Constrained Bliss Point

Relationships are funny things. When you bring a new person into the fold, you are not the only one affected. Getting to know someone means introducing them to your life, including all those people you already know. Your friends and family get to know this person you’re with, and they develop relationships too.

Most relationships end. In deciding whether or not you should end the relationship you’re in, should you consider the effect of breakup on your friends and family? Surely this decision affects you, but it affects them too. A selfish agent in a relationship would make the breakup decision without paying heed to such effects on other persons.

Here we have a situation ripe for externality — that is, if the full costs of breakup are not borne solely by the agent doing the breaking. Then again, no one ever claimed actors in a relationship are rational. So maybe, when you’re considering whether to break up with your significant other, you think about how your friends or family might feel. By asking “how would this affect others”, you can move closer to the socially optimal decision.

Now, I am not one who normally argues against the social optimum. In cases like these, though, I think a little externality is best. In matters of relationships, you should only consider yourself — and optionally the other person.

Spillover effects happen. A relationship is too important to worry about market failure.

Tags: breakups, externalities, rationality, relationships, social welfare

This entry was posted on Sunday, January 4th, 2009 at 2:46 pm and is filed under Economics, Musings. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.