This commercial is a great opening piece to talk about the differences between equity and efficiency. While both young girls are better off that before (efficiency improvements), they are not relatively better off because one is getting an actual pony (equity issues). One of the hard portions of this concept is to think about this issue as a true tradeoffs that efficiency gains often come at the cost of decreased equity. This increase in inequality between the two girls may be a nice, short way of demonstrating that tradeoff.
Time inconsistency is one of those economic topics that is quite easy to have a basic understanding of but quite difficult to understand full models that employ it. This video can be used as a lead in during a behavioral economics course or a microeconomics course that touches on behavioral economics.
Thanks to James Tierney for the clip and description
One of the tough parts of buying Christmas gifts is that we don’t have perfect information regarding what the other person really wants. This issue often leads to us buying gifts for people based on what we think they’d like. This commercial from eBay points out that you can find a variety of gifts that someone would put on their list are low prices if you shop on eBay.
An example of the endowment effect. The customer on the left is willing to give up a dollar but not his Double Stacker. This seems irrational as the Double Stacker only has a market value of one dollar. The endowment effect states that the possessor of a good over-values the good. This is illustrated in the commercial as the customer on the left refuses to give up his Double Stacker. For the classic coffee mug example, see Kahneman, Knetsch, and Thaler (1990).
Clip and summary provided by YouTube User chilibandito.
Nissan simulates a world where everything runs on gasoline and asks potential buyers to consider a world where everything didn’t.
Centel Cellular wanted to take customers in a bold new direction for communication. This ad is a lighthearted look at how far we’ve come since 1991. The amount of economic growth has been beyond most people’s imagination.
In this quick Axe commercial, we can observe both positive and negative externalities associated with cologne use. The original wearer didn’t realize the (good and bad) impact the second elevator guest would receive from his use of Axe Body Spray, and thus didn’t take that into account when he was applying it.
“Our words can have a huge impact. Isn’t it time we told her she’s pretty brilliant, too? Encourage her love of science and technology and inspire her to change the world.”– Reshma Saujani, Founder of Girls Who Code
This commercial is a great starting part for the unseen discrimination that we impose on children at an early age.
I use this clip in a couple of different ways. I usually use it to teach normal goods and the idea that when incomes increase, “we want more.” I also use it a bit in my upper-level course when I get to the idea of indifference curves being mapped in a good-good space.