Sunday, October 07, 2007

Is the Marriage Market an Efficient Market?

UPDATE 1: Craigslist removed the original post at the link below, but here are some other links here and here that have reproduced the original post and response.

UPDATE 2: NYTimes has covered this story, see articles here and here.

Here is the opening paragraph of an actual post on New York's Craigslist, in the Personals section called "Rants & Raves":

"Okay, I'm tired of beating around the bush. I'm a beautiful (spectacularly beautiful) 25 year old girl. I'm articulate and classy. I'm not from New York. I'm looking to get married to a guy who makes at least half a million a year. I know how that sounds, but keep in mind that a million a year is middle class in New York City, so I don't think I'm overreaching at all."

Two responses follow the original post, and both invoke the "efficient markets hypothesis (EMH)":

"I was taught early in my career about efficient markets. So, I wonder why a girl as "articulate, classy and spectacularly beautiful" as you has been unable to find your sugar daddy."

"I also do believe in the efficient market theory, and am surprised that $500k hasn't found you yet. There are plenty of rich lawyers, investment bankers and hedgies to go around in this city. What gives?"

The "efficient market hypothesis" assumes that there are no hundred dollar bills lying around on the sidewalk unclaimed, and would it not also imply that there should be no "spectacularly beautiful, classy and articulate 25-year old women" unattached in Mannhattan?

Actually the market for dating and marriage might not always be efficient, because it operates as a barter economy, and relys on the "double coincidence of wants," or more accurately the "double coincidence of attraction," unlike the stock market or currency trading, where barter is replaced by the much more efficient money to facilitate trading, avoiding the inefficient "double coincidence of wants."

BTW, Eugene Fama at U. of Chicago, who developed the EMH in his Ph.D. thesis in the early 1960s at Chicago, has been mentioned as a likely candidate for this year's Nobel Prize in Economics. The first 2007 Nobel Prize (medicine) will be announced tomorrow, Monday.

(HT: Sanil Kori)


At 10/08/2007 11:22 AM, Blogger Deepali Chandra said...

Nice article to read... I liked the way fact "Double coincidence of wants and attraction" has been compared with concept of Market Efficiency...!!I remember in our SAPM text it was mentioned that people do not behave rationally in stock market, its more of market emotion and sentiments....So wondering how irrational is "Double coincidence of want"...!!

At 10/08/2007 5:59 PM, Anonymous Anonymous said...

(Ummmm....Psssst! Dr. P.... "...hundred dollar bills 'laying' around..."?)

At 10/09/2007 7:42 AM, Blogger Mark J. Perry said...

Thanks Numberwise, it's fixed now. Mea maxima culpa.

At 5/19/2008 10:52 AM, Anonymous Anonymous said...

the economics of love

May 15, 2004

My friends don’t ever stop trying to set me up. It’s like they can’t stand seeing me happily single.

Over the weekend, I was introduced to a drop-dead gorgeous girl by naively officious friends. The woman is waay out of my league. She has the face and curves of an A&F model, and I have a face for radio.

So I have been thinking, which is always a bit dangerous. Why is a beautiful girl like her still single? The Efficient Market Theory (EMT) says that she should have been taken off the dating/marriage market by some millionaires or hot jocks a long time ago.

What does the market know about Miss Gorgeous that I don’t? Either she’s extremely difficult to get along with, or she may have mental or (invisible) physical defects. The EMT is rarely wrong about market conditions, and believe you me, the dating/marriage market is as robust as it gets, even more so than the stock market…


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