yo guys, just share with you my theory of love, since all the blog entries seem so"boring" so far and we need the elite guys in our class to spice things up :) PRESENTIN TO YOU :
 
THE ECONOMIC THEORY OF LOVE BY COOLGOH
 
If Economics is a social science that studies complex human behaviour, logically it follows that love being part of human behaviour can be subjected to analysis. The economic theory of love is a useful approach to deciphering the mysteries of love. If love is assumed to be a commodity, under the conditions of perfect competition, there will be no person who is love deprived or overburdened by love in the market. The laws of supply and demand of love will reach a stable equilibrium at a single price and a fixed quantity and ensure that all suppliers and consumers of love have sufficient love. Applied to the context of a couple, the laws of supply and demand will match a lovesick young man who has a need for a lot of attention with another crazy woman who needs to be in the arms of a man all day. The seller (woman) would be able to supply her love only at a very high price (e.g. seas of chocolates, thousands of roses). The lovesick young man is willing to incur a high opportunity cost (e.g. sanity, attention, forgone earnings) to procure the love of the woman, as it is better than the next best alternative. Hence logically, according to the laws of supply and demand, if there is an ever-increasing number of human beings who are lovesick and mad, it will lead to a continuous rightward shift in supply and demand. This will eventually increase the total quantity of love in this world, although the price depends on the degree of shifts in supply and demand. However, the ideal is that as long as both men and women are equally crazy about love, the shifts will be about the same, thus it is possible to maintain a relatively stable price while ensuring an ever-increasing quantity of love in the world.
           
            Unfortunately, the condition of perfect competition does not apply to the real world; hence there is a need for government intervention. For instance, there may be a monopoly of love by a single supplier. This may be a result of extreme price-cutting, i.e. the woman decides to be very angelic and understanding and does not demand anything from her potential lover. Yet, simple economics tell us that after the monopolist has cornered the market and forced out all her competitors, the woman will restrict the output of her love and force up price, resulting in supernormal profits. In the long run, the consumers (men) will suffer from exploitation, as they have to pay a higher price compared to conditions in perfect competition. The government must come in and place a maximum price ceiling on love. This is of huge importance as consumers with low income may not be able to have love if the price of it is too high. Politically, it may be crucial as voters may vote in a new president who will promise greater love and freedom. However, there will be a shortage of love as demand is greater than supply. Hence, the problem of a black market may arise. For instance, American males may be willing to procure love through human trafficking rings that import Asian females into the American market. More importantly in economic terms, a maximum price ceiling represents a misallocation of resources. The Marginal Social Benefit will not be equal to the Marginal Social Cost; hence the society in the whole will be worse off.
 
            Up till now our discussion has been limited to microeconomics, but love plays an important role in macroeconomics and our survival as well. There is a logical explanation for why people love so much and so deeply for centuries— because they all want to avoid a recession. John Maynard Keynes has contributed a new school of thought to explain this phenomenon.  When people are in love, they tend to give gifts to their lovers to show their appreciation, sincerity or simply because the lover demands it. This will raise the aggregate expenditure in the economy through greater consumption (C) as AGG E = C + G + I + (X-M). Hence, increase aggregate expenditure will ensure that more people will get jobs in the chocolate and flower industries. Unemployment rate in the economy will be lower and increasing love in the economy will lead to a boom. This is proven by empirical observation in the Clinton Administration and epitomised by Bill Clinton who had many lovers. Furthermore, game theory tells us that since love is just a game, in a conflict of love interests among competing lovers, there will eventually be a payoff (outcome), in the of lawsuits and divorce cases which will generate additional economic activity in the nation. The Keynesians will argue that in times of recession, governments need to step in and “pump primp” the economy.  Governments can make good capital investments in love by setting up the infrastructure, e.g. counselling clinics, orphanages. This will be useful capital expenditure with positive effects in the long-run, while in the short run it will hopefully pull the economy out of recession.
 
Combining the Monetarist and Keynesian schools of thought, I have come up with a new equation that links love to the economy. L= SILLY where L stands for love, S stands for savings, I stands for investment, L stands for Loans and more Loans, and Y stands for national income.  From this equation, which is the result of the compilation of statistics for centuries, it is empirically proven that love has a direct relationship with national income. When love increases, it can go into any of the SILLY variables. For instance, it can go into savings, for in an increasingly materialistic society, lovers need to save for a long time to buy a new BMW or a plush mansion as signs of love. Yet they never managed to buy them, as the savings are never enough, hence the savings can only increase with love. Similarly, increasing love will result in people investing more in their portfolio, thus increasing investment. After all, it seems that all the executives with fat wallets get to date with supermodels (e.g. Donald Trump). The saying “ No Money, No Honey” is a time proven truth in the modern economy. Hence, male lovers who want increasing love will need to show that they are rich.  The relationship between love and loans and more loans can seem obscure at first glance, but it all works out logically. As lovers never save enough to buy new cars and other luxury items to show their love, the logical alternative is through loans. This is proven in the experience of Japan in the past two decades. In the 1980s, Japan experienced a booming economy with huge loans being borrowed. During this period, there were more children being born in Japan. Logically, a child is a sign of love, the fruit of a union between two lovers. Hence more love leads to greater loans through the empirical observation of more children. In the 1990s, when Japan experienced economic stagnation, it was a period of decreasing birth rate, with an increasingly ageing population. Furthermore, Japanese banks are subjected to bad debts of the 1980s. The current economic stagnation in Japan can be attributed to excess love in the 1980s and the lack of love in the 1990s. So policy makers in Japan should abandon the fiscal or the monetary approach, and encourage more love in Japan hence dragging the nation out of recession.
 
In conclusion, economic analysis of love is a useful approach to the seemingly unfathomable phenomenon. After all the L= SILLY formula explains many experiences observed in the economy. Hopefully, this short analysis of love in relation to economics will spark off more debates and discussions, leading to a breakthrough in the field that will bring a stable increase of love in this world.