The Most Important Decision in Life

The best economics class I ever took in college was called Market Design. The class was about all the markets that do not involve an explicit exchange of money. Most markets we participate in are not like this.

For example, if it starts to rain and you need an umbrella, you can walk into a store and get it for about $5-$10. You want a new television? That will set you back about $500. A diamond ring? How about $15,000? You get my point. You give someone money and they give you goods and/or services.

But some of the most important markets we participate in are not like this. You can’t exchange money to make these markets function. For example, if the most annoying person on Earth wanted to be your roommate, you probably wouldn’t accept any amount of money to live with them. They couldn’t pay you enough for the future misery and hardship.

The same goes for relationships. While having money can make someone seem more attractive, it doesn’t usually overcome other factors such as looks and personality. You can’t just give someone $10,000 or $100,000 and make them fall in love with you. You might be able to get them to have sex with you, but you cannot buy their legitimate desire and companionship.

These kinds of markets are called matching markets and they will have a bigger impact on your long-term happiness than any traditional market ever will. And the most notable matching market is the dating market. It’s who we decide to spend our life with and, possibly, who we have children with. It’s the most important decision of our lives and I can’t even think of what’s second.

As I’ve written about before, the quality of your relationships will affect your lifetime happiness more than just about anything else. And your partner (i.e. the person you will spend the most time with) is a significant part of that equation. This doesn’t mean that you can’t be happy as a single person, but there is some research suggesting that married individuals are marginally happier than their single counterparts.

As a result, I’ve been thinking a lot more about the dating market recently and how it impacts our lives. As a single, 31 year-old male living in New York City, I have a feel for this market and I’m convinced that most people don’t spend enough time and resources on this area of their life. They don’t treat it with the weight that it deserves.

For example, I’ve heard complaints from my male and female friends alike that dating is “time-consuming”, “expensive”, and “emotionally draining.” Yes, it definitely can be. But consider the upside if you get it right and ask yourself: how much does that really matter?

I mean, let’s reframe how we think about this. Imagine we turned dating from a matching market into a traditional market. How much would you be willing to pay for a lifetime of happiness, great companionship, and a wonderful family? I’d argue most people would be willing to pay a lot.

For those that currently have this in their life, they’d probably easily give up 10%-20% of their net worth to keep it, if not more. Technically some people have to give up 50% of their net worth when they get this decision wrong, so 10%-20% of your net worth is a bargain if you ask me.

So how can you complain that “dating is expensive” or “time-consuming” when it’s literally one of the best trades you can make in your life? Oh you had to spend $50 on drinks and nothing came of it? It happens. You set up dates that eventually fell through? Yeah, that’s unfortunate. But those costs are small compared to the possible upside.

There are very few areas in life where the asymmetry between the costs and benefits in life are so pronounced. This is why I think most single people who are looking for a partner should spend much more time/energy in this area of their life. From this framework, you can see why it doesn’t seem as crazy to pay for a dating app or even a matchmaker. While originally I thought this was silly, given the cost-benefit ratio I now understand why paying for these kinds of services can make sense.

Of course I’m not a dating expert. I’m probably average at it at best. But I do think a lot about risks, tradeoffs, and investing. And some of the best investments in life don’t have a ticker symbol. They can’t be found in the Wall Street Journal. They aren’t something that can be bought or sold.

As I’ve gotten older, I’ve started to realize the importance of these kinds of decisions and I regret not investing even more in them when I was younger. I regret not paying more attention to values earlier in a relationship. I regret not being as cognizant about what I want. I get that this is a learning process, but it’s always so difficult looking back and realizing your mistakes now.

How could I have been so foolish? How did I not realize what was staring me right in the face?

It reminds of the time I attended an admit party six months before going to college. For the uninitiated, an admit party is where all the high schoolers who got in to a particular university get to meet with recent alums and ask them questions about their experience.

During my admit party I asked every alum I met the exact same question: What do you regret the most about your college experience?

You know what they all said?

I wish I had met more people.

Every. Single. One.

They all said the same thing completely independently of each other. It was like a sign from God to an 18 year old me.

“Talk to lots of people in college. Meet as many as you can.”

But you know what my biggest regret from college is? Not meeting more people.

I was quite social, but definitely not as social as I could have been. I should’ve played in the marching band. I should’ve been in more clubs. And though I didn’t have the money at the time, I should’ve taken out a loan to join a frat.

Sometimes we can know the right answer and still make the wrong choices. It reminds me of that time Stanley Druckenmiller lost $3 billion in six weeks betting on tech stocks during the DotCom bubble:

You asked me what I learned. I didn’t learn anything. I already knew that I wasn’t supposed to do that.

So, please trust me on this and make sure that you get the most important decision in your life right. And if you already got it right, make sure to keep investing in it every single day. You won’t regret it.

Thank you for reading!

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This is post 267. Any code I have related to this post can be found here with the same numbering: https://github.com/nmaggiulli/of-dollars-and-data


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