What can online dating teach you about economics?
More than you might think.
Turns out online dating (or, say, the marketplace of life partners) operates a lot like other markets, says Paul Oyer, an economics professor at the Stanford Graduate School of Business and author of “Everything I Ever Needed to Know About Economics I Learned From Online Dating.”
According to Oyer, you can see everything from why executives “sugarcoat” their company’s situations to why qualified candidates remain jobless, reflected in the world of online dating.
Ears perked? Ours were too.
Below, just in time for that love-related holiday coming up, Oyer shares some of the insight he gained through his own forays into the online dating world. Hey, it worked for him: Ultimately Oyer met his match online.
LearnVest: First of all, what does online dating have to do with economics?
Oyer: I’m a labor economist, so when I found myself back on the dating scene, it became clear to me that online dating is a marketplace.
On a dating site, lots of members mean lots of available potential matches. Assuming the algorithm of each site you visit is good at matching members, if you’re given 10 matches from a site with 100 members and 10 from a site with 10,000, bigger is better. You’ll see more options over time, and the matches will likely better suit you.
This is what is called a ‘thick market’—one with a lot of options—and a thick market is usually more efficient. In the book, I use the example of buying a pair of jeans: If you have an hour to shop, would you rather be in Manhattan or in a rural community? The city, of course, because there are more options and more chances you’ll find what you need.
Keeping the idea of thick markets in mind, aren’t small, niche sites inefficient?
The thing is, you can be a generalist dater or a specialist dater. If you have a deal-breaker requirement and will only consider dates who fulfill that—for example, a certain passion or religion—then you’re a specialist dater, and your personal thick market is a specialized site such as ChristianMingle or JDate, because everyone there meets your basic criteria.
If you choose to be a specialist dater, you should know that these targeted sites are more viable options in densely populated areas, where there are a larger number of people with special interests in the region and there are enough people to provide an appropriately thick market.