Tag: opportunity cost

National Lampoon’s Christmas Vacation – Holding Out for Management

In this scene from Christmas Vacation, Clark is surprised to learn that Cousin Eddie hasn’t bought any Christmas presents. When he asks about Eddie’s job situation, Ellen shares that he heard Eddie has been out of work for a while. Not because jobs aren’t available, but because he’s waiting for a management position to open up.

This clip offers a great example of frictional unemployment, the kind of unemployment that arises when individuals are between jobs or selectively searching for a new position that better matches their preferences or skills. Eddie’s decision to wait for a specific type of job, despite other jobs being available, shows how personal expectations and job search behavior affect labor market outcomes.

Thanks to Brian O’Roark for the recommendation!

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The Smiths – Heaven Knows I’m Miserable Now

This track by The Smiths offers a rich backdrop for exploring the opportunity costs associated with how people allocate their labor. The lyrics reflect the emotional cost of employment: the narrator moves from idleness to employment, only to express regret and dissatisfaction:

I was looking for a job and then I found a job
And heaven knows I’m miserable now

The chorus questions why he spends his valuable time (a scarce resource) on work that feels meaningless and unappreciated:

In my life, oh, why do I give valuable time
To people who don’t care
If I live or I die?

This song is a great opening to discuss opportunity cost in labor decisions: just because someone can allocate their time to paid work doesn’t mean it’s their most valued use of time. It’s important to remember that most labor models don’t focus on maximizing income, but rather utility. There is a tradeoff between the income we earn from paid labor and the loss of leisure time. The cost of that tradeoff is much higher when the work we do isn’t satisfying.

Thanks to Allison Murphy from Oregon State for the clip submission and topic recommendation

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KAYAK: Don’t do it yourself (Vacuum)

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!

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Ferris Bueller’s Day Off – Skipping Class

With summer break on the horizon, Ferris wants to skip school to enjoy a beautiful spring day near the end of the semester. In the opening scene, Ferris rhetorically asks how he could “possibly be expected to handle school on a day like this.” Nevertheless, there will be costs associated with his truancy. First, he admits:

This is my ninth sick day this semester. It’s getting pretty tough coming up with new illnesses. If I go for ten, I’m probably gonna have to barf up a lung, so I’d better make this one count.

Ferris Bueller’s Day Off, 1986

At this point in the school year, Ferris’ pattern of playing hooky has aroused suspicions that could land him in trouble. The opportunity cost of his day off from school is an ordinary day of classes free of the fear of getting caught and punished with repeating his senior year.

While Ferris manages a mostly relaxed day, by the end of the movie he undergoes a nerve-wracking sprint back to his house to beat his parents home and a nearly catastrophic confrontation with his principal. In spite of the unwanted stress associated with sneaking around, Ferris’ conclusion to his cost-benefit analysis for skipping school remains the same at the end of the movie: “Life moves pretty fast. If you don’t stop to look around, you could miss it.”

Thanks to Amanda Mandzik for the clip submission.

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Surfer, Dude – What’s So Special About Surfing?

In Surfer, Dude, a soul-searching surfer (played by Matthew McConaughey) experiences an existential crisis when no waves come for over a month. When asked “what’s so special about surfing,” he responds with:

What’s so special about the wind? Surfing is to… be with that mystery. To ride
that mystery for as long as you can. And then when it’s over that’s cool because
you know what? You were there, in line and on time.

Surfer, Dude (2008)

Ocean waves can be forecasted, tracked, and even hunted by the most dedicated surfers, but ultimately, they are an unpredictable natural resource that is scarce. McConaughey’s character recognizes the value of this scarce resource beyond monetary terms.

Thank you to Amanda Mandzik for the clip submission.

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Point Break — The 50-Year Storm

An FBI agent goes undercover to infiltrate the surfing community. The agent learns about a “50-Year Storm” that is predicted to generate the largest wave imaginable. The surfers want to ride it and are willing to risk their lives to do it. The surfers are acutely aware of our limited time on earth and want to maximize their happiness while they can. Resources, like time and money, are scarce and individuals face tradeoffs when determining what objectives to pursue. In the case of riding the biggest wave known to mankind, that tradeoff may include their life.

Thanks to Mandy Mandzik for the clip submission.

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Surf’s Up – Cody’s Second Board and Tube Talk

Cody is a surfing penguin who is preparing for a big competition. He’s already broken his first board and his mentor Big Z is trying to break his second one. Cody doesn’t have a lot of time left for the big competition, so he’s focused entirely on getting this board finished. Time is one of our scarce resources, and requires us to make decisions about how to properly allocate them to get the most out of what we’re doing. When Big Z goes on a memory trip about riding a tube, Cody can only focus on how many points that would earn him in the competition. His focus on limited time and maximizing points is frustrating Big Z.

Thanks to Amanda Mandzik for the scene recommendation.

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Rod Wave – Fight The Feeling

This song is about a girl in emotional pain following a breakup. Rod Wave watches her dancing and pretending she’s fine, but he can see she’s hurt behind her makeup, her look, and her attitude. He recognizes someone hiding their feelings because he’s one of them: he had a story of pain as well, and hiding feelings is something he knows very well.

The video can be a good segue into a conversation about sunk costs. The time we spend thinking about past romances doesn’t allow us to move on to better things. The past is sunk and can’t be recovered, so it shouldn’t be factored into how we make decisions. Unfortunately, that’s easier said than done.

Thanks to Brad Scott for the recommendation!

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The Good Place – The Trolley Problem (Part 2)

The veil of ignorance is a hypothetical situation created by philosopher John Rawls to help illustrate how self-interest and ego impacted decision-makers at the highest level. Rawls wanted to find a way to create a more just society by exposing individual biases that may create injustice. The veil of ignorance is a way to expose students to their own biases and illustrate how their personal experiences and self-interest may shape the way they view the world and others around them. Under the veil of ignorance decisions about justice and the allocation of resources are made by a person who does not know what position they may have in society.

The Trolley Problem is used to demonstrate the role the veil of ignorance plays in decision-making. Students are asked if they would save five people from a speeding car if they had to push one person in front of the car. They are then asked to remove the veil of ignorance and see how they would react if someone they loved were in the group of five people who would be hit, or if someone they loved would be pushed in front of the car to save the five other people. This unlikely scenario is meant to reinforce how self-interest and personal experience can impact the decision-making process.

Thanks to Jamie Wagner for the clip recommendation and summary!

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The Good Place – Trolley Problem

Chidi and Eleanor tackle a famous ethical dilemma, the trolley problem. The thought experiment is popular in philosophy and ethics courses, but the same experiment can be used in an economics context when discussing opportunity costs and costs. In a literal sense, whichever way the trolley goes will have a cost associated with it based on the people who will die. Depending on the structure of your course, you may also be able to look at the trolley problem from a game theory perspective.

Thanks to Jamie Wagner for the clip recommendation

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