Teaching Economics with Media
The digital revolution can replace a lot of items that traditional paper was used for, liking color pages, sticky notes, books, or puzzles, but it can’t replace toilet paper. Substitute goods are at the discretion of the consumers with some items being “perfect substitutes” and others being some gradient of substitutes. Digital toilet paper isn’t a very good substitute for the real stuff.
Thanks to Dr. Michele Pickett for the clip!
In this commercial for the new caramel M&M’s, our grocery store employee is trying to buy back M&Ms from customers as they’re leaving the store. The employee offers $2, $3, and his watch to get the M&Ms back even though the customers could easily go through the line again and get a new bag. People tend to value items they possess at a higher rate than they actually paid for them and this action appears irrational since the transaction costs of buying another pack is already low.
Thanks to James Tierney for actually watching the commercials on Hulu:
The squad is invited over to the Captain’s house for a birthday party, and they all have the same idea when it comes to wine. While Jake wants to try to impress the captain with the finest bottle of wine, he’s a little out of the price range and settles for an $8 bottle of wine. Come to find out, the entire squad buys the same bottle of “wine drink” and Kevin isn’t too fond of their selection.
While it isn’t clear that there is much of a difference between cheap and expensive wine, “wine drink” probably doesn’t send the best signal of quality.
Vox goes through the popular wine test tasting to show that many drinkers are able to distinguishes between cheap and expensive wines, but that doesn’t mean that people actually liked the expensive wines. Often, people rated the expensive and cheap wines similarly. Even when it comes to experts, they often aren’t able to identify the same wine presented in a mix of other wines.
Frank convinces an art gallery director to come to the bar in order to try and convince her to buy their bad art. After looking around and watching a homemade video, she describes how art is worth what the buyer is willing to pay and that everyone has different preferences and values items differently. She also discusses the double coincidence of wants and how she no longer wants to buy back Frank’s painting.
Thank you to Ian Pearson for the clip reference!
Frank poses as an art collector to try and convince the art gallery owner that a really bad piece is actually really valuable. This clip is a great segue into subjective value and preferences of individuals.
This prankster is going around Chicago asking people to sell their dog for up to $10,000. Most people aren’t willing to part with their beloved pooch, but some people consider his offer. This clip is a good introduction to the idea of willingness to sell and people’s subject valuation of their possessions.
Kevin needs to get a pair of sneakers for his son, but only Nick has any around. Even though he hates Nick, he feels like he needs to pay big money in order to secure a pair for his son. By choosing to limit the number of shoes available, a shortage exists for the sneakers. Only toward the end do we learn that a black market dealer may have access to another pair of shoes.
Thanks to Ryan Welch for the clip!
Louis, played by Dan Aykroyd in Trading Places, is trying to earn some cash by selling is premium Swiss sports watch, but the Philadelphia owner isn’t seeing its value. Louis reluctantly agrees to sell for well below the original price.
Ron isn’t sure how a pair of sunglasses can cost more than a color television. On a recent trip to the Sunglass Hut to pick up a pair of new sunglasses, he encounters a salesperson who tries to convince him that the elimination of UV rays makes the glasses worth their price tag. Ron, not so politely, disagrees.