The Romance of Economics:

How Tinder Behaves as a Market

BY ANTHONY ZUCCHERO

Online dating is a market within itself. Some people say it works, while others have absolutely no luck. While some people may have some success, there are flaws in the model of the online dating market. The structural issues of this widely used form of social interaction can be explained by basic economic principles.

Ludwig von Mises, an Austrian economist, says that economics starts with a foundational understanding of human behavior. He sees it as a monetarily driven form of sociology. He defines human action as “purposeful,” which is precipitated by perceived “uneasiness” and the “expectation that purposeful behavior has the power to remove or alleviate uneasiness.” In relation to online dating, many people have desires and needs that are not being met, which online dating attempts to satisfy. By engaging in the purposeful act of using resources like Tinder, people expect to come to achieve a feeling of utility.

Economist David Ricardo said, “as more resources are combined in production with a fixed resource–for example, as more labor and machinery are used on a fixed amount of land–the additions to output will diminish.” This is called the Law of Diminishing Marginal Returns. With each additional unit of a product, the additional satisfaction gained is diminished. According to a study of 1.8 billion “swipes” on Tinder in Redwood City California, behavioral usage trends indicate that as the app is used more, users become less “picky” in choosing their potential partners. At first, people swipe right (indicating that they want to match) very meticulously. But after a while, the scrutiny becomes much less intense, and users swipe right more frequently. A user’s first match is a rush, but after 50 or 100 matches, the marginal utility of getting a match drops significantly. This is an illustration of Ricardo’s thinking. Why does this happen?

In regards to online dating, there is lower opportunity cost for choosing a potential partner. When people go to a bar to meet someone, they must choose one person to talk to and try to pick up. There are numerous people to choose from, but due to the nature of human interaction, time and effort must be dedicated to a single person in order to receive a return on  that investment of time and effort. With apps like Tinder, one can go through hundreds of potential partners in minutes, and there is a minimal amount of time and effort lost while choosing to engage or not engage with someone. Tinder has allowed unregulated access to supply, but there’s no way to accurately corroborate demand. If one finds a Tinder match they’re interested in, they have no way of validating that a potential match has genuine interest.

Since there is a significant gender skew, with 66% of Tinder users being male, women (demand) tend to receive a multitude of matches and messages (supply). Since these messages are often all similar, and there is no differentiation between products in the market. In addition, filters that allow users to only view potential partners in their desired age range, and bias for ages 16 to 34 , there is even less variation in matches (products). When all matches are essentially the same product, how does one tell which is the best investment? These nearly indistinguishable matches (products) form a perfectly competitive marketplace. Sites like OkCupid have attempted to remedy this situation by implementing prompts that assess a user’s personality and offers potential matches based on those responses. These sites attempt to humanize these lifeless profiles, but still, the results are similar. Since users are unable to sort out time-wasters from potential partners, they often get discouraged and stop using the app. This discouragement creates prolonged periods of fewer or no matches (market stagnation).

There is a branch of economics known as “search theory”, which most notably, has been applied to labor economics. Search theory studies buyers and sellers who cannot instantly find a commerce partner. It assumes that there is a cost related to inaction. Applied to the dating market, search theory suggests that it takes time and effort to find a love interest. There is a type of romantic frictional unemployment innately present in the dating market, which these online resources attempt to alleviate. Frictional unemployment is the time spent going from a job to another job, and, in this case, one relationship to another. Search theory attempts to find the optimal balance between the cost of a delayed decision, and the value of trying again. Does the potential reward of trying again compensate for risk of failure?

In conclusion, there are fundamental structural deficiencies in the dating market, such as mitigated risk/reward, the law of diminishing marginal returns, market stagnation, and the similarity between “products.” Considering that the dating market behaves so similarly to markets that economists watch and study, these structural deficiencies can be alleviated, or at the very least improved, by applying economic thinking. Tinder, and other online dating outlets, demonstrate that there is clearly a lack of perceived cost associated with choosing someone to speak to. But what if the model incentivize consumers to be more efficient? What if a user only had the ability to match or send a message with one person a day? The user would have to choose that person at the opportunity cost of others. Then, that person’s demand may be validated, because the other user (the supplier) knows they’re interested. One user sends a message, the other responds–beautiful. Economics can be so romantic.


About the Author: Anthony Zucchero

As of May 2016

 

Anthony Zucchero is an economics major at Pace University. He is currently the Executive President of the Economics Society. In his free time, he enjoys performing music in a band and as a solo performing artist.

 

Email: anthonyzucchero@gmail.com

 


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