Evaluating a Relationship — A Rubric Discussed by Two Business School Students
“So I know one of the criteria’s you had when we began this romantic relationship was you wanted a relationship where 1 + 1 = 3 …. In which you meant that we would both be better as a pair than as us individually. So after 3 months in this relationship, what do you think? Has it added up to a 3?”
“Oh my gosh… can we not?” She remarked.
We had been discussing a range of topics earlier in the day from the inefficiencies of the New York Transportation System, to the mistakes made by Investment Banking firms in the Uber IPO. Finally I was kind enough to bring up a topic that is not business related… and this is the reaction I get?!?
“ I mean I am semi-curious, like do you think this relationship has met your expectations? I am asking this because if it is a low number, I want to understand why and how I can improve and be better.”
She stayed silent… which I knew was definitely not the best sign. After a while she asked, “Well how would you answer it?”. Clearly she was buying time… which I could only imagine be to determine how low of an answer she can go before personally offending me.
After some thought, I said “Well, using a more technical term, this is like putting a value on our individual utility right? I guess this means that this additional marginal utility comes from how much I personally think I gained or loss from this relationship, in addition to how much you think you have gained or loss from this relationship. In that case, I would give it like a 2.4. Each of us maintained our usual 1 from before the relationship. In addition, I earned like a 0.3 utility from being with you and I am assuming that you gained like a 0.1.
As you can see, I might not have been the best boyfriend, but at least I was very aware of that…
My girlfriend, absolutely thrilled that I could somehow turn a topic about our relationship into a Wharton Behavior Economics class, responded “Okay… but then how are you evaluating this marginal utility? I mean in this case, the marginal utility must come from something? It’s almost like defining a value for the synergy of two companies coming together. In the context of firms, it is how the two companies ,when joined together, can create additional potential revenue that could not be manifested on their own. In this case, I would assume it is how much more utility you have gained from us being together, that wouldn’t have been attainable if we were single. For example, some of my additional utils gained from this relationship would be just learning from you or becoming more happy because we are together. For this context, I would actually just define this additional value of individual marginal utility to be a function of how much additional learning you gained from the other person + how much happier you are with the other person.”
“ I would agree with that analysis… but you still didn’t answer my question? What is the numerical value you would give to our relationship if we both started off with 1.” , I asked, nervously.
I waited… and waited… and still no response.
Finally, she responded…. “Why are we talking about this anyway? “
I said “Well…. This is important right? I mean if we are above 2, we can at least say that this relationship has merit. Otherwise, if we are below 2, there is no point to continue, because we are clearly becoming worse off because of this relationship and we should just cut the losses now.
She then said… “I mean I was thinking 2.05… but let me explain, just to be above 2.0 is already a huge accomplishment … because if we weren’t in this relationship we would have much more time to spend, and be able to invest in other relationships, learnings etc.”
To be honest, I stopped listening after the word 2.05, thinking to myself, gee, how low of a bar does she want to set… “Did you say 2.05!?!”
She responded, “Yes… But that is if we are considering opportunity costs. My opportunity cost of taking part in this relationship would be equal to the aggregate value of the time I could have spent with other people, which is also a direct function of how much happiness I can gain by spending time with them, and how much knowledge I can gain by talking to them.
“Well. Ok. Now the “equation” is:
Realizing I was being outshone, I added “ In that case, we have to consider their trends in the next few months/years as well. Lets try to analyze them one by one.
Happiness — everybody says the honeymoon phase ends and the happiness subsides, but for this scenario, let us assume that in the near term future, within a 2–3 years timeframe, the happiness level will remain constant as the honeymoon phase has not yet ended.
Learning — Well, I know you have always said you could learn a lot from me. But if you were to compare our friendship in the first month you met me, versus the last month, in which did you personally grow more through learning from me? Definitely the first month right? Because everything was new, everything was unique, and there was more about me to learn. While I promise to never stop learning, just the process of learning something from scratch will take longer than the time it takes to then re-explain it to you. So it will only be fair to say that at some point, I will run out of things to teach you from the queue of things you can learn. Therefore we can expect learning from each other to trend downward with time.
Opportunity Cost — the value of your time is very difficult to assume. Every minute you spend with me could be a minute spent with your other friends or coworkers where you will also have the opportunity to earn additional happiness and additional learning. By spending that time talking to me, you are inadvertently giving up all of the benefits of the same time spent with other people. The only thing we can say is that the opportunity cost is very high at our age, since we have many people we want to meet, and these relationships and connections have a good chance of blossoming in the future. The quality of these interactions, however, will likely not change drastically in the next few years. Since our opportunity cost varies by different time periods in our life , let’s just assume that it is a normal distribution scattered around a constant mean in the next few years. In other words, we can assume it remains constant at the average value of our opportunity cost.
What this means is that, like the below graph, we should assume that our additional learning from each other will continue to decrease, while our additional happiness and opportunity cost will remain the same. If we extend this graph to infinity, we will assume that as time progresses, learning drops to 0 or a very small amount, which means this relationship will only make sense if both of us believe that the value of happiness originating from this relationship is greater than the mean value of the opportunity cost of spending that time doing something else.”
She didn’t say anything for the next minute, and finally…
“This entire conversation is absolutely moronic you know… You started off this conversation to find if there was anything you could improve, but then it became a conversation about whether being in a relationship makes sense for either of us. You can’t just judge a relationship with a formula, it’s more than that. The truth is, none of this really matters. Taking things back to context, the relationship has allowed us to experience some incredible moments and achievements that we possibly would have missed on our own… No matter what the math here says, relationship — to me at least — is about what we can create but not what we lose.”
Ok. Yes, I agree.
