From my email, about the deadweight loss of Valentine’s Day

by on February 17, 2013 at 7:26 am in Education, Uncategorized | Permalink

Consider:

Single people report feelings of inadequacy, anxiety.
People in relationships suffer from the tyranny of expectations. Good experiences are met with hedonic adaptation, bad experiences can be, I’m reliably informed, remembered for decades.
Florists, restaurateurs, etc., demand – and receive – excess producer surplus for their services.

For years, my solution has been to randomly select a surprise Valentine’s day substitute. Our private utility is well served (the wife loves the arrangement), and as a bonus I think I am minimizing the negative consumption externality.

In my estimation, 1 and 2 outweigh 3, resulting in a deadweight loss.  I’m not a naive utilitarian; yes, I understand there is value in signaling, and, believe it or not, I’m a romantic. I just think that by coordinating this behavior in holiday form we suffer on both demand side (expectations, zero-sum positional goods) and supply (constraints in providing flowers, restaurant tables).

That is from Shiraz Allidina, MR reader.

Rich Berger February 17, 2013 at 8:37 am

Man, this is really over-thinking it. I just ask my wife what she would like and I get it.

Rahul February 17, 2013 at 10:07 am

Agreed. Look, go out, get dinner, have a good time. Some wine, some Flowers. Avoid McDonalds.

If you worry about things like “tyranny of expectations” and “decades of bad memories” you’ve got bigger problems than V-day.

Perhaps, a-bad-choice-of-partner is what you should be worrying about……

Hadur February 17, 2013 at 8:56 am

Why not just observe Valentine’s Day on President’s Day weekend? Everything is on sale instead of marked up!

Dismalist February 17, 2013 at 9:47 am

This applies extra to the tyranny that is Christmas. We have always chosen a day well past Christmas to celebrate the holiday. Of course, with positional goods, nothing will help except eschewing positional goods.

Urso February 18, 2013 at 10:16 am

You could probably save a lot of money and stress by celebrating Christmas on January 6. Plus, you get hipster cache for doing it old school.

Claudia February 17, 2013 at 9:49 am

Valentine’s Day is not for the romantics who spontaneously show affection for their loved ones. It’s an excuse for the rational to be foolish, the penny pinchers to splurge, the self-absorbed to think of others, and the timid to be bold. All those efforts may fail miserably, but at least they are given a try at least once a year. Should we need a Hallmark sponsored day to accomplish this?…no, but there seems to be a social and private demand for it. I suspect if you’re exerting effort on the minimizing deadweight loss and using a random number generator to choose something for your Valentine then you’re missing the point. And this occasion is not supposed to be about ‘you.’ (Long way of saying I agree with Rich’s comment.)

Rahul February 17, 2013 at 10:11 am

I say, if you have the sort of partner that’s obsessed about perfect V-day’s; how likely it is that she’s gonna be a fan of this wacky “random V-day” idea?

If it’s the sort of girl that loves the idea it is likely you didn’t have that problem to begin with!

Ryan February 18, 2013 at 2:36 pm

How dare you to presume those who obsess are female.

Thor February 17, 2013 at 12:44 pm

“It’s an excuse for the rational to be foolish, the penny pinchers to splurge, the self-absorbed to think of others, and the timid to be bold.”

Exactly why it is basically a carnival occasion (and it falls around that time of year too).

Ryan K February 17, 2013 at 10:08 am

I do the same thing for similar reasons, but I also send very nice flowers to her place of work on Valentine’s Day; signaling to her social network is nearly as important as signaling to her.

Becky Hargrove February 17, 2013 at 10:12 am

The tyranny of expectations has really backfired, hasn’t it. Every time a group of people get “roped” into rigid expectation sets for whatever cultural or economic reason, it becomes practically impossible to balance the relationship again and create true reciprocity. Valentine’s Day needs to be done away with.

mike February 17, 2013 at 10:47 am

i think this is a case of not better or worse, just different (stealing from dave arnold of cooking issues).

valentine’s day rewards the thoughtful planners and the ones in good matches. many belong to only one group. (i’ve long been a terrible planner.) you’re honest with yourself, valentine’s day tells you which if any of these groups to which you belong. this knowledge helps you decide what to do next. (my now-wife was worth investments in better planning.)

Willitts February 17, 2013 at 12:47 pm

Vday is rationality test. When I had to work late on Valentines Day and canceled dinner with my girlfriend, she said, “Every day with you is like Valentine’s Day”

That’s the day I knew I found the perfect wife. That and when she went to the gun range with me.

It’s a pedestrian holiday, and demonstrating your acceptance of that is a sorting mechanism.

Andrew' February 18, 2013 at 4:47 am

It’s kind of an expensive test.

It’s also a test of social networking. I suspect the more social connections one has the more they all settle on the lowest common denominator of traditions and holidays to minimize planning costs. It would be ironic that a group lack of planning is a tax on the unconventional member’s planning ability (a la mike’s comment).

It’s brutal- crazy holidays are my biggest white people problem.

Miley Cyrax February 17, 2013 at 1:44 pm

Valentine’s Day is a deadweight loss for it’s a negative sum game–a status competition between women financed by arms-race sponsorship from men afraid to upset their girlfriends/wives.

Becky H. has the right idea; Willitts has the right wife.

Willitts February 17, 2013 at 3:23 pm

Willitts has the right wife.

