The affection economy

Transactions get personal

Those of you econ geeks who follow innovation cycles and get excited over creative destruction are no doubt eagerly watching the development of “new markets” that in theory mop up the displaced workers, consumers and value. I confess that it’s not something that I gave much thought to, until very recently. The sharing economy hype was leading to innovative models and overblown valuations, which I enjoy reading about but which never had much to do with me. And the hipster trend gave us artisan bread so I was happy to overlook the false value applied to inexpensive living.

But then I read about a service that sells hugs.

And suddenly I started seeing it everywhere. A new market, rife with eager consumers and clever marketers, selling us stuff that we always assumed was free. Concepts that were part of what we used to call “life”, that stemmed from our emotional connections and sense of community. We still have those connections and social needs. But business models are encroaching, turning emotions into transactions and favours into products.

by Dmitry Ratushny for Unsplash

by Dmitry Ratushny for Unsplash

We might as well start with the most fraught of social interactions: the pick-up (or hook-up if you’re under 35). Tinder takes care of that for you. For a price, of course. Maybe you’re not paying with cash. But you are paying with your attention, which is monetizable to advertisers. Or if swiping and by-passing small talk isn’t your thing, then any one of the hundreds of dating apps will take care of the stress (excitement?) of meeting someone, of chatting to the guy behind you in line at the coffee shop, of asking the cutie in the book store if they’ve read this one, of discovering a shared dislike of pretentiousness at a wine tasting.

And if dating is not your thing but you still want physical intimacy, the sex economy is firmly online, which makes it easier and safer to pay for it. Apps, directories and review sites add a relative transparency and transactional cleanliness to a historically secret and sordid sector.

What about asking for a ride? Trusting your mates to make sure you get home safely if you’ve drunk too much? Apart from Uber and Lyft, there’s Split which outsources carpooling, Curb which lets you schedule pick-ups ahead of time, and many, many others, depending on your location. Several of the businesses in this relatively new app-based sector are valued at over $1bn, with Uber completing its last round at a staggering $50bn valuation, and Lyft at $5bn.


As for the satisfaction of cooking dinner for those that you love, Blue Apron, Plated or HelloFresh (and a long list of others) will deliver a box of ingredients to your house to make preparing the meal for your family or friends that much easier. Munchery, Gobble or Sprig (and a long list of others) will send it to you pre-made, so all you have to do is heat it up. On-demand food delivery is one of the hottest sectors in venture capital investment, with approximately $1bn of investment in 2014 and relatively low market penetration.

Taking care of pets, minding the house when the owner’s away, babysitting, spending time with seniorsTaskRabbit will find someone to take your grandmother to the doctor. Instacart will find someone to do your sick friend’s grocery shopping for her.

Remember how you used to ask your friends for restaurant recommendations? TripAdvisor, Yelp or one of the many similar regional versions will take care of that for you. Now it’s more likely that Amazon or GoodReads rather than your friends will recommend your next book.

Even the burgeoning field of the Internet of Things is carving out its place. There are machines that will entertain your dog for you while you’re at work, even dispensing treats every now and then. Huggable the Bear will not only let your kid hug him, he (sorry, it!) will also “nurture” through reassuring phrases and playful banter. And it will report back to you through the cameras in his eyes and the microphones in its ears. According to its website, it is designed to be “an essential member of a triadic interaction” (I have no idea what that means). Paro is a cuddly seal robot that cheers up the elderly in nursing homes.

by Stephen Crowley for The New York Times

by Stephen Crowley for The New York Times

Taking it to an extreme, in Japan actors are often hired by busy grownup children to go and visit their ageing parents in the old people’s home.

I’m not saying that any of this is bad. We do need to expand the service sector to pick up some of the jobs that are being automated away. And businesses that make life easier improve productivity and free up time to invest in other activities, which could also generate new services. And the economic cycle churns on. McKinsey’s 2015 report “Connecting Talent with Opportunity” estimates that by 2026, online platforms will boost global GDP by $2.7 trillion, even if they touch only a fraction of the global workforce, although it’s not clear if that estimate takes into account the upcoming contraction in more traditional sectors.

But it’s interesting to ask ourselves: how far will this go? Will my friends start charging me for the counselling sessions that used to only cost a couple of glasses of wine? Should I set some tariffs for when my neighbour wants to borrow my serving plate? How many cents should I debit from my kids’ allowance for each push of the swings? These are obviously hypothetical examples that make no emotional sense whatsoever. And the concern itself is exaggerated. The services provided fill human needs. Not everyone is blessed with a large family willing to help out or even a strong network of friends to count on. With an increasing number of people moving around for work or study, social support structures shrink. Business fulfilling those roles help with quality of life.

It’s not even that “new”. Kids earn money by mowing neighbours’ lawns or babysitting. And the favours that my friends and I do for each other may not be quantifiable, but they have always been part of the theoretical “invisible” economy. You have given me your friendship and/or love which is valuable to me, so of course I will pick up some groceries for you. There’s emotion attached, obviously: if I love you, making you happy makes me happy. But often favours are done on an investment (I’d like to be your friend so I’ll do this for you now) or payback (I’m grateful for what I’ve been given so I’d like to give back to society) plan, however subliminal.

Yet it is a shift, one that is increasingly moving affections and emotions from the invisible to the quantifiable. And also one that makes life easier, helps others be more efficient and provides a new economic outlet. The affection economy can help to build relationships and foster positive emotions, by reducing the associated costs. It makes it easier to give a pet a home even if you can’t always be the one to take care of it. It helps those that have just relocated to put up a bookshelf without incurring a favour debt from someone they barely know. Inviting friends over for dinner is no longer the big production it once was.

And the economic shift is huge. The new markets that the cycle needs to absorb capital, labour and consumption are laden with feel-good emotions and life-affirming services. However, it’s important that we realise what’s going on, and that we are aware of our own personal lines-that-we-shall-not-cross. I applaud the services that fill unmet demands in this free market economy. Yet if I like you, I’ll give you a hug for free.

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