Online Dating according to Der Spiegel

This week Der Spiegel’s cover story is about online dating and the business that it has become. Unfortunately, the authors of the thirteen pages long story seem as confused about the phenomenon as Bridget Jones at the edge of reason. Alas, their writing is far less charming, even despite the fact that, statistically, almost half of the people who participated in writing the article are living in single households (according to their own data, 49% percent of households in cities with more than 500,000 inhabitants are now single households).

If you’re interested in a brief summary of what the article tried to elucidate, here’s an excerpt from an email I once sent to Regina Lynn, Wired’s “Sex Drive” columnist (and author of the on-topic book “The Sexual Revolution 2.0: Getting Connected, Upgrading Your Sex Life, and Finding True Love – or at Least a Dinner Date – in the Internet Age“), as a reply to one of her columns about the social consequences of the fact that, increasingly, what was once considered “virtual” is becoming the real thing. It’s not exactly the question dealt with by Der Spiegel, but then again, I’m not sure they had a particularly clear idea of the question they were trying to answer, so this is, I believe, a reasonable summary…

“I believe no one really knows what’s happening to the future of interpersonal relations. Our lives and contacts are more and more mediated by technology, and, as with many businesses today, the changing technology fundamentally changes the transaction costs for the coordination of human conduct.

This is, in my opinion, essentially, what all the writing about the choice dilemma and all other “modern” dating literature comes down to. As with businesses, transaction costs will not disappear in the digitally mediated world. No one even really knows if “unit costs” will eventually be signifcantly lower.

And thus, in absence of any real evidence, the “majority opinion” about the social effects of technology oscillates between “hope” (eg online dating will help reduce unit search costs for dating) and “despair” (eg online dating increases our choice dilemma and thus increases unit search costs).

In my opinion, most researchers are at least as confused as the societies they study. Maybe we will choose to develop some kind of Matrix. But remember the end of “Demolition Man”, in which Silvester Stallone introduces Sandra Bullock to the advantages physical contact has over cyber sex. No one knows what the future will bring. Which, on the other hand, ensures a market for all those, like you, who eruditely write about these issues so close to our hearts.

intellectual property rights, oddly enough

New Pricing model for food!

Via comes another data point proving the extent to which the right concepts in the wrong hands can create disastrous results: copyrights running wild – should there be a copyright on cooking recipes? I’m sure the next step will be the inclusion of some kind of DRM into a BigMac tying the food license to a specific licensee who had to identify himself using biometric identifiers. Enforced by RFID chips, sharing food would no longer be possible without purchasing an additional license. Imagine the possibilities…

compulsory reading

Stuck in the middle.

It’s a shame so few people outside the busines community have heard of Michael Porter and his concept of strategic analysis of business environments.

Last year, around this time, Germany was in shock. Not because of some strange election outcome or because I had moved back here but because of the poor results German students had obtained in the OECD Programme for International Student Assessment. After the initial shock had faded a little, the results again surged to public prominence as one of the crucial issues in the elections last September. So after the elections are finally over, one would hope some people would start to concentrate on facts rather than on words. But the OECD is reckless.

Today it published yet another report thus time bashing the German educational landscape for its alleged financial inadequacy and inefficiency. Browsing through the executive summary of the results (in German), I had to realise that the report appears to based to a large extent on the older PISA data. The information concerning the comparatively small amount of money spent on tertiary education is also hardly new.

So why this entry? And why would I mention a professor of business strategy while talking about educational policy, a field in which, certainly in the German case, decision making can, if at all, be described as a garbage can process.

Well, it’s because this new report compelled me to share my understanding of the PISA results and because Prof. Porter has come up the concept of U-curve rentabiliy on investment. He is, of course, referring to a U-shaped relation between two generic business strategies that could lead to a favorable strategic position in the competitive environment and their return on investment – leadership in either cost and volume or in quality and price. Companies which are not successful in pursuing either of these strategies are, according to M. Porter, stuck in the middle and will have to accept a lower return on investment.

Now I know that it might seem a little far-fetched to some, but I contend that Germany is currently stuck in the middle. Not because the German polity can not decide between mass market or quality production, of course. But I believe firmly that many of the current problems in Germany have arisen because of a failure two choose between two, equally successful, but socially opposed ways of organising the educational environment. I will describe those two alternatives as “Scandinavian” on the one hand, and “Japanese” on the other, the first being extremelly socially open, market oriented (please note that I use the term market here to denote the inclusion of transactions in the social division of labour) and one rather closed, hierarchical, family oriented. Again, both models seem to be successful. But those who can’t decide between them aren’t.

Now, looking at Germany, we see a somewhat divided country. The more “Scandinavian” oriented Northern regions and the more “Japanese”-style educational (and social) systems of the South. But in fact, both are in-between.

Well, as the divison of labour is increasing the I believe that this country’s long term shift to the Scandinavian model will continue. That theory however, does not bode well for Bavaria, which features the most Japanese-style educational system in Germany and is still the national number one. But it offers a ray of hope for those regions which currently fare less well but are already somewhat further “North”.

We’ll see.


Read Coase

Lynne Kiesling (link section) posted this in her blog. She’s into transaction cost theory, I am into transaction cost theory. So I am going to spread the word about this illustration of the Coase theorem by Megan McArdle.

She also mentions a reference to Coase’s 1988 book “The Firm, The Market, And The Law“. She, like most people, including the Nobel Price committee, believes that “The Problem of Social Cost” is the most fundamental thing in the book (and most fundamental work he has written).

I tend to disagree with most people, and luckily, Coase is on my side (that is if I remember correctly, because I really can’t remember where I read this). Both of us think that “The Nature Of The Firm” is his most important paper. But first chapter in the book is one of the best things I have ever read in graduate school. All business and economics students should have read it. Probably before they start reading standard micro/macro textbooks.

A while ago someone on Brad DeLong’s guestbook was whining that he doesn’t understand why people learn about the optimum macroeconomic policy if it is never going to be applied “in the real world”. If you think so, too, check out Coase. He’ll tell you why. And after that you’ll also understand why Douglass North believes in the remarriage of economic and political thought (in the medium run, and I’ll post the source later).


Structure in motion.

fractalsNow we all know that structure is something precious in unstable times like these, don’t we?

And like some of the gold diggers during the glod rushes of earlier times were more successful than others, some people are able to identify the precious stability, the macro trends of development within which all the instability occurs. Think of a fractal image on which a micro pattern is infinitely embedded in a macro version of itself. Since our lives take place in unstable micro patterns most of us can’t see how these patterns are actually floating on much more stable macro patterns. But some can. And I think, with reference to the fractals of social development, a lot of them are interested in economic history.

You wonder what I am talking about? OK – here’s your macro pattern detection test. What does the following dialogue, taken from, August 8th, 2002, tell you about the future…

“Do you really save money by paying her to follow you around and remember what you already have in your wardrobe?”

“Well yes, because she reminds me of things like that I already have a black skirt.”

– Two women outside Berkeley Bowl (which is a grocery store, not a bowling alley, oddly enough.)

And now I recommend to compare your thoughts to Berkeley’s Brad DeLong’s.