Economics of Love in Dating Apps: Do You Love Me Just Because We Are The Same?

In this digitalization era, we  can't spend a day without being engaged with technologies, like phones, computers, internet, and so on. We use those technologies to engage with the outside world through social media and other platforms provided. Few years ago, we were surprised by the increasing popularity of dating apps, like Tinder, Bumble, Hinge, and League. Those apps claim that they can actually make someone find the love of their lives easily with just a swipe or a click. Until now, many people from every age level still use those apps for the same reason or for some ulterior motives they have deep inside.

Generally, economics is a study that deals with how to allocate scarce resources and make choices that best utilize what is available, or in other words, efficiently. Scarce resources classification can either be found in terms of natural resources, like oil, natural gas, and other types, such as human and man-made resources. Other than that, we can still consider one thing that's pretty fundamental in our lives as a kind of scarce resource, which is love. Now, why is love a scarce resource? The answer is because it is rare, difficult to acquire, and sometimes when we already had it, it can disappear suddenly without further notice.

A 'Matching Market'

Some people say that finding love is like finding new homes, cars, and other things that we want to acquire in some point of our lives. When you want to buy a car for example, you have to choose one car that really suits your preference from the ocean of choices available. You can either check every car saloons you desire or even find sufficient amount of information through internet to find the right car to buy. When you find the right car, you can call the seller immediately to make a deal -- and that's it. 

You can drive the car of your dream right away after you pay for the deal. Alas, love does not work like that. You can easily trade for cars because car can be calculated with currency, but love has no currency. Rather than you trading with currency, when you want to find love, you trade based on information.

Another thing that makes it different from buying a car is that when you want to find  love, you need to have mutual interest in each other. You can't simply be interested in someone and go out with him without his consent. And that's what the dating apps do. They try to match your interest with others that also have interest in you. 

The golden rule in here is not only you do have to choose, but you also have to be chosen. Apparently, this works exactly like the theory that Alvin Roth, a Nobel laureate, developed from other economists' papers, Lloyd Shapley and David Gale, for what we know now as 'matching markets'.

Matching market theory is a mathematical framework attempting to define the formation of mutually beneficial relationships. It studies the macroeconomic outcome where two searchers or agents seek out each other in order to come to an agreement. This is done to prevent the inefficiency called as search friction. Search friction occurs when buyers have trouble finding goods that they are looking for and sellers may not be able to find buyers to buy their goods. 

Traditionally, we need a model to actualize this formation in match-making situation. It usually uses an algorithm model called "deferred acceptance algorithm" or well-known as Gale-Shapley algorithm. The goal of this algorithm is to find stable matches, which means no pair that would prefer to match with other pair rather than the assigned partner. Here's an example of stable matches from four pairs (assuming men are proposing):

Dokpri

The table above portrays various mix of possible stable matches based on each rank of preferences. This clearly shows a stable match because each of them is paired with partner that suited his/her no matter what they rank each other. Also one more thing, after seeing this match, we can definitely be sure that this kind of match can't use money to determine the assignment.

The Gale-Shapley algorithm has been used widely in match-making situation since its origin in the 1960s and unexceptionally until right now in dating apps. But of course, the algorithm that's being used in dating apps is much more complicated because it also calculates based on homophily, a love for the same, which is a concept that depicts how a person is link up with one another that is similar to him/her. 

One dating app, Tinder, specifically uses a little more complex method that's identical with what Google uses for its search engine, viz. PageRank that assigns people based on their rankings that they get from the 'reliability' and 'desirability' of their profiles in Tinder, which accounts from how many 'likes' they get and give to others.

I love it!

Given the complicated usage of algorithm in its system, it is clear why so many people rely on these apps to find the love of their lives -- it is because of the benefits they generate. They don't just bring together people in ways that have never been practiced before, but also they open up a new trend that society expects, that is the rise in interracial marriage.

