10/20/2007

The Economics of Gold-Digging

This is a fun article that presents many economics principles in an extremely entertaining way. It all begins when a New York woman posts a profile on a singles dating website simply stating that she is a beautiful woman and wants to marry any man that makes a large amount of money. A man writes her back and gives her the most interesting response. He points out that this trade of beauty for money is a losing deal for him in a free market, and thus he should be justly compensated if he enters into this deal. This is because while income is, on average, an appreciating asset, beauty is an accelerated depreciating asset. Thus, he would only consider entering this trade if he was able to lease, “date,” not buy, “marry,” this woman. I think that if all relationship could be dealt with in such a logical manner, the dating world would be a lot easier to deal with. Unfortunately though, this is not how it works. Maybe some day!

8 comments:

Logan said...

This story is hilarious! I love to see rational logic win an argument. The guy that responded to her solicitation was right on the money.

You really can't argue with his economic conclusions, however, social relationships typically don't behave as a regular supply/demand curve, so I would normally struggle with the economic implications of dating. However, in this case, since her entire focus is her supply of something she feels demands a high price, you can't blame him for trying.

Further, I love the responder's analysis of her claims. If she was so smart, sophisticated, and hot, why would she need to use something so shallow and heartless as an internet post to find a mate that fits her criteria? Even better was the implication that if she is all that she claims she is, why can't she make the money herself?

To give yourself out to the highest bidder is a low measure of esteem, no matter how beautiful you may be. She openly states her intent to get money in exchange for her 'trophy wife' status. Where do you have to go in your mind that you can justify something like this to yourself and look in the mirror every day? Is this how materialistic we have become?

Timothy said...

It sounds like they are both trying to get the most from two products (so to speak) that are in high demand, but short in supply; she being very beautiful, and he being rich. They both should have the ability to set their own price in what sounds like a case of monopolistic competition. You have got love this guy though!!!

peyton said...

I like this article and I am glad that the guy's good looks is not a big part of the womens position, because we all know that the older a guy gets the better looking he is.

Dr. Tufte said...

I was going to mention this in the comments to the one about husbands being a normal good, but then this got posted.

This story has gotten a ton of press over the last month.

Two things are missing in the counterargument.

First, the guy ought to know better than to not make a present value argument. Yes, his increase and her beauty may decrease, but the decision is about the present value of both of those.

Second, the woman is making a common and rational investment choice: to convert a large current value (her looks) into an annuity (a rich husband). There's an active market of lottery winners to do this.

I agree with Logan though: something is just not right about the woman's story.

Jordan said...

Dr. Tufte said:

"The guy ought to know better than to not make a present value argument. Yes, his increase and her beauty may decrease, but the decision is about the present value of both of those."

At first, I thought the guy was pretty clever and right on the money. But I hadn't thought of it in the way that Dr. Tufte did. It makes sense, though, that if the woman is going to "invest" her present good looks, she ought to do it in something that will pay off in the long run. Merely dating won't give her the pay-off her present investment supposedly deserves. This was a very funny article!

Gavin said...

Extra Credit - Dr. Tufte
Dr. Tufte suggested using a present value argument. For the gentleman, I think the present value of the lease is better than the buy option. For the lady, a 5-year contract with a lump sum payout would be a better annuity.

William said...

Dr. Tufte,
I believe that the woman should try to get the most amount of money possible in the present because women do age and do not look as attractive when they get older. I can't believe how vain people are these days, but I guess it's better to be up front then to hide your true feelings until you are married and stuck with each other. What is our society coming to? Beauty fades and money only brings happiness in the short run. What a shame, both do not last in the long run and the two individuals in the end will live unhappy lives if this is what they truly value.

Dr. Tufte said...

I like Gavin's comment very much - what would marriage be like if this sort of contract were possible?

I'm very sympathetic to William's point, but I don't have a way to solve this: in the old days we just didn't live long enough for most of these issues to come up.