Arranged Scissors 9 – Cost Benefit Analysis

Neha, also known as MotherJane, writes in her blog:

…I do not believe in love. Partners offer solutions to everyday issues like running a house, satisfying needs and filling in the blanks. However they come at a cost – often too high to bother. Still we go ahead and do the trade – its just what we do. In our lives friends become the people we talk and listen to, partners become people we are forced to talk and listen to, so that we can have everything else they offer. If you think about it, your relationship is already transactional. If calling it love makes easier on your conscience, I won’t hold you back.

I was trying to figure out how it all fits in with the arranged scissors process. And every time the answer came out that the Arranged Scissors process is fairly irrational.Mainly because of the short time for decision. A few basic checks are made, obvious misfits are checked for, and things get “done”.

The biggest cost of getting married (which Neha doesn’t mention) is the opportunity cost of the option of getting married to any of the other women in this world apart from your wife. Divorce is messy and expensive (in more ways than one), and hence once you have hitched yourself to someone, this opportunity cost immediately kicks in.

Later in her post, Neha talks about the “friends-with-benefits” model, but the problem with that is that it doesn’t help propagate your genes. It is tough to raise kids in that kind of an environment, and considering that the purpose of life is to procreate (this is the general case; i konw you may be an exception so don’t shout at me for this) the friends-with-benefits model is not stable. The reason the world has settled down into a model of bilateral commitment is to optimize the costs and benefits of propagating genes.

So if you want to propagate your genes (again, I’m not sure if you want to. If you don’t, I’d recommend you to settle down with the FWB model – but then it’s easier to find one stable counterparty rather than several FWBs, so you’d rather get married) you need to get into a bilateral commitment deal. And these deals are mutually exclusive so you need to realize that when you get into one, you will be foregoing the option of getting into any other.

There are several other costs and benefits when it comes to the marriage thing – there will be lifestyle changes, you get “tied down”, you need to take on responsibility, share duties and all that, but in my humble  (and unmarried) opinion, the biggest cost is the opportunity cost.

I say this quite often (and this reminds me, I have a paper to write – which I’ve postponed for nine months now) but I think outside of the financial world, option value is generally underrated (even in finance options are more often than not undervalued since the most common pricing formula ignores fat tails). And in settling for a Common Minimum Programme in the arranged marriage market, people severely underestimate the value of the option value of the rest of the world.

So the next time you want to propose to someone, or want to answer “the question” in the affirmative, make sure you do the following:

  • Make a list of all the people in the world belonging to the opposite sex (gays feel free to generalize this)
  • Evaluate the option of marrying them. Your job will be quite easy because with respect to most people, either you don’t want to marry them or you know that the chance of them marrying you is so infinitesimally small that the option value is negligible
  • I’m sure there will be a number of peopl ewho you prefer to the person you are proposing to/saying yes to. If you think there is a nonzero chance of them saying yes to you, ask them. Rejection is cheaper than a lifetime of guilt
  • Once all the options have been evaluated, and an additional buffer term added to account for all the people you don’t know yet, you know the full value of the opportunity cost. Then add up the other costs and benefits, and then make your decision.

Typically to know the other costs and benefits of the person that you are currently evaluating, you need to know them rather well. Yes, you can draw a sample and estimate the population based on that, but the cost of a type 1 error (error of commission) is very high. So make sure you collect enough data. To collect enough data, make sure you give yourself enough time.

Ok now I don’t know the point of this post. I don’t even konw if it fits into the arranged scissors series, but I think I’ll let it stay. Changing the title is too messy. I think I wrote this to put fundaes about opportunity cost. Maybe I had something else in mind when I thought up this post, but then subsequently forgot the contents and remembered only the outline. In any case, I’ll stop here. Before that I’ll tell you for one last time that you need to keep track of option value, and opportunity cost.

