The Economics of Romance
Some may think that there could be nothing less romantic than economics, yet markets permeate almost every aspect of our lives, including that of love. So for a city that is thought to have the highest rate of student inter-marriages in Britain, perhaps some economic analysis of arguably the most romantic day of the year may be of some interest.
In recent times, Valentine’s Day has been subject to criticism by many for becoming a purely commercial affair and perhaps rightly so. It is estimated that at least £1.6 billion is spent on gifts and treats in the UK for the day, yet only one in three adults plan to celebrate it.
Some sectors are particularly effected by Valentine’s sales. Lingerie sales double in the lead up, whilst jewellery sales peak on the 8th February rather unsurprisingly as 10% of proposals are carried out on the 14th February. Restaurants also see an increase in earnings by 14% and hotels a 30% rise in sales. Data suggests that the most popular gift is flowers as revenues at florists triple for this annual celebration. Further to this, last year £40.2 million was spent by Britons on cards for the day with the highest average spend among special occasions, according to Greeting Card Association.
However, businesses don’t only look to the lead up to Valentine’s Day to generate extra revenue. Monday 15th was labelled ‘make up Monday’ this year, as many attempt to compensate for failing to remember the occasion by spending an estimated 25% more on flowers for their partners.
Interestingly, spending patterns also differ between genders, regions and ages. On average in the UK, men spend £35 on their partners, whereas women only spend £20. Those in Scotland are thought to spend the least on gifts, whilst those in the South West and Wales are least inclined to celebrate Valentine’s. The most generous age range is believed to be those aged between 25 and 34, spending an estimated £33 for the day.
Despite the heavy focus that economics has on rational agents, perhaps it could be used to demystify some of the actions taken by Valentine’s lovers.
The theory of choice supportive bias has been used by behavioural economists to suggest that when we are free to select from a range of options, we will focus on the positive aspects of choice and ignore the flaws that may undermine it. This helps us to feel good about ourselves and have less regret for those choices made that did not turn out so well. Perhaps this could go some way into explaining how people project amazing attributes onto their partners, whilst others can’t see the attraction.
After making a decision, it has also been suggested that people only listen to information that fits with their preconceived view. This idea of confirmation bias may demonstrate why some people seem deaf to hearing anything bad about their partner. Likewise as a result of our selective perception, people only tend to perceive what they would like to perceive.
Moreover, behavioural economists’ theories can help to explain why some people seem to remain trapped in unhappy relationships. The conservatism bias implies that people naturally favour old information, rather than new. Over time, people fail to notice how horrible their partner has become as they continue to revert back to believing that they are as pleasant as they were at the beginning. This is also similar to the ostrich effect which explains that people ignore any negative information and instead ‘burying their head in the sand.’
However, those who spent Valentine’s Day without a romantic partner are not alone. Of single women in the UK, about 68% choose to spend it with friends rather than on their own, whereas an estimated 69% of single men spend it alone. It is also not only those in love that spend money for Valentine’s Day. In the US, 15% of women send themselves flowers and $231 million is spent on pets.