Love by Economics - Assignment Example

Economics of Love Name Institution Lecturer Course Date Love by Economics Question 1: Summary and Main Message Love is a scenic controversial event or subject. Theories explaining love are too many to mention and it goes to show how intricate and complex love is. The beauty of love is that it is also considered simple. Among the many prudent scholars of love Ben Stein shares the podium with the great art of William Shakespeare among many others. Ben Stein is a lawyer, writer, actor and economist whose definition of major life terms would be encompassed in what he understands and in this article, he writes about his understanding of love in economics. His outlook is indispensable considering that life is more about money than we recognize. In light of that, his analogy would pass for the best model to explain love. Who would have thought we could relay love to returns, cost, investment and bonds? In the business of love, there are expectations from both parties and love is at work. Stein (2008) puts it clearly; the returns in love are proportion to the amount of self-investment made. The values that an individual comes with can either build or destroy a relationship. Rarely does he say this is otherwise. One invests quality and gets back quality, an intense comparison to bonds. It is funny how we are intent on making free money. Research quite helps in choosing a partner as it is known that appearance can fool the eye and it mostly does. Philosophy about the people we involve in our lives depicts how much others could be of influence to us. The analogy to bonds is perfect, high quality bonds yield more return than junk and so it is with high quality love (Stein 2008). Stein (2008) offers great advice; to consider monopoly in long term romantic relationships. There comes a time one has to retire and it is more comfortable when ones finances are in line. The financial freedom and stability is ecstatic. Relating the freedom in such a time to matters of love, sharing the love apparently is not an option, which makes a lot of sense. Another fact in Stein’s work is about expectations; it goes hand in hand with research. Understanding the other party and knowing what they are about enables one to fully write out what to expect from the partner. It is necessary to have real expectations hence not to expect heaven when hell awaits and to understand that it is not always rosy, in fact, it never is (Wessel 2006, p. 13). Economics of Love While understanding economics and that it is the study of the use of scarce goods and services, which have alternative uses, it is important to siphon the ideologies and principles of economics so as to understand its analogy to love. In economics, it is more about the drive behind the resources. The consequences of decisions made about the use of the resources that go into producing the volume of output, which is the underlying to a countries standard of living. This is quite evident in countries that have tangible resources as compared to others yet their standards of living are demeaned; the likes of Venezuela and Uruguay whose income per capita is half that of Japan considering that its resources is relatively small (Sowell 2011, p.3). There is nothing special about Japan and the reason why it is doing well for itself; it accounts for its resources adequately. The resources in love are the mere values that each party put in; time, interest, good virtues like patience, kindness, honesty, fidelity amongst many others (Acevado 2008). These are essential in attaining a rich romantic relationship. It is not about the identity in love, more or less like it is about the steps taken to ensure the most comes out of the entity of love. Love is broad and ever surpasses common understanding but as earlier stated, it takes on a simple wear. In trade networks there are relations and they tend to be very specific and where one cannot exchange one relation for another without significant cost. For example a car company that obtains its automobile components from a certain supplier cannot change and obtains its windshield wipers from an alternative supplier. It will require a do over. They will need information and knowledge of the new car dealers. This requires time, research and resources to build relation and trust. Naturally, to build a romantic relationship with the element of love, it remains true that it is not easy to sell out especially if the returns in the relationship are good (Frijter 2013, p. 5) Question 2: Principle of Perfect Competition What is economy without competition? It beats logic. Apparently there is competition in love too. A market that has attained perfect competition is one in which there is many buyers and sellers of the same good or service. It is characterized by price takers, free entry and exit. Price takers, who are both the producer and the consumer, are those whose actions have no effect on the market price of the good or service (Becker 1996). Free entry and exit describes the case when new producers can easily enter the market and existing producers can easily leave. A perfectly competitive market has no significant barriers to discourage new entrants. A firm that intends to enter can do business on the terms that other firms are already using (Becker 1996, p. 2) It is agreeable that love is a commodity when hypothetically stated; if it were in the market, it would have a significant number of buyers and sellers