0 thoughts on “Arranged Scissors 9 – Cost Benefit Analysis”

  1. Thank you for the taking my notion forward!
    I did miss the key opportunity cost piece, without which any CB analysis is incomplete…

    You’ve done a brilliant job of counting the costs, but you have forgotten about the benefits! I have to believe there are some, but I’m just not the best person to ask. Anyone any ideas?

    1. i think it’s due to experience. i don’t think i’ve experienced any “benefits” yet (i don’t know if i intend a pun there) so not counted any of it

  2. That type 1 error will always remain high, due to large universal set. Which is why Western society sees so much divorce and Indian society so much “compromise, adjustment” etc. etc. Broadly, no matter how I tried to fill up the option value formula, I couldn’t come up with a complete win-win situation!

    1. that’s true. actually – if you see western world has higher divorce, but also takes more time to get hitched. and also sleeping around is more common than it is here – which reduces the value of the option!

      that divorce is not very socially acceptable here is a sign of oppression. i’ve heard stories of several relatives who are trapped in really bad marriages, but are “conservative” and hence don’t want to talaaq.

  3. Of course you do realize that most of this is intuitive yes?
    Sure you can use the financial or economic jargon to ‘interpret” what is ultimately an inherent trait of species to propagate the genes. Which to your credit you have hinted ofcourse ( Familiar with Dawkin’s Selfish gene concept? ).

    And again most of these analyses assume that people behave rationally. Some of us might “think” rationally but most of the time there is a dichotomy between thought and action.

    From your linked in profile :
    “I spend a lot of time trying to answer fundamental questions in life, and specially those connected to the workplace. Questions such as “why is something this way and not that way?” “why do people behave in a particular fashion in a particular situation?” etc.”

    Not surprisingly these were the precise questions which I was/am obsessed about too ( Right after what I am going to eat next and when I am going to get laid next . Atleast I know the answer to one of these) . I am increasingly led to think that we are wired to think and act only in a certain way. I am guessing you are familiar with the MBTI types ? To me it’s been astonishing how uncannily accurate it was in “bucketing” people and their personality. Yes sure it only indicates a “bucket” and there are degrees within it which will vary. But over all to a large extent it is a very very good tool at understanding why some people behave the way they do. The point I am trying to make is our brains are “wired” and our cognitive capability is pre determined. From what I know of you from your posts and our mutual acquaintances , I am willing to go out on a limb and predict your personality type. It is pretty simple to narrow down your type to either of the four :
    INTJ, INTP,ENTJ and ENTP.
    Since I don’t know you well enough identifying the one from this is more trickier. But my guess is INTJ.
    http://www.humanmetrics.com/cgi-win/JTypes2.asp

    Anyway MBTI is just a starting point. Atleast that’s an understandable explanation to,for want of a better phrase, ‘suffer fools gladly’ . On a serious note what’s been quite a disillusionment so far is the deterministic aspect of our personality itself. What you and Neha write makes absolute sense to me but there are many who would go “What the heck are they blathering about? ” and wax eloquence on “love” and the “feeling” bit. Good luck by talking about pheromones and mental wiring.

    1. I’ve done this MBTI. back when i was doing MBA. i’m ENTP if i remember correctly

      and yes, i’ve read Selfish Gene, and thatz where i get this idea of the purpose of life being to procreate.

      i agree that people don’t always behave rationally. actually people don’t always think rationally – i think if you think rationally you’ll act rationally.

      btw how do you know me? who are you?

      1. Ah really? ENTP? Interesting! So what do you think about the ENTP profile description? did it fit you ? or are you going to argue it is a bit like Zodiac where it can be “suitably interpreted’ by the reader? 🙂

        Oh I beg to disagree that people who think rationally act rationally. There is almost always a dichotomy between thought and action. What I “think” may not necessarily be the way I act. Simply because “action” implies transgression into the physical boundaries of our existence and ergo conflicts with the boundaries of others. Unless one is hopelessly naive,ideal or both it is impossible to think and act the same way. ( No it is not hypocrisy in the traditional sense ).

        I know quite a lot of people from your IIM batch. Former CAT aspirant,pagalguy.com forum etc .

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