Teaching Economics with Media
This KAYAK advertisement showcases a person who insists on manually handling tasks, including booking travel, despite acknowledging it’s not the most efficient method. He thinks he can do everything the best (absolute advantage), but fails to recognize that people can be better off when they focus on their comparative advantage instead.
Thanks to John Kruggel for posting this clip on Twitter/X!
In an earlier episode, we learn that President Obama enjoys doing his own taxes, but Adam points out he would be better off with an accountant. Specialization and trade allow people to see improved efficiency but doing everything yourself can result in a lot of wasted resources. At the end of the series, we see President Obama is still working on his taxes and has made a lot of mistakes already.
Adam is contemplating whether it makes sense for him to star in a new series about the role of the government while it’s produced by former US President, Barack Obama. When Adam gets up, he notices the President doing his own taxes and is surprised he doesn’t just hire an accountant to do it. While Obama claims he enjoys it, he doesn’t appear to be very good at it. Typically, people can benefit from trading services and specializing in things they are good at relative to other people. The opportunity cost of the President doing his own taxes is likely really high compared to an accountant.
The guitar player is too busy to do his taxes, but TurboTax is happy to step in. The opportunity cost of stopping to complete the task is high for the guitar player but low for the accountant. The two can benefit from trade by having the musician continue to produce music and the accountant complete the taxes.
Thanks to Luke Starkey for the clip and summary!
In this American Express commercial, Tina Frey highlights the economic concept of gains from trade. A man in front of her gets the last goat cheese garden salad, but she really wants that salad. She has to figure out what he might possible want from her. She offers to buy his movie and include her snack box if he’s willing to exchange the salad that he had just received. Both parties benefit from their ability to trade with each other.
Thanks to John Raby for the submission!
Gaston is the best man in town, for everything! If you don’t believe that, you can just ask him. In this scene from Beauty and the Beast, LeFou starts a song to help cheer up Gaston after Belle’s rejection. Gaston has an absolute advantage in a wide variety of things)—fighting, spitting, eating a large number of eggs, and even interior decorating. Gaston, however, is a relatively poor chess player. While Gaston is capable of doing everything for himself, it doesn’t mean he should. Gaston can still benefit from trade if he focuses on his comparative advantage.
Thanks to Matt Rousu for the clip!
Each year, children collect their trick-or-treat goodies and then go about trading their candy with each other. This scene from a 2019 Walmart commercial illustrates the concepts of gains from trade, bartering, and mutually beneficial transactions. Each child only trades an amount they are willing to give up and aren’t forced to trade with each other. After the exchange, both are better off than they were before the meeting.
Thanks to Brian Lynch for the recommendation!
Tim doesn’t like green beans, but his baby brother sure loves them. Whenever the parents leave the kitchen, the boys realize there’s an opportunity for trade. The Boss Baby knows he needs a favor in exchange for eating his brother’s beans because he isn’t just giving away his services for free.
Thanks to Catherine Madrid for the reference!
In Pretty Woman, Edward is really interested Vivian and makes a business proposition for her to spend a week with him. He offers to hire her as his companion. During the negotiation process, they attempt to settle on a price. They agree on a price of $3000, but at the end of the clip she admits to Edward that she would have stayed for $2000 (implying she has now earned $1000 of producer surplus), but Edward reveals he would have actually paid her $4000 (implying his consumer surplus is also $1000).
James Tierney shared this great clip on his website a few years ago and it covers the idea of using Project Runway to discuss specialization and gains from trade. One of the contestants describes the process of designing the outfit line and discusses each member’s role in the creation of the outcome.