The Economics of Relationships: Counterpoint.

This is Nami, guestblogging in response to Esther's post on the economics of relationships.  Read our blog posts then take the 1 question survey below!  We'll post the results in a week!


You’re young, fresh out of college, with your entire future ahead of you.  New opportunities and possibilities abound.  No longer strapped to your academic core and concentration requirements, you’re free to pursue almost anything you want – except another boy.  Why?  Because you’re in a “relationship.”  Bah.

Now, I’m neither an economist nor an expert on relationships.  But, I am a new grad in a new city, with a new life and a new boyfriend (I’ll refer to him as A).  Our relationship has seen its share of ups & downs and the option of splitting has, in times of stress, fatigue, and annoyance (can we say Friday nights?), more than once entered our vocabulary.  I’m sure that the question of “Is this worth it?” has crossed our minds multiple times.


But, the answer thus far has always been yes.  Once the fights die down and the rage begins to dissipate, a fear settles in.  “What am I doing? I don’t want to break up!”  Panic hits me, a fist to the stomach.  I’ve acted and reacted in such a way many times, but I rarely stopped and thought about the question – Is this worth it?  Am I gaining as much as I should from this boyfriend?  Do the allowances of this relationship really outweigh its limitations?


As I stated earlier, I’m no economist.  But, Esther is.  She suggested that I research the following terms to better understand my situation, from an economic point of view:

• ·    Diminishing marginal returns
• ·    Opportunity cost
• ·    Sunk cost

Here’s my understanding of them:

• ·      Diminishing (marginal) returns: when you get progressively less as you put in more (in contrast to what you would expect).  Relationship example: Before A & I were anything 1^st person plural, I would get really happy when he called me.  Over time, he continues to call me – it still pleases me but I derive less and less happiness from each call. 
• ·      Opportunity cost: value of the next best choice, or basically, what you’re giving up.  Relationship example: One opportunity cost of having a boyfriend is freedom to see other boys.
• ·      Sunk cost: costs that have already incurred and you can’t get back – what you already gave up. Relationship example: We’ve been through too much; what a waste all our troubles were!  Even if I’m miserable now, I can’t just bail – I’m loss-averse!

Given her previous post and the terms she'd assigned me, I think we can all agree that she's not only an economist, but a Pessimist!  And it's true, these terms paint a pretty grim picture of love.  But, let’s take a closer look at how these terms can apply.  

Diminishing returns do indeed exist in dating – the 100^th kiss does not rival the 1^st.  Thinking about diminishing returns makes it seem as if you’re losing out in the end: I’m putting my love, patience, and time into this relationship…but why am I not getting the same high?  But, first of all, what you have to realize is: hey, you’re still getting some high!  You’re still gaining from the relationship, just not as much as in the beginning.  And this makes perfect sense.  The opposite of diminishing returns is accelerating returns.  For example, once a crush develops, every phone call and e-mail brings more and more excitement and pleasure.  You start dating and every moment you spend together seems better than the last.  OMG, this is perfect, you think, it can’t get any better!  Your returns are accelerating, your happiness is through the roof; 1^st kiss and you melt. 

but Warning: this may not last.  But, that’s not a bad thing!  Your returns start to even out, become constant, normalize.  This is good: people can stop regurgitating.

Second of all, you lose some, you win some.  While you lose some of the excitement and eustress over time, you gain consistency, reliability, dependability.  Boring?  Maybe.  But, definitely more satisfying in the long run.  The high dissipates but contentment and security take its place.  I now have a companion, a partner-in-crime.  The spectrum of sentiments I express widens – I can be angry, I can be a brat, I can be depressed, I can be annoying, and I know that he’ll understand, and vice versa.  

Now, with opportunity cost, things get more interesting.  Having a significant other has its perks, but it also has its drags.  Am I still the i-n-d-e-p-e-n-d-e-n-t woman that I was?  Sure, but less so.  What am I giving up by being with A?  Being the center of my own life.  There’s another party to consider now.  What do we both want to eat?  What do we want to do?  Another is romantic freedom: I’m not free to sow my wild oats!  I am not living the care-free, dating-around, everyone’s a potential hook-up kind of lifestyle.  Bound to monogamy: prison!  And last but not least, I may possibly be giving up The Perfect Boy, The One  – somewhere out there, my exact counterpart may be waiting for me, searching for me, but I’m nowhere to be found.  This relationship is a prison!  Free me from my chains, lovely captor!

