What a labor economist can teach you about online dating

Editor’s Note: With Valentine’s Day right around the corner, we decided to revisit a piece Making Sen$e did on the world of online dating. Last year, economics correspondent Paul Solman and producer Lee Koromvokis spoke with labor economist Paul Oyer, author of the book “Everything I Ever Needed to Know about Economics I Learned from Online Dating.” It turns out, the dating pool isn’t that different from any other market, and a number of economic principles can readily be applied to online dating.

Below, we have an excerpt of that conversation. For more on the topic, watch this week’s segment. Making Sen$e airs every Thursday on the PBS NewsHour.

— Kristen Doerer, Making Sen$e

The following text has been edited and condensed for clarity and length.

Paul Oyer: So I found myself back in the dating market in the fall of 2010, and since I’d last been on the market, I’d become an economist, and online dating had arisen. And so I started online dating, and immediately, as an economist, I saw this was a market like so many others. The parallels between the dating market and the labor market are so overwhelming, I couldn’t help but notice that there was so much economics going on in the process.

I eventually ended up meeting somebody who I’ve been very happy with for about two and a half years now. The ending of my personal story is, I think, a great indicator of the importance of picking the right market. She’s a professor at Stanford. We work a hundred yards apart, and we had many friends in common. We lived in Princeton at the same time, but we’d never met each other. And it was only when we went to this marketplace together, which in our case was JDate, that we finally got to know each other.

Lee Koromvokis: What mistakes did you make?

Paul Oyer: I was a little bit naive. As I honestly needed to, I put on my profile that I was separated, because my divorce wasn’t final yet. And I suggested that I was newly single and ready to look for another relationship. Well, from an economist’s perspective, I was ignoring what we call “statistical discrimination.” And so, people see that you’re separated, and they assume a lot more than just that. I just thought, “I’m separated, I’m happy, I’m ready to look for a new relationship,” but a lot of people assume if you’re separated, you’re either not really — that you may go back to your former spouse — or that you’re an emotional wreck, that you’re just getting over the breakup of your marriage and so forth. So naively just saying, “Hey, I’m ready for a new relationship,” or whatever I wrote in my profile, I got a lot of notices from women saying things like, “You look like the type of person I would like to date, but I don’t date people until they’re further away from their past relationship.” So that’s one mistake. If it had dragged on for years and years, it would have gotten really tiresome.

Paul Solman: Just listening to you right now, I was wondering if that was an example of Akerlof’s “market for lemons” problem.

Paul Oyer: Yes. Statistical discrimination is always closely related to adverse selection, or the so-called Akerlof’s lemons problem. There are many other examples in online dating where that idea applies as well, and the nice thing about being separated is, while that signals you might be a lemon, unlike many other signals, this one passes with time. So eventually, you’re no longer separated and the problem solves itself, whereas if you have a problem like you’ve been on the site for years and years, people might assume you’re a lemon who can’t find a relationship. That problem doesn’t fix itself.

Lee Koromvokis: So that would be like a house that’s been on the market too long?

Paul Oyer: Yes, like a house that’s been on the market too long. A really good example of this is unemployment. A lot of people are finding it hard to find a job even though the job market has revived. And a lot of it is just bad luck. They lost their job when the market was really bad. They couldn’t find a job for a while, and then it becomes a fulfilling prophecy. Employers see you’ve been out of work for a year, and they make an assumption that you’re a lemon, when in fact, you just had bad luck.

Paul Solman: I want to quote a line from Bob Frank’s 1988 book, “Passions Within Reason.” He writes, “People who have participated in dating services are indeed easier to meet, just as the advertisements say, but signaling theory says that, on the average, they are less worth meeting.”

Paul Oyer: The online dating market had a hard time getting up and going. It had a hard time getting critical mass, because there was an adverse selection problem initially. People made the assumption back in the 1990s when online dating started that anybody who went to an online dating site was a loser who could not meet people the old-fashioned way. And only over time, as it became so obvious that the efficiencies of meeting people online were so overwhelming, did that stigma slowly break down, and the non-losers began to come onto online dating sites, and the assumptions people made that you were a loser if you were an online dating site began to go away.

Lee Koromvokis: You spend a lot of time talking about the parallels between the job market and the dating market. And you even referred to single people, single lonely people, as “romantically unemployed.” So could you expand on that a little bit?

Paul Oyer: There’s a branch of labor economics known as “search theory.” And it’s a very important set of ideas that goes beyond the labor market and beyond the dating market, but it applies, I think, more perfectly there than anywhere else. And it just says, look, there are frictions in finding a match. If employers go out and look for employees, they have to spend time and money looking for the right person, and employees have to print their resume, go to interviews and so forth. You don’t just automatically make the match you’re looking for. And those frictions are what leads to unemployment. That’s what the Nobel Committee said when they gave the Nobel prize to economists Dale Mortensen and Christopher Pissarides for their insight that frictions in the job market create unemployment, and as a result, there will always be unemployment, even when the economy is doing really well. That was a critical idea.

By the same exact logic, there are always going to be plenty of single people out there, because it takes time and effort to find your mate. You have to set up your dating profile, you have to go on a lot of dates that don’t go anywhere. You have to read profiles, and you have to take the time to go to singles bars if that’s the way you’re going to try to find somebody. These frictions, the time spent looking for a mate, lead to loneliness or as I like to say, romantic unemployment.

The first piece of advice an economist would give people in online dating is: “Go big.” You want to go to the biggest market possible. You want the most choice, because what you’re looking for is the best match. To find somebody who matches you really well, it’s better to have a 100 choices than 10.

Lee Koromvokis: Aren’t you then faced with the challenge of trying to stand out in the crowd, getting someone to notice you?

Paul Oyer: Thick markets have a downside – that is, too much choice can be problematic. And so, this is where I think the dating sites have started to make some inroads. Having a thousand people to choose from isn’t useful. But having a thousand people out there that I might be able to choose from and then having the dating site give me some guidance as to which ones are good matches for me, that’s the best — that’s combining the best of both worlds.