Saturday, 19 March 2016

Tindernomics; An examination of microeconomic principles through the assortative pairing site, Tinder

The Elegant Economist is back!

And first I must apologise for my long overdue absence. I have spent the last 18 months focusing my efforts on project ‘Get into Grad School’. And now that the exams, essays and bureaucratic insanity is done with I can return to my first love; economics!

And love is indeed the theme of my welcome-back post. I have not been a total recluse and this post (previously a work-presentation would you believe!) is my back-to-basics economics refresher.
Instead of my usual recipe format, I will be covering some basic microeconomic principles through none other than the dating app Tinder. Welcome to Tindernomics.

But quickly for those of you who have never used Tinder (trust me, you’re missing out!) a quick three step guide.

  1. Download the app and sync it with your Facebook profile – this allows you to share your mutual friends and interests as well as a selection of photos.
  2. Look at pictures and swipe right for ‘yes, I like this person’ and left for ‘no, please keep them away from me’
  3. If they swipe right too, you match! And then you can begin messaging 


Now for those of you who had the good fortune never to study economics (or better yet never date an economist…) I’m going to run through a little introduction to demand and supply using a very similar commodity to boys…bananas.
If you look below you will see my banana demand curve. On its own it means nothing because it takes two to tango (or exchange bananas) so I add a supply curve. Where the two lines meet we have an equilibrium. With this I can find out how many bananas my supplier is prepared to sell me at a certain price.  

If this is sounding all a bit unromantic. Don’t worry it is. So, to a large extent, is online dating.



Now back to Tinder.

If you look below you can see my dating demand curve and my pre-Tinder sad little supply curve. As you can see it takes me quite a lot of effort (substituted for price here) to meet just a few guys. Pre-tinder I had to meet guys at bars, parties or once, memorably, dressed like Rene Magritte’s The Son of Man. 


   
Introducing Tinder! Now I am carrying round half of eligible London in my pocket. So my supply curve shifts way out. 



What does this mean? 

For much less effort I can meet many more guys. This is known in economics as a WIN. (Actually its not, it’s just what I call it)

The same is true for guys with Tinder but…less so. It’s an unproven observational finding that guys are much less choosy than girls on Tinder. Sadly for guys, as the diagram below demonstrates, this means while Tinder will shift your supply curve out, not as much mine. You’re going to have to work harder for fewer dates. 



Sorry about that.

So we’ve established that Tinder is great for the increasing quantity of men trying to take me out. But the quality…?

Not so much. 

This is because of something economists applaud and I despair over; low barriers to entry. 
What do I mean by that?

Let’s imagine we are trying to enter the airline market.  To do this we need to finance and purchase a fleet of planes and comply with a litany of regulation. That’s a lot of effort and money or what economists call High Barriers to Entry. 

Now what about a boy trying to supply me with a date on Tinder. What does he need to enter the market? 

A smartphone and opposable thumbs (I’m not even sure the latter is a deal breaker) or Low Barriers to Entry. 

There’s another economics challenge I face on Tinder, incomplete or imperfect information. 

If we think about my bananas from earlier. Now when I’m looking to buy bananas I have most of the information I need. I can see them, check their ripeness and because they’re from a well-known brand I can safely assume they’re not organic and thus free of organic things like disease. 

Unlike bananas, Tinder profile tells me remarkably little information about the product. 

Let’s use my own profile as an example. 

First, it less is relevant to know how good I look half way through an amazing holiday and more important to know how I look first thing in the morning.



I’ve included a picture of me scuba diving to make me seem fun and adventurous.



This in no way indicates that I will likely bore you with anyone of the following subjects over dinner; the history of cartography, institutional reform in Southern Italy, third-wave feminism and, of course, micro-economics.

My profile may tell you I am 26. 



What it won’t tell you is it that I more often behave, and sometimes dress, like a 6 year old.

Economists have developed a few methods for overcoming this. 

The Nobel-prize-winning economist Michael Spence, proposed ‘signalling’ as a way to overcome imperfect information in markets where it was inevitable. Following this theory, sellers (my future Tinder dates) ‘signal’ their value to me. This is why on Tinder, boys over 6ft always mention their height…and boys under 6ft never do. 

Yet signalling may not be enough to overcome this information gap. George Akerlof, another Nobel-winner, predicted that in markets where there were too many lemons (bad Tinder dates) that couldn’t be detected the market would decay to the point of nonexistence. Perhaps this is why I have not invested in Tinder yet…

If you do manage to overcome the vast quantity and variable quality of Tinder choices you may get to the messaging stage. 

This is where the romance really can die. 

Messaging on Tinder closely resembles something economists call the prisoners dilemma but which I call EGO-FAIL. It’s briefly this. 

Let’s say I have finally found an acceptable Tinder date; Ryan Gosling. I am excited that I have matched with Ryan and I obviously want to message him all the time.

But, I play it cool. Why? Because the risk of being friendly is too high! 

For example, it’s possible that I message Ryan a lot and he messages me too. This is the ideal, as we can see in the diagram below. Both I and Ryan’s utility (economist speak for happiness) has shot up by 10 points. This is what we call a Pareto optimal situation and where romance can bloom.



But there’s a risk.  If I’m excited, and Ryan is not, my EGO will take a huge hit. Now instead of being top left box, we’ve sunk to the bottom one. Ryan is enjoying all the attention so he is still up by 10. But my utility has fallen by 20 points. What this translates to in real life is misery. I can no longer concentrate in meetings because I’m wondering why Ryan hasn’t replied. Did I seem to keen? Does Ryan really hate girls who scuba dive? 

Because this situation is relatively worse than the happiness I get from messaging Ryan (-20 is greater than +10) I will do all I can to avoid it. I message less. If Ryan follows the same strategy based on ego we both end up in what economists term a Nash equilibrium or ‘just what we’re stuck with’. Where no one gains but no one’s ego takes a hit either.



Too long here and you can end up in Tinder-nertia. Once you’ve reached there a date will never happen. 

There is only one escape from the dilemma – finding a Tinder match with no shame. 

Feeling depressed? I am. After all, they don’t call economics the dismal science for nothing. 

But as its valentine’s day let me offer you a little ray of hope from my own life. I first started using Tinder two years ago. This time last year after about 25 first dates I did indeed find a Tinder date with no shame (aka he’s Italian). Last month we celebrated our 1st anniversary.  

And I have Tinder to thank.  Who knew that somewhere out there in London there would be a boy that really has no interest in scuba diving but who did appreciate my first date chat on microeconomics, cartography, institutional reform in Southern Italy, and feminist theory. He thinks I look cute in the mornings (though he is VERY short sighted) and he is remarkably tolerant of my childish behaviour. I guess my point is that even for economists, love is possible folks. 

Now get swiping! 


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