.

In any event, the article describes a dating event held in NYC. To be invited, you had to be a man that earns a whole bunch of money, or a woman that is a whole bunch of hot. The event was called the first-ever “Natural Selection Speed Date: Rich Guys & Hot Girls event.”

Why is this interesting to an economist type – or budding economic students?

Believe it or not, some economists like to think about marriage (not this one). You might have guessed it, but economists analyze the process of searching for a perspective spouse in a similar fashion to how one might analyze searching for a job, or even an appliance or new car. Let’s first talk about “search” in terms of cars.

Take for an example, someone looking for a new car. Let’s imagine that people know what type of car they want, and that there are several dealers that sell the exact car they want. But let us suppose that the consumer does not know the price each dealer is charging unless the consumer physically visits the dealer’s lot. This consumer must “search” for a good price. The consumer knows that there is a distribution of prices – some dealers charge higher prices while some dealers charge lower prices – but doesn’t know which dealer is which.

How many car lots should the consumer visit?

Should the consumer purchase the car from the first dealer? Likely not. Visiting a second dealer might result in finding a lower price. Perhaps a third or forth will result in a lower price still. But if the consumer has already visited 99 dealers, is it likely that a visit to the 100th dealer would result in a lower price? What are the odds that the last dealer is the dealer with the lowest price? Pretty slim.

What I am trying to point out is that there is a marginal benefit for each additional “search”. The marginal benefit is derived from the likelihood that this extra search results in a dealer that offers a lower price than has previously been offered by all other dealers. The marginal benefit of each search declines as more searches have occurred.

There is also a marginal cost for each additional “search” – the time and energy it takes to visit the dealer. This cost is quite likely close to constant for each additional search.

Simple economic theory tells us there is an optimal number of visits to dealers. Likely more than one, but likely less than all. Also, the more costly it is to check out prices, the fewer searches will occur. If searches are cheap, say if everyone posts their prices on the internet, many searches would occur.

Ok, but what does this have to do with dating?

Think of a date as a trip to the car dealership (not a good place for an actual date, though). Hopefully, you are not trying learn the price of your date (that’s illegal), but you are “searching” for a potential match. Just as you wouldn’t marry the first person you dated, you wouldn’t want to date everyone before you decided to whom you wish to get married.

I think it is comical that people are calling the people that attending the dating event shallow, crass, or gold diggers. In fact, I think they are just smart. People know what they want. Would you call someone crass if they were interested in fancy furniture and bypassed shopping at Wal-Mart? This event is designed to lower the cost of searching.

As a non-Louisianan, one thing that strikes as different about Louisiana is that 90% of the people living in Louisiana were born in Louisiana. I’d claim that is a higher number, and that people who are born in this area tend to stay in this area. I would claim that the average Louisianan is not as mobile as the average American. In addition, particularly in this area, people have grown up in small towns.

There is not as much room to comment on this post, so I’ll give a bonus point to the first person who gives a good answer to this question. How might folks having less mobility affect the average age at which people get married in this area? Explain in the context of a search process. Why?

–CT

This entry was posted on Friday, August 31st, 2007 at 7:51 am and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.