Swipe right and become invested: What Tinder has taught me about economics

Economics is not a sexy topic.

My Tinder profile reads “friendly, rarely bites”, but neglects to mention I’m of the rare breed that enjoys talking about the cash rate over dinner.

As it plays out in the world of dating apps, however, economics is intriguing, amusing and occasionally insightful.

Dating apps like Tinder have opened up an unprecedented world of potential partners.Credit: iStock

Just as ecommerce has expanded our selection of goods, dating apps such as Tinder have opened up an unprecedented world of potential partners. You can filter for what you’re after, down to the person’s age, gender and location. And in a convenient swipe, you can express your interest and find out if it’s mutual, without the potentially painful rejection present in the act of approaching someone in person.

Different marketplaces cater to various preferences. Tinder – the most well-known – is often seen as the app for people looking for a quick hook-up; Bumble provides the option of meeting friends, romantic partners, or business partners; and Hinge markets itself as the app for people taking dating a little more seriously.

I’ve dabbled in all three for research purposes – and, of course, to see if my soul mate is doing the same. Here’s what I learned.

First, just as the clothes you ordered online can come two sizes too big or look drastically different from what was advertised, there’s often a mismatch on dating apps between what you demanded and what’s supplied.

It illustrates a lack of what’s called “perfect information” in economics: economists like to assume that in a free market, we all have the information we need to make the best decisions for ourselves. The problem is, we often don’t.

Maybe the photos on a dating profile are from a bygone era, maybe they lied about their age or their intentions were unclear.

From a cursory glance, the guy I saw on my screen ticked some boxes. When I met him, he was witty, intellectual and ambitious. He also told me he planned to sell all his shares and permanently relocate to a mansion in Switzerland with a few private chefs within a month. Not exactly the recipe for a sustainable relationship, so I ruled him out.

The thing about dating apps is that just like economics, decisions and outcomes are often based on assumptions.

But I did learn that there were more than the conventional reasons why people use dating apps. Before becoming chief executive of a technology company, Switzerland man said he had used Tinder to advertise a fitness program and matched with hundreds of people, many of whom ended up buying his product. While there can be some mismatches, it seems dating apps can also be leveraged for sales.

My online ventures have also given me insight into economic trends as they relate to the dating scene.

It’s no secret that inflation – or the price of goods and services – has soared in recent months and that cost of living is a real concern for many people, especially those in their 20s who are yet to reach the comfortable upper echelons of income generation.

While admittedly, my sample remains small, the empirical “research” I’ve engaged in suggests Tinder users have been tightening their wallets when it comes to planning dates. Over the past year, offers I’ve received for nicer dinner dates have gradually been usurped by invitations for a quick drink. Incidentally, prices for food and non-alcohol beverages skyrocketed 9.2 per cent in the 12 months to December, while alcohol and tobacco prices increased by 4.4 per cent. But of course, correlation doesn’t always equal causation.

Then, there’s the salesman who piqued my interest when he claimed to own three pugs – and who I later noticed, conspicuously flashed his wrist in several photos on his profile. Young people, he said – himself the prime case study – are ditching stocks and term deposits in favour of investing in luxury watches. “It’s crazy how much interest there’s been in watches in the past five years,” he said.

According to a second-hand watch market index by WatchCharts, the average market price of some top luxury branded watches peaked early last year, although that ceiling remains more than 40 per cent higher than it was before the pandemic.

A note to investors from Morgan Stanley, though, which warned against purchasing luxury watches as an investment. “We have noticed a significant increase of watch inventory in the secondary watch market year to date as a result of second-hand watch dealers and individual watch investors off-loading their stocks,” the note read. “Given the current watch inventory for sale and the worsening macro backdrop, we would expect second-hand prices to contract further quarter over quarter.”

I have always thought pugs were better value than luxury watches.

The thing about dating apps is that, just like economics, decisions and outcomes are often based on assumptions. It’s the reason things don’t always work out the way economists say they will, and why there are so many funny and horrific dating stories from those who brave the likes of Tinder, Hinge and Bumble.

I once went on a date with an economist who matched my enthusiasm for his discipline with a comprehensive lecture on behavioural economics. But even two economists could not take the topic beyond a friendly encounter.

It’s not all disappointing, though. People find love on dating apps, economists do sometimes get it right and there’s much to learn from these experiences.

But just like Tinder, the science of scarcity should be taken with a grain of salt.

Millie Muroi is a business reporter at The Sydney Morning Herald.

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