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
Absence makes the heart go wander.
My mind is sticking at point A. :)
Actually, it probably is an interesting area of study from a sociological perspective. But as with anything to do with human behaviour, generalised patterns become fairly meaningless when trying to understand a specific instance. As for the application of economics, I've always found that while you can make a cost-benefit analysis of almost anything, it tends to narrow our view rather than provide illumination.
This article is hilarious. I agree with your reasoning Jake about the "perfect weekend."
It brings up the age old question of whether economics is useful. I'm reading books from Nassim Taleb who is critical of economics party because its practitioners rely too much on theory instead of practice. And its dangerous when you try to apply it to finance, where he argues relying on bad models increases overall market volatility. He spoke about this with 20 years experience as a trader.
I have a new idea: economics should be seek to become more of an entertainment business. Somewhere between horoscopes and journalism.
This at first sounds bad because it makes academics feel it would make their work is less important. Heck, that devalues the very degree I got from college.
But when you think about it more, it would be a great step forward. People seem to care less about useful ideas (free trade is good) than entertaining ideas (sumo wrestlers might be cheating). If economics turned into a pure entertainment industry, it would be more popular than ever. And you can make a lot of money by entertaining people.
why, economics can do just about everything but predict the behavior of economies
My SO and I call it "vacation mentality" - it is *ok* to leave work that extra half hour early (now and again), that little foible is not *so* annoying (in strictly finite doses), and special occasions *deserve* the attractively packaged organic Greek sheep's milk feta stored in brine made from the tears of virgins who believe that they will ever draw Social Security benefits. Conveniently, the per unit cost of a round trip is enough to put the "starving" in "poor starving grad student," reducing the worries by a third.
On the other hand, as a grad student there is a certain utility cost to having ready access to unlimited distraction.
There is an Institute on Long Distance Relationships? Sure. It is right next to the prestigious Ponds Institute (and right next door to the place where they test that gum that makes even a dirty mouth feel clean).
Given the current divorce rate in America (and I would have to assume (dangerous, I know) an even higher 'split' rate among those with a 'significant (non-married) relationship'), does this surprise anyone?