Thank you. I could not have have done better in my wildest dreams.

I’ve always liked your comments and I’m curious Miley; Are you male or female?

I agree with Becky, but of course we can’t just “ban” Vday. The fact that enough people honor it rationalizes supply and demand.

But we have several voices here that might influence others to jettison this wasteful tradition. Ironically, some bars in Chicago have what’s called a “Bitterness Ball” on Vday. People who had bad break-ups bring photos, love letters, gifts, and mementos of their ex and burn them. There might be some catharsis in those token gestures. :)

I’ve also read that Vday is an awful day for a first date. I had one in college that went very badly. But I also have a friend who had his first date on Vday with his wife of 25 years. Generally I agree that expectation is the mother of all disappointment.

Willitts February 17, 2013 at 3:44 pm

I have a question regarding the post and the headline. How does the description imply a deadweight loss?

A deadweight loss most often results from a distortionary tax or subsidy which isn’t present here. Economic conditions that result in disequilibrium pricing might also create a deadweight loss.

In the Hicksian sense, there can be a deadweight loss from an imperfect gift, but I think it is mis-modeled. A gift is a gift – an addition to your assets. A gift that doesn’t match your expectations might produce some disappointment, but it certainly doesn’t make you worse off in most circumstances. You might have some disposal costs.

I admit that you can logically include disappointment into a dynamic utility function, but then analysis becomes very much more complicated. I can buy a lottery ticket for the chance to win, but not care much if I lose. Alternatively, I could be heartbroken from the loss. Utility becomes a measure of self-selected states of mind, and sometimes irrational responses. I cannot ignore the reality that perception matters, but I also find no resolution in theory that makes for predictable results.

In a relationship, a string of disappointments likely leads to a break-up and a search for a Pareto improving outcome. As I said earlier, I asked out a woman for a first date on Vday and it was a flop. But had it gone better than expected, I likely wouldn’t have found my soul mate. Thank God for unanswered prayers.

The pain associated from failure – break-ups, gambling, job loss, injury, paying to much for a car, etc – contribute to a learning process. I don’t think that the economists who dwell on the dynamic effects of disappointment and behavioral economics take into account the additional utility of learning. They also don’t account for the extreme utility boost of pleasant surprises such as the gift that was better than you would have picked for yourself! Utility is based not only on expectations, but on the information set available to you.

People who live serene lives learn to lower expectations. I can’t explain why some people choose to live lives of perpetual misery.

Claudia February 17, 2013 at 5:32 pm

“People who live serene lives learn to lower expectations. I can’t explain why some people choose to live lives of perpetual misery.”

It’s not about low expectations. It’s about more emphasis on *expectancy* than *expectations.* Or to be a bit geekier: It’s about being prepared for the full distribution of possible outcomes and not getting your mind set on the (overly optimistic) central tendency.

I agree there is much to be learned from the setbacks, mistakes, and bad draws…above all, an appreciation for the good in your life. (And this from someone who has sampled pretty heavily from the adverse end of the distribution in the past few years…it all works out.)

Willitts February 18, 2013 at 1:49 am

Hmm, I think you’re making a false distinction between expectations and expectancy theory. The latter is all about the former.

Ii can understand the concept of myopic preferences from hyperbolic discounting. I can understand decision making with a small information set and limited cognitive abilities. But I have yet to understand self-destructive behavior – doing something that you know from experience is likely to result in a bad outcome. I heard these stories first hand in confessions when I was a prosecutor; they KNEW it would turn out badly for them. My best guess is that some people find comfort in familiar mental states albeit poor physical or social conditions. In the criminal world there is a strange conflation of the inability to learn and the unwillingness to learn from one’s mistakes.

Claudia February 18, 2013 at 7:36 am

Willits, the first sentence in my response was not from decision theory…it was a riff on a Christmas-time sermon that stuck with me. I think the need to control outcomes and people is the source of much unhappiness (on both sides) in relationships.

The cases of self-destructive behavior you pose are a little different…I think that’s more like muscle memory or rules of thumb. I mentally tell myself that I just need to lose 10 pounds to feel better about myself, but gosh dang it if I didn’t grab a handful of gummy bears on the way to the computer, without even thinking about it. Change is hard, much harder than going with the familiar flow…no matter how bad it is for us. If you get far enough in to the behavior, a wake up call, even as dramatic as a court room, may still not be enough. People who deal easily with change often forget just how hard it really is. Also in relationships, sometimes people believe they deserve the bad outcomes and act according, low self esteem can be a big problem too.

dearieme February 17, 2013 at 4:45 pm

I ignore St V’s – consumerist nonsense.

Hazel Meade February 17, 2013 at 7:19 pm

So I just bought two boxes of discounted post-Valentines-Day chocolate.
Wow. What a rip-off. the chocolates were noticably smaller than the ones in a regular box, and they had a disproportionately large number of cream fillings (which are cheaper than nuts or caramel). The whole thing was obviously designed to maximize the amount of packaging and minimize the actualy amount of chocolate they had to give you.
So all you get is the stupid heart-shaped box, and not the actual candy. Clearly the market has far too many retards buying heart-shaped boxes or else this sort of thing would not be sustainable.

IVV February 18, 2013 at 11:26 am

A random thought: What’s the ZMP of a partner?

Comments on this entry are closed.

Previous post:

Next post: