Considering a Relationship or "Love" in Economic Terms - A Metaphor

Considering a Relationship in Economic Terms – a Metaphor

The Big Question: Are you making a wise investment in your relationship? Have interest levels dropped thereby decreasing the return on your investment? Is the relationship a short term or a long term concern?

In order to evaluate the wisdom of continuing in a relationship, it is helpful to remove emotion from calculations in order to assess the overall viability.

Value/Worth of the Investment

When investing in any venture, the overall value of the enterprise or product will need to be considered. The value or worth of the concern will vary according to the needs and purposes of the investor. Any investment should yield a return equal to or greater than the investment in order for it to be worth while.

Investment of Time/Money/Labour

Investment can take various forms: money, time or labour. This is an expense put forth on the part of the investor. However, if the interest level in the product, business or service is low, then the investor should reconsider the amount of investment put forth. Higher interest levels would encourage further investment, whereas low interest levels would discourage an increase in labour, time or money spent.

If the investor continues to expend resources when interest levels are low and the return on investment is small, then it follows that the resources are wasted. A wise investor would consider lowering the level of investment or even discontinuing involvement in a concern which is using valuable resources. Investment could be made in an alternative enterprise and thereby reduce waste. Profit and return could be made elsewhere.

Balanced Interest of All Parties

An important aspect of any viable relationship is the investment of all parties concerned. In order to achieve maximum productivity and therefore return, all parties ought to contribute equally. Contributions may take different forms depending on the resources of each party. These would need to be considered and evaluated by each party initially and periodically. If any party reduces their investment, then all things will not be equal; the ultimate value and worth of the investment will decrease.

Short Term/Long Term Investment

Return on the investment may increase gradually or quickly – either it will be a long term investment, or a short term investment. At any rate the final outcome should ultimately place the investor in a better or richer position. If short term, then perhaps the maximum return has already been yielded, in which case the relationship should cease or any further investment of resources will be wasteful. If long term, then serious consideration needs to be given to the continuing viability and net worth of the relationship. This is the difficulty of the economist – to be able to predict long term profitability and therefore the wisdom of continued investment.

Subtraction of Emotions – Assessment Made Easy

At any rate, considering a relationship in economic terms is beneficial in that it reduces the issues of the heart to the level of mathematical calculations and logic. Without the inclusion of emotions in the calculations, the overall benefits or lack thereof can be more easily assessed.

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Comments 4 comments

Matthew Maktub profile image

Matthew Maktub 4 years ago from Las Vegas

Interesting breakdown. Since I used to gamble for a living I always think of things in terms of ROI, and EV (expected value) of a given situation. Relationships are no different. A good relationship should always increase your ROI and give your life more value.


adamantony 4 years ago

A very interesting analogy, which would bring a smile to any worthy economist or accountant's face. However, in so many cases it is left to the divorce lawyers, and the settlement packages to place the real value on relationships in economic terms.

Freeandlaughing, it is a sad situation when one must draw a balance sheet to ascertain the worthiness of an investment. Markets do change without warning due to circumstances beyond control or reasoning. Even when there is a logical reason for a decline in return, should we jump ship? Long term investments may have declines, this is usual, panic merchants can cause a rapid decline in market values.

Hindsight is a great thing, but if the world was full of panic merchants, investments would be something not worth being involved with.

My last investment was one which fluctuated on a regular basis, influenced by a variety of market changes or outsider trading. A variety of reasons were given for the lower returns. For months I kept up my input, hoping the return would justify my persistence.

In hindsight, your implicit comparison, could have been of value, but am pleased that I have been true to myself and my heart even though it has taken a beating.

They say that LOVE is blind, that is as true as HONESTY is the best policy.


Freeandlaughing profile image

Freeandlaughing 4 years ago from Brisbane, Australia Author

MatthewMaktub - good comparison and summation of the main point - yes, we would want to add value to our lives. Bad relationship/bad investment/bad bet = time to hit the road.


Freeandlaughing profile image

Freeandlaughing 4 years ago from Brisbane, Australia Author

adamantony, Thanks for your perspective. Guess it all comes down to individual decision - whether to invest or not. Sometimes we win, sometimes we lose. How much do we want to pay for love and honesty? Are we prepared to pay the price and accept resulting loss or profit?

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