Tag: income effect

The Pajama Game — 7 1/2 Cents

Asking for a raise is tough, but even a modest raise in wages can have a huge impact on worker salaries. In this scene from The Pajama Game, we see how a 7.5 cent raise can impact a worker’s wage. The cast goes through the calculations of what they could earn with additional income, including an automatic washing machine, a year supply of gasoline, and a vacuum cleaner.

Assessment idea: This is a neat opportunity to calculate real wages and see what 7.5 cents would be worth today versus 1953. The BLS has a calculator so you don’t have to wait!

Looking for more: Do you want to see more economics in Broadway shows? Check out BroadwayEconomics.com

Thanks to Mark Sammons from the University of Arizona for sending this clip in!

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Straight Talk — Income Effect

Cut your cell phone expenses in half and all of a sudden you feel a bit richer, but does that mean you think you should be driving a significantly more expensive car? When incomes increase, we tend to purchase more items, but luxury goods require a pretty substantial increase.

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Superstore — Discounting the Lottery

Mateo and Cheyenne discuss what they would do if they won the lottery. The two list a variety of different items they would spend their money on after receiving their income boost. Unfortunately, Sandra tells them about the difference between an annuity and a lump sum payment.

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Superstore — Winning the Lottery

What would you do if you won the lottery? This clip fits nicely with two different sections of an economics course. The first is how people respond to income increases in terms of purchasing normal goods or luxury goods. For labor economics, this discussion is a good segue to discussion how increases in income decrease the time people devote to work assuming leisure is a normal good.

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Always Sunny — Circular Flow

Mac and Dennis come up with a plan to create Paddy’s Dollars in order to stimulate their bar’s revenues, but they have the system a bit backward. They decide to give away a bunch of vouchers that could be used to buy beer to local homeless people. Unfortunately, there’s no incentive for those individuals to come back and buy more Paddy’s Dollars later. This would also be a neat example when teaching circular flow diagrams.

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The Barenaked Ladies — If I Had a Million Dollars

If you had a million dollars, what would you buy? A bunch of normal goods most likely or you may decrease the number of inferior goods. Ask you students to list off the things they would do with a million dollars and then have them identify whether the things they would change are normal or inferior goods.

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Grey’s Anatomy — Jackson’s Inheritance

Jackson’s grandfather dies and leaves him a very large inheritance, $250 million to be exact. Jackson feels like this is a burden for personal reasons, but Maggie chimes in that it is a burden because it’s hard to know how to spend that much money. She goes through all the things he could do with it and how having that many options can be tiring. This is a classic example of the overchoice problem where consumers can become overwhelmed with options. There is small note in Maggie’s speech where she says that Jackson could buy a vineyard and never work again, which would be reflective of a pure income effect.

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Futurama — Fishful of Dollars

We can see economic concepts throughout the episode when Fish learns that he is rich because of a small savings account he opened 1000 years ago. Thanks to interest rates, his money has grown to billions. When Fish and his friends try to order a pizza, he finds out that anchovies no longer exist because of overfishing when humans arrived on the planet. Zoidberg notes that his people killed the anchovies because they always believed one more wouldn’t have an impact.

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AT&T: We Want More

I use this clip in a couple of different ways. One of the weirder demand shifters is the idea that tastes and preferences can shift the demand curve. This commercial from AT&T is a great example of that concept: “you really like it, you want more.” The preference shifter is that you’ll consume more (demand increases) when you start liking things and then you’ll consume less (demand decreases) when you don’t like things anymore. 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.

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