Dokpri

The graph above indicates that dating apps have raised the number of interracial marriages in US significantly ever since the introduction of the first dating app, Match.com (shown by red line), and followed by two other giant dating apps, OKCupid (green line) and Tinder (purple line). It also means that they had made it easier for most people to get together in new ways and for good. For good here means that from interracial marriage, we can obtain some beneficial impacts. One is a society that's easier for us to live in because now people can see differences with more tolerance through the prevalence of interracial marriages.

Another thing that these dating apps provide is the choice whether you want to be in a 'thick' or 'thin' market. If you want to have more options so you can get exposed with more potential partners, you can choose a general dating app like Tinder. But, if you want to be more specific with what you want, i.e. you want to be partnered with a cowboy, because you just simply think that city folks just don't get it (yup, that's exactly what it says on the website), you can choose an app known as Farmersonly.com.

...but there's this 'assortative mating'

Apart from the lovey-dovey pleasure, there's this flaw that slips away from our attention because we are so drawn into the world of "one swipe away"-kind-of-love. It is the troublesome impact for the economy as a whole. Dating apps, with their material-driven features like educational background and work information, reinforce what we know as assortative mating. Assortative mating is a mating that happen when a person chooses someone that is similar to him/her, in this regard his/her socioeconomic background. 

It is not quite a new thing for people to choose their future spouses along socioeconomic line, judging from their alma mater or their salary level, because they are seen somewhat similar to their social class boundaries. With these dating apps, it will definitely be easier for college graduates to find their same-level partners. 

This tendency comes from the calculation of most people that if one family has two breadwinners, they are more inclined to form a stable financial foundation for the family. Study has shown that in the United States, 71 percent of college-educated men married a wife who is also college educated in 2007 compared with only 37 percent in 1960. 

That study is also supported by data from National Bureau of Economic Research that found the degree of assortative mating based on education has increased between midst 20th century to 21st century. Assortative mating isn't unethical, but it definitely changes how marriage works. What men and women want from a marriage is different nowadays than before. Men don't want a mere homemaker, so do women. They don't want to be partnered with men just for a motive of being provided. They both want partners; partners that can actually work with them together through emotional and financial upheavals (though the later seems to be more prominent).

But aside from that, one consequence that society has to bear is increasing inequality. Between 1960 and 2005 in the United States, which in-between them marked  the birth year of two giant dating apps namely Match.com and OKCupid, there was an estimated 25 percent rise of inequality and a rise in Gini coefficient by 0.09 point from 0.34 to 0.43. As we may all know, the rise in Gini coefficient is not a good thing because the more it comes near 1, the bigger is the inequality of one's country. Obviously, there are factors that have driven this rise in inequality, but the way dating apps work might have contributed.

From this, we can clearly see that it's getting harder for people to socially mobilize through marriages because people are simply more gravitated towards those similar to them and these apps surely help them to make it comes true. More divorces are also reported to be increasing for the less well-off couples and in contrast, the divorce rates are decreasing continuously for the opposite since 1980.

So, what does it indicate for us? Do we have to blame ourselves for choosing someone that's similar to us in dating apps thus resulting in bigger disparities?

These dating apps show that they actually work exactly like what we used to do when we choose our partners in real life, but in a more sophisticated form. Through its feature to find people from similar socioeconomic background, these dating apps hope that they can make more matches. But inadvertently, this leads to more inequality in economy -- and these apps do little or might as well none to prevent and resolve it. In reality, they may actually accelerate it. Perhaps, government can somehow see it as a chance to fix the economic gap by increasing the marginal tax, so that the extra tax that richer households have to pay is increased. But it's going to have to be justified further.

In the end, it is as clear as glass that love is a scarce resource: it requires sacrifice to get it and also to maintain it in order for us to acquire a fruitful result and not wasting it. Also because of its scarcity, we have to bear a 'cost' coming from the ownership of the resource, which here takes in the form of inequality.

Oleh Sendy Jasmine Karunia Hadi - Ilmu Ekonomi 2017 - Staff Kajian Kanopi 2018