Wednesday, November 17, 2010

Online dating and the business cycle

During an unemployment spell, people spend significantly more time on leisure and may thus be more interested in social activities like dating. It is simply a matter of available time. But for those who suffer from a reduction in wages during a recession, things are not so clear: the income effect would lead to a reduction in leisure, while the substitution effect would favor an increase. And this interest in dating is not trivial, as 10% of people in the US a registered with an online dating service at any time, while this is 18% in Europe.

Véronique Flambard, Nicolas Vaillant and François-Charles Wolff point out that this ambiguity is even stronger with the demand of dating services, as some would want to find more solace in a partner during hard times, while other feel less secure in dating. The impact of a recession on dating services thus needs to be sorted out empirically. They do this for France with a short monthly times series on economic sentiments, an indicator of dating services (searches for a popular online service on Google) and lagged fertility (as a proxy for those leaving the dating market for good). I am not completely convinced that 56 months of data are sufficient to capture what happens over business cycles (of which there is only one in the data), but let us take this seriously. Using a VECM using four lags (thus we are down to 41 degrees of freedom, they find evidence that dating services demand increases during a downturn. That should hardly surprise us given the impact of the unemployed. Using microeconomic data that distinguishes between the employed and the unemployed would have delivered more interesting results. In fact, using more direct observations of what is to be measured would make results credible.


Anonymous said...

This post is highlighted on the research page at the faculty of economics of the catholic university of Lille. This is how i found it. It is funny that the post is very negative about the paper, yet they find it worthwhile to link to.

Brandon Duran said...

I wonder if the study separated guys from women in their data. Since women usually don't pay for the first few dates, I could see them dating more when they have less money because it's a form of entertainment they don't have to pay for.

However, I would think most guys would date less when they don't have money, even if they have extra free time.

Brandon Duran