An Un-Valentine’s Market

15 February 2007 at 3:13 pm 4 comments

| Cliff Grammich |

Earlier today I followed up an earlier post of Peter’s on the business of weddings.  It appears that’s not the only business that might boom around Valentine’s Day — my friend Liz Birge reports the divorce (legal) services market does as well . . .

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The Weatherhead School’s Tumor Life Among the Econ

4 Comments Add your own

  • 1. Chihmao Hsieh  |  15 February 2007 at 9:38 pm

    What with all these posts relating to Valentine’s Day and text-messaging to break up, and weddings… It all brings to mind the ‘integration’ of romantic relationships. A theory of firm boundaries? Why not a theory of love boundaries?

    Actually, a good friend of mine, an evolutionary psychologist at UT-Austin, often chats for a long time about such topics: his research is in human ‘short-term mates’ like one-night stands, and ‘long-term mates’ like spouses. (Perhaps it’s his MBA from NWU’s Kellogg that makes for the good conversation.)

    While he and I often have lively discussions, we’ve generally found only a great deal of overlap between strategic organization and evolutionary psychology, and few research questions of mutual interest. Tonight one potentially interesting research question dawned on me: Does technology disrupt the value creation and organizational form of romantic relationships more than it disrupts the value creation and organizational form of business relationships, or vice versa? In a world where everybody continually shifts their time and resources between their home-based personal life and their work-based professional life, which life is more likely to dictate our ‘identity’ over time, given technological innovation?

  • 2. Peter Klein  |  15 February 2007 at 11:03 pm

    Chihmao, I haven’t thought about the analogies too closely, but I do find them useful pedagogically. When explaining markets and hierarchies to my undergraduate students, most of whom have no business experience, I explain that vertical integration is like marriage, hybrid contracting is like dating, and spot-market procurement is like a one-night stand. (They instantly get it.)

    Margaret Brinig’s article “Rings and Promises” does a nice job explaining the emergence of the diamond engagement ring in transaction-cost economizing terms. And you romantics out there might enjoy Jennifer Roback Morse’s book Love and Economics: Why the Laissez-Faire Family Doesn’t Work.

    Maybe it’s time to start the Journal of the Economics and Business of Love and Marriage? We already have the Journal of Sports Economics, the Journal of Wine Economics, and countless other specialty journals. Why not?

  • 3. Chihmao Hsieh  |  16 February 2007 at 1:13 am

    Hi Peter, I have used the marriage/dating/one-night stand analogy before. Last week for the first time, two of my students reported it as ‘sexual harassment.’ No reprimand or warning from the Dean, but there was a still-congenial ‘chat.’ So that’s pretty much the end of that, where I am. It appears I may have to stop at comparing hybrids to ‘dating.’ Oh what, Oh what will I do about markets, Oh what, Oh what will I do?

    Incidentally, from chats with my evo psych friend, much if not most of the human mating literature appears to align with TCE-type theory.

  • 4. Cliff Grammich  |  16 February 2007 at 8:28 am

    Peter, I literally “LOL”ed at the spot-market procurement analogy, which I hadn’t heard before. My, what activities can’t economic language cover, or economists re-define? In fairness, I should note, of course, that even the Church refers to the “contract” of marriage and to its most intimate activities as settling the marital “debt.”

    Chihmao, I’m very much a non-economic interloper here at O&M, so I’m going to have to defer to others on your interesting questions. In my non-economic ignorance, I’m not sure I understand how marriage and, especially, children, can withstand purely economic considerations. Schumpeter first made this point for me when he noted as soon as men and women “introduce into their private life a sort of inarticulate system of cost accounting they cannot fail to become aware of the heavy personal sacrifices that family ties and especially parenthood entail under modern conditions and of the fact that at the same time . . . children cease to be economic assets.” For me, the calculation has always been based on a realization that, as Schumpeter also notes on these matters, “the balance sheet is likely to be incomplete, perhaps even fundamentally wrong.” (Although, I should, of course, also note Schumpeter contends such realizations aren’t enough to to withstand the long-term pressures he saw on the bourgeois family.)

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