Economic Movie Quotes

I was looking at some quotes from Paul Newman characters to reflect on his life and work, when I came across these gems from Butch Cassidy and the Sundance Kid, I think I will work them into an Econ class one day.

Butch Cassidy: What happened to the old bank? It was beautiful.
Guard: People kept robbing it.
Butch Cassidy: Small price to pay for beauty.
-------
Butch Cassidy: If he'd just pay me what he's spending to make me stop robbing him, I'd stop robbing him.
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Butch Cassidy: You know, it could be worse. You get a lot more for your money in Bolivia, I checked on it.
Sundance Kid: What could they have here that you could possibly want to buy?

...Questions to follow.

How should history remember FDR?

I've been wondering about this question on-and-off for a while now. I know most economists are unfriendly to him because of the widespread belief that his New Deal policies actually lengthened the Great Depression, but nonetheless he is consistently held in high regard in American Presidential rankings. 

Now, if the only criticisms against him were his economic policies, I would understand why he was held in high regard. Very few average citizens have any understanding of economics, and without any criticism it's easy to believe he was the man who brought us out of the Depression. But what about...

• Japanese internment camps during World War II? These were absolutely atrocious and it's embarrassing to me that anyone could sign them into law. 
• The switch in time that saved nine? This was a blatant attempt by FDR to take over the Judicial branch of the government.  It was disrespectful of the Constitution, as well, and I find it appalling. Combine this with his subsequent breaking of the two-term limit, and you have a man who made regular attempts at dictatorial power. 
• Yalta? This was one of the worst treaties ever negotiated, from an American perspective, and FDR's ailing health is often cited as the reason he made so many concessions to Josef Stalin. I don't want to speculate on how this would've changed the world, but I do think there are a lot of ways America and the world would've been better off.

Maybe, when Social Security collapses completely from bankruptcy, people will begin to view FDR differently. Personally, I just don't understand how he gets so much love from Americans.

Restaurant Inefficiencies

Bryan Caplan recently posted that because patrons are not charged for their water or the time they occupy their table, there is an inefficiency in the restaurant industry. In my opinion these inefficiencies are relatively small. If they were larger the highly competitive restaurant industry would already have worked them out.

There is one restaurant inefficiency which I am still trying to figure out. Prices convey information about goods; the prices in menus help guide diners' choices in meals. However, there is one price that never shows up on the menu: the price of beer. It would cost almost nothing extra to print prices by the brands of beer offered, and supply customers with extra information regarding their dining options, so why aren't beer prices listed.

Though beer prices and other alcoholic drinks are generally listed without prices, there is one category of drink where prices are always listed: wine prices. In fact, wine usually gets its own separate menu with its own prices listed. At some lower class establishments, I've even seen unpriced beer listed at the bottom of the wine list-- but you bet every wine had a price next to it. What makes wine different from Beer?

The only thing I can think is that restaurants would prefer to not list prices for any alcoholic beverage to disguise their extreme markup. Beers have national advertising campaigns to create product branding. People know Sam Adams will be more expensive than Budweiser because their commercials target different types of consumers. Wines, however, vary in quality by vineyard as well as year, and there are few national ad campaigns. Aside from price, the only wine quality question I can think to ask is, "does that one come in a box?". That is not to say that there are not vast differences in wine quality, the problem is simply how to convey this. The casual diner needs prices to inform him of wine quality, while beer companies ensure that diners are informed of this on their own.

Any other thoughts?

As a side note, I was once given the tip for impressing a date: when the sommelier comes, show him the wine list and ask him what he would recommend -- with your finger pointing to the cheapest wine on the list -- if the guy is worth anything he'll take the hint and you'll look like a stud. Conversely, you can call the waiter to your side of the table, point to the cheap wine and say we'll go with this one. When your date asks what you ordered, just say it's one of your favorites. The key to this, is making sure the wine list gets cleared before the wine is served. Hey, not everyone needs to know the price of things.

A Stand-up Quiz

When I teach Economics, my class will be fun. If my students don't learn Economics, they will fail my class. If they don't learn how to have fun, they will fail at life. I think I might give a quiz to my students based on the SECOND HALF of this stand up routine by Nick Thune. Showing my students the first half would probably be grounds for my dismissal from the teaching profession. (For those who are not fans of the dirty jokes, I would suggest skipping to the middle of the clip)

Stand Up Quiz (feel free to submit answers):

1. Thune makes fun of the expression "kill two birds with one stone" because in fact stones are abundant relative to birds. The expression actually applies to what scarce resource?

2. Thune's lack of internet is an example of what collective action problem? Explain.

3. What has happened to the real price of an Arby's Beef n Cheddar since the deal was first introduced?

4. What else could explain Arby's ability to continue offering the 5 for 5 deal? Provide two.

5. Why is it unlikely that Arby's has been "highballing" for 14 years?

The Limits of the Death Penalty part 2

In my last post, I said that if the death penalty is used to deter crime then it shouldn't be used to deter rape because then the state would have no additional penalty to discourage murdering rape victims. But what if the death penalty does not discourage crime? As suggested in this Freakonomics post, capital punishment is issued so rarely that criminals reacting to the probability of receiving the death penalty could not rationally be deterred by it.

That being said, does the death penalty serve a function aside from discouraging other would be criminals? Judging by the reactions of the presidential candidates to the Supreme Court decision, the death penalty functions not only as a deterrence for other crimes, but also as an expression of society's disgust for the most heinous of offenses. Is this function reasonable enough to continue administering capital punishment?

Though its impact on society at large is questionable, the death penalty does deter convicted criminals from committing further crimes.  Watching MSNBC's Lock Up has made me wonder if executing gang leaders serving life sentences for initiating the murders of other inmates would be an effective (or ethical) policy to deter violence within prisons.  At minimum, executing gang leaders would prevent them from promoting more violence, but it is also possible that gangs are a limited access order that minimizes violence, and upsetting the order that gangs establish would lead to chaos and greater violence.  

(Barry Weingast Gives a good description of Limited Access orders in this EconTalk)

The Limits of the Death Penalty

If the death penalty is the state's most extreme punishment, it should not be administered to rapists. My economics training teaches me this because murder is a marginal crime to rape, and if the maximum punishment is used to deter rapists, the state has no additional means to discourage the more heinous act of rapists murdering their victims to evade prosecution.

Last week, the Supreme Court agreed with this point as it declared the use of the death penalty unconstitutional as punishment cases that do not involve murder. The majority opinion declared, “We cannot sanction this result when the harm to the victim, though grave, cannot be quantified in the same way as death of the victim.” (Full Article Here).

Because I agree with the logic that rape should not be a capital offense, I was surprised to see that the Justices I tend to agree with were united against this decision. If I had thought beyond stage one, perhaps I wouldn't have been so surprised. I agree with this particular policy, but the broader issue is whether the Supreme Court should have veto power over laws it views as bad policy. My reading of Knowledge and Decisions leads me to believe it should not.

Gas: Dollars/Gallon or Gallons/Dollar?

It occurred to me today that even though gas is priced in dollars/gallon, I've never purchased it that way. I either pay with a credit card and fill the tank up, or if using cash I pay for an even dollar amount, like 20 bucks (or more often this summer, 40 bucks). I have never bought exactly one gallon of gasoline, though in high school I did once buy exactly one dollar of gasoline. This being the case, why aren't prices listed in gallons/dollar?

Displaying prices in this form would emphasise Bryan Caplan's point that the instability of the dollar is a significant factor in the current high price of gasoline. The national discussion would change from concern about high gas prices to how little gas each dollar purchases.