IIM, Love and Economics.

“Can the class think of an example of escalation of commitment from our day-to-day lives?” asked the Organizational Behaviour Professor, expectantly looking at everyone in the class. I found myself stretching my hand high up in the air.

“Yes, Dania?” came the response from the instructor.

I didn’t know if I had the nerves to utter the answer I had mentally reflected. Term 1 was being an excruciatingly tiring term, making me realize that maybe MBA is a lot more than dressing smart and speaking sense. I always knew that it won’t be easy competing with equally motivated and ambitious people as me, but I had no idea that there would be no concept of “average performance” in my section: Section B. Section B seemed to outperform every section in academics. A score in mid-term which would fetch an A in other sections was being scaled to a B- in section B. Life was being hard and my metabolism had found a way to cope up with it. Yes, I was over-sleeping. Times which asked for a lot of hard work for great grades, the serotonin in my body was pumping up to its highest levels. Thanks to the selection criteria of IIM Indore, IIM Indore is home to all the academically consistent students- triple 9ers or 9-9-8 meaning a 90+% in 10th, 12th and under-grad. All the students who have worked hard all their life ended up in IIM I. Therefore, complacency was out of question in term 1: the first term of MBA- when ambitiousness is at its peak.

Being friends with Tejashree Dautpure, my extremely diligent friend from NIT Nagpur, I was motivated to study well- but never as motivated as her to ace all the subjects. I look up to friends like her and then go to sleep- knowing that I can’t struggle so much.
It was the 14th lecture of OB which focussed on Common Biases and Errors in Decision Making. One of the biases is: Escalation of Commitment.

Escalation of Commitment: Escalation of commitment is the tendency of decision makers to continue to invest time, money, or effort into a bad decision or unproductive course of action. The expression, throwing good money after bad” because they have “too much invested to quit” captures the essence of this common decision-making error.

I gradually lowered my hand and mustered the courage to utter what I felt fit perfectly into this bias. I knew that I could sound absurdly funny or stupid, but I wanted to express it as it captured the on-going scenarios in my present mental state. “Suppose a friend is in a long-distance relationship and things aren’t working out fine for the couple. He isn’t willing to break-up simply because he has invested too much time and resources in the relationship already.” I, for a second, couldn’t believe that I heard myself saying this.

There was a mild round of laughter and the instructor loved my answer. She jokingly said to the entire class, “For those of you who are in the aforementioned situation, you may be experiencing escalation of commitment.”

Long distance relationships aren’t easy. They make you undergo the toughest tests of constancy and put you in existential crisis by questioning your integrity. To make you feel worse, there are blossoming couples all around the B-School. People miraculously find love and seem contented about it. (I don’t even know how infatuations turn into love in a span of two weeks, but whatever.)

History has given us examples of exceptional lovers whose love for each other’s has passed varied tests of time and community. I may sound like a rebel when I say this, but I don’t feel Romeo and Juliet deserve the eulogy that they have received hitherto. Sure, the story is a classic for its times, but its extension to the present and comparison with the modern tales of relationships would be highly unjust for today’s generation. Romeo fell for Juliet after seeing her in a ball. They both have an epiphany that they love each other madly and decide to be together till death do them part!

If either of the two were given an option to study and meet like-minded individuals, I highly doubt that this story would have ever taken place.

The problem with long-distance relationship is not just that you’re continuously missing your partner; it is aggravated by the fact that you keep witnessing all the things that you could have been -every hour in a residential campus.

You would want to be comforted by someone on not receiving the short-list from your favourite company, would want to be dependent on someone for sending the email right before the deadline or would just be happy with their presence when everything comes down cascading. There are innumerable instances which would remind you of the misfortune of not having another human to solace you.

But long-distance relationships do a brilliant job of testing your emotional connect with your partner. They would deliver a verdict on your affinity for this relationship. These excruciatingly painful times which push your upper limit of tolerance to a new height teach you if you are willing to be loyal in this commitment despite the aforementioned situations.

If we speak of behavioural economics, long-distance relationships are a good example of understanding opportunity cost. In microeconomic theory, the opportunity cost of a choice is the value (not a benefit) of the choice of a best alternative lost while making a decision. A choice needs to be made between several mutually exclusive alternatives. Assuming the best choice is made, it is the "cost" incurred by not enjoying the benefit that would have been had by taking the second best available choice.

If one decides to break-up, the benefits that come with dating the present partner would be the opportunity cost. A rational person would make a list of losses and gains of this move and make the right decision. If you think you’d be happy without this person, the opportunity cost is inferior to the situation in which you won’t be with them. However, if you feel that life has been too kind in gifting to you that one person who tolerates all the non-sense that you exhibit which might be more random than the random function in excel, your opportunity cost will be very high. You would prefer to continue this relationship.

The author of this article has been positioned in the aforementioned situation at the onset of her MBA. She realized that the opportunity cost of leaving her old relationship is worth diamonds and gold. Life has been kind to her.

I, while browsing through Huffington Post, came across this video. Here’s the link: http://www.huffingtonpost.in/entry/a-behavioral-economist-explains-why-your-love-life-sucksus58470095e4b0ebac5806e101 .
This video beautifully explains why comparison can be one of the worst things to do in a relationship.

If you’re dating someone miles apart and you feel like distance is restraining your happiness, calm down for some time and calculate the opportunity cost. I wish that the opportunity cost is paramount.

Dania Faruqui
Dania Faruqui

Dreamer. Reader. Perpetually confused. NIT Bhopal - IIM Indore.