Sunday, August 09, 2009

Economics @ Home © Volume 1 Issue 3

Economics of Love

How can love and economics ever be related? The relationship between these two is a lot closer than you think. Economics is a study of scarcity and as we all know, at some point or another in our life, we have definitely experienced the scarcity of love. In life, everything that is in shortage will definitely have a price, monetary or otherwise.

For the sake of simplicity, I choose to discuss this topic in the case of heterosexuals. Goodness knows I am not that familiar with the concept of Homosexuality and how it works. As usual, let us begin with a basic assumption. We first assume that when one is in love, he (now and henceforth unless otherwise relevant referring to both genders for the sake of time and convenience) has a commitment towards an on-going relationship with a partner, or several but that is usually not that common. I try not to make too many assumptions so that I do not limit the scope of my argument. I believe that any sane person would agree and allow my assumption.

Now, I am not going to pretend to know everything that one should do when they are in love. However the most common activity among couples is probably dating. Dating does not have to be dressing up and going to an expensive French restaurant, eating over a candlelit table for two. Let us consider a typical date among couples.

Tommy and Sharon have been dating for six months (I am going to assume they are in love or at the least, they think they are). They are both gainfully employed. They try to see each other over the weekends as often as possible, whenever their schedule permits. Just last Saturday, Tommy asked Sharon out for a dinner and a movie. Sharon, of course, having not seen Tommy for more than three weeks not only agreed, she even requested that he pick her up at two so that they could just hang out a bit more.

On that eventful day, Tommy arrives at exactly 2.01 p.m. at Sharon's apartment and Sharon, being the loving girlfriend that she is, ensured that she was punctual because she knew that Tommy is very picky about tardiness. Being the gentleman that Tommy is, he brought a pink rose (stereotypically Sharon's favorite) for her. Now we have arrived at the juncture where I explain to you what the point of this story is. We are going to estimate what a date costs for a couple (or in most cases, men) to go out on a date and hopefully make some conclusions about the price of love. The rose just cost Tommy RM10.

On with the story. Sharon gives Tommy a tight hug and a long frenchy, long enough to give him a whiff of the Chanel perfume he bought her for her 23rd birthday (RM350). After some additional tender-lovingness that is not going to be elaborated in this issue (or any other issue), they are on their way to Mid Valley. What is there to do at Mid Valley besides shopping (window or otherwise). Now, before you begin having preconceptions of me exaggerating the cost of date, I assure you that for the sake of all my avid readers, Sharon is not a spoilt brat or a demanding girlfriend. The shopping mainly constituted browsing through clothing from shops like Zara, Top Shop etc. Occassionally, Sharon would hint at Tommy about how nice that skirt was at Zara. Tommy would reply nonchalantly while making a mental note to get it for her as a surprise during the next special occassion. That skirt will cost him RM 59.

After walking around for about two hours (Tommy is a real man and he is not going to bitch about shopping), Tommy suggests that they get a drink and relaxed for a bit. Sharon excitedly requests for a Mocha Frap from Starbucks. Knowing that they probably might not finish two drinks, Tommy orders a Large (or Venti or whatever they call it) Mocha Frap. RM16.50. They agreed that they should probably get their movie tickets while it is still early. Two tickets for couple seats for Harry Potter: RM 30. Nothing eventful occurs until dinnertime.

After haggling over Sushi Zanmai or Italiannese, they finally settled for Italiannese because there was no line at the entrance. Salmon Fettucini and Calamari Caesar Salad, with two drinks: RM80 (conservative estimate).

I am not going to include the price of popcorn or drinks during the movie because any sane person who has eaten at Italiannese will know that after dinner, you'd have to be Jabba to down more food. After the movie they left Mid Valley and headed back to her place. Depending on your imagination, what entails will be left out and let's assume that it cost them about RM12.

Totalling the cost for the goods that were mentioned in the relationship:

Rose: RM10
Chanel Perfume: RM350
Skirt: RM59
Mocha Frap: RM 16.50
Movie Tickets: RM30
Dinner: RM80
Parking: RM5
"Extra goods": RM12

Total: RM562.50
Total (excluding perfume): RM212.50

Okay, maybe the perfume was a bit too much and let's just assume it's a once a year thing. Even so, the total expenditure for the day was a whopping RM212.50!!

If you have read my last issue, my company's total expected expenditure is RM1765. That would mean that a date would cost about 12% of my monthly expenditure and 9% of my company's revenue. Wow!! I am sure any beginning investor would be happy to make 9% per year.

Let's just say they only manage to go out once a month. Now we include spending during special occassions like Birthdays (two a year), Valentine's Day, Anniversary (2 gifts), Christmas (2 gifts) and random gifts (2 a year), Assuming that RM150 is spent per gift, that would entail another RM750 per year. Total expenditure per year of dating would be RM3300.

Is love worth RM3300 per year? I don't know. To some people, maybe. I mean, if you paid for an escort, it would probably cost more than RM212.50 per day. So maybe it is worth it after all.

The Lean and Mean Machine (update)

For cost and efficiency purposes, I have decided to only to publish my income statement monthly, all the relevant financial statements quarterly, and a special annual report.

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