But, wait.  We must consider the opportunity costs of being single or breaking up.  I mentioned some before (reliability, companionship, etc.), but there are more.  I lose a best friend, a listener, consistent plans, consistent physical relations, and freedom…from loneliness.  We’ll get into the actual financial costs and gains later.

Considering the role sunk costs play in all of this makes everything a lot more…serious.  Technically, if you’re a rational player – and I’d like to think of myself as quite practical and reasonable – you shouldn’t take sunk costs into consideration.  The example Wikipedia gives us is about buying tickets to a movie.  Let’s say you Fandango that shit and buy advance tickets to High School Musical 2. Then, you realize there’s no way you want to watch that – the reviews have been terrible and you don’t know what you were thinking.  Should you bail or go? The sunk cost is the price of the movie ticket.  If you stay, you’ve lost $9, your mental well-being, and your time.  If you bail, you still lose $9, but you’re mental state is intact and you can spend your time better elsewhere.  If you look at it that way, of course you should bail!  But more often than not, people stay.

So, maybe I’m not so rational.  I know I ought not consider sunk costs, but I do.  I order a big meal, it’s expensive, I get full after eating half of it.  But, what do I do?  I truck on and devour the entire dish, which leads to stomach pains, fat goggles, and world of regret.  Why do I do it?  Because I paid for that goddamn meal!

Right, so back to relationships.  Relationships aren’t easy; they require work and sacrifice.  The road to A & my relationship was rocky – distance and time differences aggravated tensions, resulting in countless arguments and resentment.  We worked through each and every one.  Sunk cost.  I moved to a new city, not for him, but it would be wrong to say he didn’t play a part in my decision-making.  Sunk cost.  How can we break up now?  After all we’ve been through, after all we’ve put into this mess?  Technically, if things are rough with A & me, I should consider only the future, ignore sunk costs, and break it off.  Eff this, A!...right? 

Not exactly.  Yes, a relationship is an investment, but it’s not a night at the movies.  A sunk cost in making a relationship work is nowhere near the same as $$ paid to watch Zach Efron.  With love, a cost can also be a gain – arguments can make your relationship stronger – and sunk costs are also history, and history is part of what holds relationships (friendships, family, romantic) together!  A shared history with your best friend is invaluable.  Sunk costs need not be the focus, but they should be considered to some extent!

I’m guessing you have a pretty good idea by now where I stand in terms of my relationship.  But, this wasn’t easy.  Weeks of field research have shaped my conclusions, during which A & I experienced the best and worst of our times together.  So, let’s scrap all this theoretical and romantic nonsense and get down to the numbers.  Is our decision to stay together a financially sound one?

FOOD & DRINK: Going out every weekend adds up.  When I was single, I usually went out (dinner + drinks) on Fridays and Saturdays.  Dinner was an affair and drinks were expensive.  There was pressure to go out hard and spend the money to do so.  And if you're a guy, you can expect to spend even more -- impressing your dates with fancy dinners at fancier restaurants, buying rounds of drinks for the ladies you're trying to bed.  Once you're in a relationship, standards begin to change.  A fun night can just meet a night in, cooking dinner and watching something on Hulu.  Lame?  Maybe.  Affordable?  Heck yes.  Cruising for potential mates costs money, and by money, I mean alcohol.  People like to loosen up with liquor and unless you limit yourself to happy hours, drinks can get expensive.  BFs and GFs sort of eliminate the need to booze up.  Alcohol doesn't loosen you up, then, it just makes you sleepy.

Maybe I've just become lamer, more boring.  Maybe I've imprisoned myself, allowing hundreds of potential mates slip past me.  Maybe I'll find myself at age 42, stuck in a loveless marriage full of resentment and discontent.  Perhaps.  But for the meantime?-- at least, I'm saving a shit ton of money.