An Economist’s Perspective on Love

Economics is regarded as a science that thrives on two primary assumptions: First, people are fairly rational. Second, people act in their own self-interest.

The fact that we are capable of falling and being in love probably seems to fly in the face of economic reasoning. You do crazy things when you’re in love, taking risks the “rational” you would consider outrageous. You’re willing to make sacrifices for a lover, even when there appears to be nothing in it for you. A love struck person sounds like a far cry from the individual envisioned by economists. I don’t think this is really the case. Economics is perfectly capable of accounting for behaviors such as love.

According to classic economic thought, individuals are self-interested and act to maximize their utility function (their personal satisfaction). Economics can account for love by explaining love as the phenomenon that occurs when person’s utility function is at least partially a function of someone else’s utility function. This is to say that if Andy loves Betty, then Andy’s utility is based, in part, on the personal utility of Betty. So even though Andy may be a self-interested individual, he still has reason to take an intense interest in the wellbeing of Betty. Consequently, when Andy’s utility is dependent on Betty’s utility we can expect Andy to bear certain hardships to ensure that Betty is well off; depending on the precise utility function of Andy, he may be willing to suffer severe physical harm to help Betty.

So classical economic thought is perfectly capable of accounting for the “irrational” behavior that results from love. When Andy appears to make a sacrifice for Betty it isn’t a sacrifice at all. Andy’s utility depends on Betty’s utility, so it is perfectly rational and in-line with self-interest. Andy should and wants to make a sacrifice (at a reasonable cost) to help Betty, since the net benefit received from ensuring Betty is well- off far exceeds the cost. Economics can account for even the most extreme sacrifices. Say Andy takes a bullet for Betty and dies, this isn’t necessarily irrational or contrary to Andy’s self-interest. If Andy’s utility function is such that a life without Betty would be so bad that he would experience a utility less than zero, then it make absolute sense for Andy to take the bullet, since the zero utility of being dead is preferable to negative utility.

One might object to this by citing an example of young teenagers behaving irrationally over love. They proclaim that “they can’t live without each other,” and will “do anything for each other,” engaging in extremely risky behavior for each other. Surely, such behavior by naïve teenagers must be “irrational,” and behaving contrary to economic thought. Not necessarily, a third party may look at the teens and declare they are irrational because they are too caught up in the present and not adequately thinking about the future. The fact that the teen lovers care only about their present conditions is not irrational, it’s simply matter of their time preference. They weight their present situation as being much more important than their future, and as a result greatly discount the risks of their actions. This discounting isn’t rational or irrational, it’s non-rational. Preferences simply are and cannot criticized on grounds of rationality.

So there’s an economic and entirely unromantic take on love for you.