… “sit down in front of your television set when your station goes on the air…and keep your eyes glued to that set until the station signs off. I can assure you that you will observe a vast wasteland.” That’s Newton Minnow, former Chairman of the Federal Communications Commission, in a talk he gave before the National Association of Broadcasters in 1961. Critics still rail against TV as a vast wasteland. TV-watchers are coach potatoes. (Google “television” and “vast wasteland” and you’ll see what I mean.)
Hah! What the sneering critics don’t realize is that viewers are actually learning the basics of economics, at least when it comes to watching 9 years of Seinfeld (and the reruns). A trio of academics have put Seinfeld clips up to illuminate basic economic concepts. Maybe the equation is this: Couch potato + Seinfeld = economics + knowledge (or is it supply + demand)..
When it comes to personal finance one of the most important economic ideas is [opportunity cost]( The Chinese restaurant.). The clip illuminates the concept.
Here is the basic definition: Whenever you make a decision to do something–like dramatically accelerate mortgage payments or go to college–you foreclose using money and time for other purposes. You could use the money to pad the savings account rather than pay down the mortgage fast or earn a paycheck instead of attending college. Economists call the value of the goods and services you sacrificed in making a choice an opportunity cost. It’s a measure (a very imprecise one) of what you’ve given up. It helps us better understand the return we expect from our choices.
Now, watch Seinfeld bring the concept alive. In the Chinese restaurant-opportunity cost clip,Jerry lies to his uncle and says he can’t go to dinner with him. “Did I do a bad thing by lying to my uncle and saying I couldn’t go to dinner? “
Class, what was the opportunit cost of that lie?
A related concern is what economists call “opportunity cost.” Whenever you make a decision to do something–like dramatically accelerate mortgage payments–you foreclose using the money for other purposes. Economists call the value of the goods and services you sacrificed in making a choice an opportunity cost. It’s a measure (a very imprecise one) of what you’ve given up. It helps us better understand the return we expect from our choices. The late Robert Eisner, an economist at Northwestern University, somewhat tongue-in-cheek illustrated opportunity cost this way. The cost of buying and reading his book–The Misunderstood Economy–was not only the dollars spent on it, but also the value of the time spent reading it and the alternative use of that time. In other words, his book should only be read if you believe your return, both in enlightenment and enjoyment exceeds its opportunity cost, that is, money spent on the book and the time required to read it.
The Chinese restaurant. Linda S. Ghent is a Professor and Chair in the Department of Economics at Eastern Illinois University. She has been teaching economics for over 15 years and has been using popular culture in her classes more and more over time. In 2007, she developed a course called “Pop Culture Economics” that is taught as a Senior Seminar for non-economics majors. Many of the Seinfeld clips here are used in this course.
The economics of Seinfeld. Linda can be contacted at: lsghent@eiu.edu
Alan Grant
Alan Grant is an Associate Professor of Economics at Baker University. He has been watching television for almost forty-three years, and considers himself an expert on the topic. He enjoys long walks on the beach and teaching economics to college students. Many of his courses incorporate clips from Seinfeld, and also utilize other popular movies and television shows. One of his darkest moments was when he discovered that his wife doesn’t share his love for Seinfeld.
Alan can be contacted at: alan.grant@bakeru.edu
George Lesica
George Lesica is Assistant to the Dean of the College of Sciences at Eastern Illinois University. He has also taught undergraduate economics courses. He never really liked Seinfeld, but he does like economics and databases disguised as web sites. He has always wanted to participate in a massive copyright infringement and this is probably as close as he’ll ever get.
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