Economics: is there anything it can't do?

Here are some economists speculating about why long distance relationships fail. Their answer: too much money.

Instead, says Mr. Cowen, people in long-distance relationships may spend more money than local lovebirds.

How is that possible? The answer, says Mr. Cowen, lies in the Alchian-Allen Theorem. Developed in 1964 by economists Armen Alchian and William R. Allen, the theorem states that adding a per unit charge to the price of two substitute goods increases the relative consumption of the higher price good.

In layman's terms, "you don't take a long trip unless you are going to make it worth your while," he says. Very few people in a long-distance relationship are going to fly across the country just to hang out in sweatpants with their sweetheart.

Tim Harford, the author of The Undercover Economist and the recently published The Logic of Life, has also pondered how the theorem applies to long-distance relationships. Ultimately, says Mr. Harford, long-distance relationships come at a high economic cost.

"If your boyfriend or girlfriend who lives 3,000 miles away is worth dating, it better be high-quality because you might as well have no boyfriend or girlfriend than a low-quality boyfriend or girlfriend who lives 3,000 miles away," says Mr. Harford. "If you're going to visit for a weekend, you want a high-quality weekend. You don't want to arrive and crack open a beer. You want lobsters, you want Champagne."

Add up the costs of travel and these high-quality experiences and that is why, says Mr. Cowen, long-distance relationships may be more expensive than local ones.

The Institute on Long Distance Relationships (ILDR), a California-based research partnership of therapists, sociologists, psychologists, military therapists and social workers, estimates that there are about seven million couples currently in longdistance relationships in the United States.

A) There is an Institute on Long Distance Relationships? Somewhere, there are men and women in white coats working strenuously to identify what is best to talk about on that long distance telephone call to your girlfriend in Europe.

B) I don't know about the lobsters and champagne bit. I guess I don't see it so much as the actual price of the trip but rather the more abstract allocation of time and the quality of the experience. However, this is not to suggest that these are not economic considerations.

The problem with the long distance is that whenever you visit, you are really invested in it being a perfect weekend. You build it up so much that both of you get stressed out. Then when it fails to be perfect to even a tiny degree, you end up fighting over something that in hindsight was a total non-issue.

I think this speaks to the fact that people are often making cost-benefit analyses even for non-monetary considerations. Economics explains how people behave when they are forced to make decisions about limited rewards. That applies just as much when you are deciding whether to ditch the high school girlfriend your first year in college as when you are investing in the stock market.

Hat-tip: Marginal Revolution