but still could not completely identify with creating a perfectly competitive market. This is merely because their actions do affect the price of love and it comes costly. Love requires sacrifice. A lot is put on the line just to attain love. Normally, an individual has a career and academic goals, financial needs, goals and family orientation, and it has never been a walk in the park trying to merge these among other aspects of each other’s lives. However, this is the price paid for love. Intently, when production and consumer prospects of love are analyzed, they cannot be measured with the same bar. The terms in the business of love are more or less the same, its hard work, but still the market price is wholly dependent on the individuals (McCrea 2004, p. 70). Models used in the analysis of love Stein describes the cost put into a relationship as proportional to the returns one gets. One has to invest time and self to a relationship if they are to maintain a long term one. The amount of love received is correlated to the amount of investment put in. In economy, it is more or less the same; actually it is exactly the same. The exceptions are dismal is if not none. Love is also acquitted to bonds. Interesting it is how everyone is quick to attain quick money. Well, it is fast and tantalizing as it always comes with a deceiving yet irresistible desire. The difference between junk bonds and high quality bonds is the risk involved. Well the returns in the junk bonds may be higher and faster, but chances are that one may not recover his money. High quality bonds have no intense returns and may as well not be fast but the risk is small and its ratings are higher. As an analogy to love, one should stick to high quality people and the return is high quality love with less risk involved. The philosophy that well articulates that the most impact in life is from the people around us and not we learn or know backs up the fact that one should invest in people with high standard and principles. Clearly every investment to give a good return must have some substance in it. Another issue of consideration is research. Economy with no research has no sense in it. One has to understand the nooks and the crannies of country or firm. While choosing a partner, it is necessary to do research on them. In the old days, this was a must, a background check was necessary, all the details right into the family background and who were they were in the society. Why it was important to enter into a relationship with a person associated with a good background, is well accounted for. They understood that a love affair that was meant to last had to come from somewhere worth. Stein (2008), in his article clearly states that it is not a wise choice to want to change someone to align to ones expectations. The backfire is painful and comes with great loss of time and self. It is safe to say they avoided disappointments in the future. Consumption good A consumption good is one that is used by a household and is used to directly satisfy the needs or wants of the members of the said household. Certainly, love can be considered as consumption good. It is intriguing to term it so since it is an affair between two people. If the two are not satisfied, then clearly the particular consumption good fails to serve it purpose. If they are perturbed by external factors, then it ceases to satisfy the needs of the individuals (Becker 1996, p. 10). Question 3: Cost Benefit Analysis The benefits should outweigh the costs, that simple. Before a new airport is built, or a new steel mill, or rather taking on a new project, a cost-benefit analysis is conducted to analyze and evaluate all the potential costs and revenues that may result from undertaking the project. When arrayed with choices of projects to take on, this analysis assists in defining the alternative choice of project. Basically it identifies the positive factors and subtracts all the negatives, the costs (Glaister & Layard 2003, p. 9). An example is one of a production manager proposing that his firm purchases a stamping machine worth $1 million to increase firm output. Before presenting this to the vice president, a cost benefit analysis is required. The manager itemizes the benefits, 100 more units can be produced per hour, the three workers working on the current machine can be replaced, and the units would be of higher quality since they will be uniform. The manager is convinced this outweighs the cost. This he does by determining the revenue of the additional 100 units per hour multiplied by total production hours in a month while considering that 2% loss the firm undergoes will be eliminated with the introduction of the new machine. The manager also adds the salary of three workers that the new machine will eliminate, which totals up to a pretty good total benefit. In love, it is completely necessary to carry out such an analysis as it is prudent to understand what one is getting out of it. Well, if one was to choose a partner who appreciates what the other brings to the table and goes on to make good out of it, would be greatly amazing; it is not a simple give and take affair. It is important that the relationship grows and a cost benefit analysis would work as a great model to help one chose a partner to grow with. Dating games Reality programmers based on the experiences and emotions of ordinary people are an important feature of television worldwide (Syverste 2001). The experiences