Category: Labor Economics

WSJ: Drive-Thru AI Chatbot vs. Fast-Food Worker

In this video from The Wall Street Journal, senior personal tech columnist Joanna Stern examines the performance of an AI chatbot versus a fast-food worker. Are these two inputs clearly substitutes or are their complementarities that could be exploited by companies? If the goal were only to produce the same amount of food as before with lower costs, we might expect to see a reduction in fast-food workers. However, this technological improvement may end up increasing output and subsequently requiring more tech and more labor.

Thanks to John Raby of Thorton Academy for the clip suggestion!

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What We Do in the Shadows — Night Market

What We Do In the Shadows is a mockumentary that follows Nadja, three other vampires, and their family who live in present-day Staten Island. In this episode, the wraiths employed at Nadja’s vampire nightclub begin to agitate for better working conditions. In pursuit of a rare substance that will squash the wraith labor movement, Nadja goes to the night market—an open-air market organized and frequented by witches, demons, and other mythical creatures. Because the market runs on the barter system, Nadja has to make many trades and spend a lot of time haggling with others to get what she seeks.

Thank you to Megan Kirts for the scene suggestion and clip summary!

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The G Word with Adam Conover – A Job For Everyone

People have a wide array of preferences for working conditions, which creates a heterogeneous workforce. Some workers may need to be paid extra to compensate for unpleasant conditions (known as a compensating differential) while others may be willing to be paid less to work a job that they enjoy. Workers are often assumed to be utility maximizers, not income maximizers, in the decision of which jobs to work and how many hours to work. Adam highlights that notion at the end of this brief scene with a USDA veterinarian who specializes in the disease.

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Boston — Rock & Roll Band (1976)

This song is older but is still useful as a discussion about investing in human capital. Human capital is much more than just getting a degree. Human capital also involves general knowledge (what do you know?), skills (what can you do?), experience (where have you been?), and personal characteristics (are you reliable? do you work well with others?). If you have a small enough class, ask students to identify investment in these characteristics based on the story in the song. Not only does the song tell a good story, but it also shows that there’s more than one way to get an education.

Thanks to Bryan Sloss for the submission and summary!

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Monsters at Work: No More Scaring

Tylor was one of the best young monsters to graduate from Monsters University and always dreamed of becoming a Scarer. Once he lands a job at Monsters, Inc. he discovers that scaring is out and laughter is in. This brief scene from the movie’s trailer is a good opportunity to discuss skill-biased technological change. While scaring was previously seen as a good-paying job with a bright future, the world has changed suddenly and those skills are no longer needed.

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A Series of Unfortunate Events – Paid in Coupons

The Baudelaire orphans have been sent to the Lucky Smells Lumbermill and are being forced to work on the production floor. After a grueling morning of “log day,” the workers are given an entire five minutes for lunch, but the Baudelaire’s come to find that lunch consists of gum. Frustrated, they wonder if they can use their wages to buy something else, but it turns out that the Lucky Smells Lumbermill pays their workers in coupons rather than actual currency. The coupons don’t have any value since the workers don’t have any money to go out and buy things anyway. The workers also don’t have power to leave or demand better conditions because Lucky Smells is the only place to work in town.

When a single firm controls the labor market in a region, they are said to have monopsony power in the market. Monopsonies can pay workers below competitive wages because workers are unable to find alternative employment opportunities. In this case, the Lucky Smells Lumbermill pays them almost nothing since the coupons can’t really be redeemed anywhere.

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History of the World — Unemployment Insurance

For someone to be considered unemployed, they must actively search for employment and not be currently employed. In this scene from Mel Brooks’ History of the World, the unemployment officer asks two key questions of citizens looking for their unemployment payment:

  1. Have you worked (killed) last week?
  2. Did you try to work (kill) last week?

She also warns that their unemployment is about to run out and that they need to make sure that they find work, which is similar to how many unemployment systems are setup.

Thanks to Alex Marsella for the clip submission!

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The Office — Automated Assitant

A new phone system can replace many of Pam’s tasks. She normally spends her day connecting incoming calls to different sales people and departments, but this new phone system will make it so that anyone calling Dunder Mifflin can dial directly to the department they want. She thinks she still has value at putting our candy, but then realizes a vending machine can do that as well.

Jim swoops in to save Pam and play the role of Michael Scott, the branch manager. Jim is in love with Pam and doesn’t want to see her fired, so he acts like Michael and tells the salesman that they aren’t interested. He’s almost busted, but luckily gets away with it.

Thanks to Richard McGrath for the clip submission!

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The Simpsons — MoneyBART

The local little league team has a new coach, and she plans on using statistical analysis to improve their chances of winning. She tracks player tendencies and digs into the work of Bill James to bring a Moneyball approach to the Isotots. Bart laments that she has taken the fun out of the game, which begs the question of the team’s objective function. Are sports teams win-maximizers or should some teams focus on having fun?

At the end of the segment, Bart has a choice to make. Should he take the statistical approach to win the game or should he swing and try to preserve his hot streak. The hot hand fallacy is the belief that previous observations are correlated with upcoming observations. This fallacy leads us to believe batters “get hot” even though the probability of the next hit is independent of the previous ones.

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Brooklyn 99 — Moneyball

Captain Holt and Lieutenant Jeffords want to streamline the department and improve efficiency across the precinct. Jeffords is concerned that Capt. Holt is getting to greedy and can’t make many more improvements, but Capt. Holt believes he’s taking a Moneyball approach to the department. The film is his favorite and he finds the statistical analysis beautiful.

While he may be improving efficiency through his new statistical approach, the two should be concerned about diminishing returns. Productivity can increase with revised strategies, but additional productivity may require a significant increase in cost. In order to determine the optimal outcome, the two should focus on marginal analysis.

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