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How Economics Can Help Your Love Life

February 14, 2011, 12:00 AM

"Signaling is an attempt to understand how information gets transferred in a market environment where the person on the selling side knows something about what they’re selling that the buying side perceives imperfectly," Nobel Laureate economist Michael Spence tells Big Think. 

Sounds drab? Think again.

Signaling, a fundamental element of economics, could help you nab your true love this Valentine's Day, as Spence explains in the video below:

Spence's example of the fasting lover outside his love interest's house is not merely hypothetical—or confined to 80s teen romance movies. "In some cultures the level of interest and commitment of a young man to a woman is determined by a procedure by which the young man actually sits outside the house for a long period of time, fasting," he tells Big Think.

"In lots of cultures, when you get married, the woman’s family provides a dowry. There are lots of potential young men and their families who are interested in these large dowries, and if the cost were relatively low, they would try to explain how interested they were in the woman and her well-being even though what they’re really interested in is the money. And so over time, these cultures have evolved a way to allow young men to signal true interest and also, from the point of view of the woman who might be getting married and her family, a way to screen out ill-suited suitors."

If the young man is in it only for the money, the cost of sending the signal (fasting for several days outside a woman's house) will be much greater for him than if he is truly in love with her and can look forward to a lifetime of happiness with his beloved. In other words, his partaking in the costly ritual signals his sincere interest, for it would be foolish to subject himself to the ritual otherwise. 

Now, while you probably won't be camping outside your lover's house, be cognizant of this concept of economic signaling as you convey your true intentions this Valentine's Day. 

More Resources

—More examples of signaling in your daily life and career.


How Economics Can Help Your...

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