# Economic Model on Friendship

Building an Economic Model on two friends, using the factors that determine their Level of friendship and also breaking point

1.  Theory: If two people are in friendship, their level of friendship is directly proportional to the No of Years, Total time spent together in day, similar interests, Loyalty, Hanging Out, And inversely proportional to Level of Hatred to towards one another, and no of Fights.

2. Factors determining the level of friendship (F):

– No of Years (Y)

– Total time spent together in a Day (T)

– Similar Interests (I)

– Loyalty (L)

– Hanging Out (H)

– No of Fights (Fi)

– Hatred towards each other (Ht)

3. Assumptions:

Let’s assume that it is a two-friends model, where only two people are being considered for the model. Which means, two-friends have no other friends and it is assumed that time spent with their girlfriends is constant (k). They are in a market of Perfect Competition

Thus,

The variables for the factors, Y, T, I, L, and H are all direct proportions, while, Fi and Ht are inverse relation with the variable F

• No of Years (Y) in a friendship, will help in understanding each other better, thus it is direct relation with Friendship (F)
• Total time spent together in a day (T) is again a plus point, thus it is a direct proportion
• Similar interests (I), loyalty (L), and Hanging Outs (H) are all direct proportions to the Friendship (F)
• However, the factors like Fights (Fi) and Hatred (Ht) will reduce affection towards one another, thus it leads to inverse proportion. The lesser the fights and Hatred, the better is the friendship.

4. Calculation:

Level of Friendship (F) = f( Y, T, I, L, H, Fi, Ht)

F∝ Y, T, I, L, H

F ∝ 1/Fi, 1/Ht

Since, Y, T, I, L, H are all directly proportionate to the (F), it is upward sloping curve, and Fi and Ht are inversely proportional to the Level of Friendship (F), the curve is downward sloping.

5. Result:

• If the relation between the 2 friends at point X, if their friendship is at equilibrium, then they are said to be Friends.
• If the two friends are placed above the point X, and below the Best Friend Point, then they are said to be Good Friends.
• If the level of friendship between two friends is above Best Friend Point, then they are Best Friends.
• If their friendship is below point X and above Breaking Point, they are said to be in Unsafe Zone.
• If the two friends are placed below the Breaking Point, which means, the no of fights and hatred is more than the all the positive variables, thus they are bound to be Not Friends.

6. Shifts in Curve

• With increase in No of Years (Y), the curve shifts outwards, with decrease in common interests (I) , the curve shifts inward, leading to decline in friendship.
• With increase fights (F) the curve shifts inward, and thus, there will be a new equilibrium point, which will be more in favour of Breaking Point.

Note: Please don’t take the model seriously. Just for fun. The following assignment was given to us by our Economics professor for our internal assessment. I thought, it  would be fun posting it on my blog. Nothing in this article can be actually quantified as all the variables are more of qualitative aspect. Please leave your comments below.