of participants in the television dating games are a fore thought to what people experience in real life dating. Normally the dating games are to reflect on the intense game of love, how it begins and its journey to either the end or the beginning of something beautiful as usually put. They are helpful, but to take it up a notch, the reality shows should do less filtering of the films and giving the desired version of dating (Syverste 2001). Truth is that it is not always rosy in the business of love. Just as it is an analogy of economics, it is not always that money is made, there is loss as well. Question 4: Monopoly Market versus a Competitive Market Monopoly is a market structure with total market control. Monopoly controls the supply of goods because it is the only seller in the market. Whereas in a competitive market, no firm has control over the market hence cannot influence the market price in any way. In other words, a firm in a monopoly market is a price maker and a firm in a competitive market is a price taker. In comparison to love, a price maker sounds suited for the job. Competition in love is work and tends to shorten a relationship. It crops up vice like doubt and is never healthy for a relationship. In the last twenty years of the twentieth century, East Asia has emerged as the most dynamic region in the world economy. In relation to the West, East Asia raised it average income dramatically (Wade 2004). They have diversified and upgraded their economies and actually are at par with the high living standards of the most prosperous countries. Their improvement is due to their industrial and technology policies away from the excessive intervention of their governments in the markets especially the financial market (Wade 2004). An economy’s success is due to its integration into the world economy and an economy’s crisis is due to homegrown causes more like the intervening of the government (Wade 2004, p. xxiii). Question 5: Realistic Expectations While setting out to search and experience love, it is wise to have realistic expectations, ones that tally with reality. One cannot expect a perfect person that perfectly suites ones expectations. Unrealistic expectations are a recipe for disappointment and disaster. Unrealistic expectations have caused global financial crisis let alone broken hearts or rather failed relationships. Take for instance global financial crises. In the United States back in the 1950s, the real estate crisis was as a result of unreal expectations and the enthusiasm for housing investments, which went downhill (Shiller 2008). At the time, business and government leaders did not know how to deal with the crisis and had no financial institutions that could handle them. It was the dimmed expectations and not the dishonest mortgage lenders or greedy financial security providers or hedge funds or rating agencies as they seemed to blame (Shiller 2008, p. 4). Similarly, love requires realistic expectation from either party for it to last and realize the set goals. According to Sherman (n.d), love relationship based on realistic expectation results to frustrations because the relationship does not have the capacity to deliver as expected by either or two parties. In fact, it is like pursuing an endless journey with no marks to gauge progress. The party with unrealistic expectations will develop a sense of mistrust prompting end of the relationship. Conclusion Love is a broad entity and can be deduced in different lights. The economy of love is straightforward no ancient language is used, just terms that a majority can relate to. It gives no fallacies but truth to the never ending quest for perfect love. But as it is, love stands to be an exponential curve that always has a new twist just as it remains simple. Delved in the understanding of each person, it interestingly remains a mystery. Bibliography Acevado BP 2008, The Neural Basis of Long-term Romantic, New York: ProQuest Becker GS 1996, The Economic Way of Looking at Behavior: The Nobel Lecture, United States of America: Hoover Press. Frijters P 2013, An Economic Theory of Greed, Love, Groups, and Networks, New York: Cambridge University Press. Glaister S & Layard R 2003, Cost-Benefit Analysis, United Kingdom: Cambridge University Press. McCrea TL 2004, What Price Are You Willing to Pay for Love, Author House. Wade R 2004, Governing the Market: Economic Theory and the Role of Government in East Asian industrialization, United States of America: Princeton University Press. Sherman J n.d, The Realistic Expectations Roadmap: Navigating Marital Myths. Viewed September 01, 2013, http://www.google.co.ke/url?sa=t&rct=j&q=&esrc=s&source=web&cd=3&cad=rja&ved=0CDgQFjAC&url=http%3A%2F%2Fextension.usu.edu%2Fweber%2Ffiles%2Fuploads%2FMar_Conf_Handout_Sherman.pdf&ei=ZQUjUsLLJIHxhQetloGYCw&usg=AFQjCNHOhKhzOOhq1EifdtTeuJGnvojHYQ&sig2=Yl2yfb70niZMzrJdB7L3TQ&bvm=bv.51495398,d.ZG4 Shiller J 2004, The Subprime Solution: How today’s Global Financial Crisis Happened, and what to do about it, United Kingdom: Princeton University Press. Sowell T 2011, Basic Economics 4th Ed: A Common Sense Guide to the Economy, New York: Basic Books. Stein B 2008, Lessons in Love, by Way of Economics, New York Times Syverste T 2001, Ordinary people in extraordinary circumstances: a study of participants in television dating games, Media Culture Society, vol. 23, no. 3, pp. 319-337. Wessels WJ 2006, Economics, New York: Barron's Educational Series. Read More