Trading a Paperclip for a House

 

Kyle MacDonald started with a red paperclip and ended up with a house. Trade and barter requires a double coincidence of wants, but Kyle was able to find people willing to give up something he valued more than his holdings. Mutually beneficial exchange makes both parties better off. This is a great clip to start the process of discussing why trading can grow an economy and why centrally planned economies are harder to coordinate.

Thanks to @AlcovyEconomics on Twitter for the clip!

T-Mobile — Ariana or Maps?

The driver of the car faces scarcity (limited data). The driver is forced into a decision between streaming music and using maps with her data. At the end of the commercial she chooses maps, leaving Arianna as her opportunity cost.

Thanks to Brian Devitt for the clip and description!

Could Have Had a V8

One of the classic commercials of the 1970s came from V8 (they have updated ones as well!). Unknowing consumers of snacks and sodas realize mid bite/drink that they could have had a V8 instead of their other choice. The concept of opportunity costs is that by consuming an item, you give up the opportunity to consumer something else. A rational individual will pick the item with the highest level of utility, but sometimes we aren’t fully aware of all the alternatives. The individuals in this commercial only realize when it’s too late.

The clip was described in Joel Waldfogel’s book, Scroogenomics: Why you shouldn’t buy presents for the holidays. Dr. Waldfogel also appears in an Adam Ruin’s Everything episode on the inefficiencies of gift giving.

Brooklyn 99 — Cluttered Work Area

 

This clip deals with diminishing marginal productivity of labor. An influx of uniformed officers from another floor of the precinct has led the precinct to become a cramped pigsty, and there is not enough space for each of the workers (“too many cooks in the kitchen”). The detectives now have to spend time organizing the precinct instead of investigating their cases; due to overcrowding, the productivity of the precinct has declined from an additional unit of labor, rather than increased.

Submission and description submitted by Melissa Paton

Young Sheldon — Communism & Bread

 

Sheldon finds that his sandwich tastes a bit different than normal. After a quick trip to the grocery store, he realizes that his local bread company has been bought out by a larger corporation that is looking to make break quickly and cheaply. He doesn’t like this switch and petitions super market customers about getting the local bread company to listen to their customers.

Without realizing it, Sheldon suggests that communism may be a better system because then one central authority can decide the recipe for bread. He assumes bread lines in Russia are a result of great tasting bread, and not the country’s inability to allocate resources. The show is set in the 1980s, which is the midst of a Cold War. Sheldon’s dad gets a spot on the news and Sheldon almost shares how the social security system is similar, but his dad doesn’t give him the chance.

Goldfish Pinball Commercial

The dark orange goldfish excitedly explains to his light orange friend that he has invented a new board game. He goes over the extremely complex rules to the game and this conversation ensues:

Dark orange fish: Let’s play!
Light orange fish: What do I have to lose?
Dark orange fish: Just the next three days!

This would be a great intro clip to show for opportunity cost / implicit costs. Learning all of the very intricate rules and playing this game will be extremely costly for the light orange fish in terms of the time he has to give up to participate. What else could he do with his time instead?

Thanks to Erin Yetter (Twitter) for the clip and description!

Lil’ Dicky — Professional Rapper

In this video, Lil’ Dicky interviews with Snoop Dogg for a position as a professional rapper. There’s one section early in the song that looks at the concept of opportunity costs. Lil’ Dicky (David Burd) was a college graduate from University of Richmond, but decided to become a rapper instead. During the “interview” with Snoop, he mentions that he actually had a lot to lose by becoming a rapper compared to other rappers who became rappers because they had nothing else to do. Another interesting application of the video could be in teaching unemployment and focusing on skills necessary for particular jobs. Lil Dicky needs to apply for a job with Snoop because other people haven’t appreciated his rap skills.

LYRICS (emphasis added)
So real shit you ain’t never had to struggle for much
I wouldn’t say it like that, we just had a different kind of trap
Elaborate
Well I ain’t never had a tool, but I had to be the man at school
Like I was doing shit I had to do so when I finished undergrad
I’m cool and I can get whatever job I wanted
But the job you wanted wasn’t all that bumping
Yeah, and I saw it quick all the flaws that be coming when you grow up like that
Know you been racing them rats, you ain’t been making them raps
Boo hoo what a hardship
How you paid to get the rap shit started?
Man, my Bar Mitzvah money
But don’t diss me buddy, I wasn’t one of them younguns up on the block who had nothing to lose
I must’ve wanted this a lot, I had something to choose

Check out the snippet of the entire song on this tweet:

The Good Place — Externalities & Unintended Consequences

 

Things seem off in The Good Place, but it turns out that the as the world becomes more complicated, seemingly identical actions (like giving flowers) can have unintended consequences that most people don’t realize. Our private actions can have social costs that we’re unaware of and would probably try to avoid if we were fully informed of their costs.

Thanks to Kalina Staub (Twitter) for the clip!

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