For love or money

An employee packages replicas of the British royal engagement ring at a jewellery factory in Yiwu,...

An employee packages replicas of the British royal engagement ring at a jewellery factory in Yiwu, Zhejiang province January 12, 2011. REUTERS/Carlos Barria)

Michel Kelly-Gagnon, Special to QMI Agency

, Last Updated: 1:04 PM ET

What if, this Valentine's Day, that rascal Cupid mistakenly shoots you with two arrows instead of one, and you fall head over heels for a pair of identical twins?

And what if both of them are the jealous types? The only difference between the two lovely women (or handsome men) is that one is as rich as Bill Gates and the other as poor as Oliver Twist. The question: Which one would you marry?

Or, if you find the idea of falling in love with more than one person at a time unrealistic, imagine instead that each of these twins invites you to a romantic dinner on the same night. Imagine also that you think you might be starting to fall in love with both of them. Which invitation would you accept?

Of course, as we all know, money isn't everything, but neither does it hurt to have some. Individual choices and their consequences are the stuff of economics, a discipline whose basic concepts can be applied just as easily to romantic dilemmas as to investment choices.

In both cases, our decisions are based on subjective individual preferences. It is therefore entirely plausible for someone to choose a romantic partner who is poorer, but who otherwise has more of a desirable characteristic, depending on one's preferences.

Indeed, economics is interested in money only as a means, among others, of achieving one's goals. In his book Hidden Order: The Economics of Everyday Life, David Friedman, who specializes in the economic analysis of law, shows that at bottom, economics is not about money.

The economic analysis of love has some interesting things to say about the real world. An American economist, Margaret Brinig, asked herself why the custom of engagement rings, practically unknown in the United States before the 1940s, proceeded to spread like wildfire -- only to become less important two decades later.

Her explanation is that in the 1940s it was becoming more and more common for fiances to have sexual relations, even though just about every young woman was aware that the loss of her virginity could hurt her chances of marrying another man. The engagement ring therefore served as a form of compensation if the guy ended up not marrying her. As the social importance of virginity faded, the custom of giving engagement rings became relatively less important.

Another specialist in the economic analysis of law is Richard Posner, a federal judge in the United States and the author of Sex and Reason. Posner argues that the economic theory of sex explains why the forms and the frequency of sexual practices, which must be distinguished from desire and sexual preferences, can be interpreted as rational responses to opportunities and constraints.

For instance, if the cost of sex (in terms of risk) falls thanks to better contraception, we would expect, all else being equal, that the quantity of sex demanded would increase. Indeed, this is exactly what happened during the sexual revolution.

All this shows that, even in the most emotional or instinctive aspects of our lives, we do remain "rational" in the sense that, given our emotions and passions, we tend to respond to constraints and opportunities.

- Michel Kelly-Gagnon is president of the Montreal Economic Institute (