Playing with Dolls

 

Alex in babysitting her cousin Lily. Lily wants to play dolls, but Alex suggests reading an empowering story. Lily insists on playing dolls, and the first doll she shows Alex is a wife who does not have a career, but shops.

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Glue Sticks for College

 

While Alex is freaking out about her junior year grades, Haley doesn’t need to study because her community college asks her to bring glue sticks. Education may serve as a signal of ability instead of actual skill building, which would be shown by the requirements or competitiveness in the application process.

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Facon — Soy Bacon

 

Cam has started making is own soy based bacon alternative called facon. He insists that it is indistinguishable from real bacon, but Mitch and Alex are able to tell a difference.

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Street Strider Embarrassment

 

Phil wants to ride his street strider, but his whole family thinks it is very uncool. Luke points out that he has friends on the street that might see, and Claire not so subtly threatens to leave him if he rides it suggesting she is not getting any joy from him enjoying his street strider and in fact it is harming their relationship.

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Prom Signals

 

Claire believes Alex’s boyfriend is gay, but Alex doesn’t think that’s the case. She believes that since he invited her to prom and then they kissed, that it must mean he can’t be gay. Signaling is when one party has more information about a transaction than another, but displays some traits or “signals” to convince the other party of the true outcome.

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Decreasing Returns from Halloween Makeup

 

Claire is proud of how she almost scared a man to death last Halloween, but Phil points out that it was overkill and she could have been scarier with less makeup.

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College Interviews

 

Alex is practicing her college interview for Princeton in the mirror when Haley comes in to style her hair. Princeton is an Ivy League school that is very prestigious and gets a lot of applications. Princeton does not know which applicants it should let in so it screens them. Screening is an action taken by an uninformed party in a situation characterized by adverse selection. There are many things that colleges do to screen applicants. They require high school transcripts, a certain GPA, test scores and they conduct an interview. When someone is interviewed, it’s an opportunity for them to send a signal. A signal is an action taken by an informed party in a situation characterized by adverse selection. Alex wants to signal to Princeton that she’s a good candidate for admission into the university. Haley shares her thoughts about the message that Alex is actually sending.

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The Neighbor’s Boat

 

The Dunphy’s neighbor has a new boat that they leave in the driveway. Many of the family members are impacted by the visibility of the boat. This represents spillover effects and mean that an externality is present in the market for boats. Some family members see the boat as having a positive externality. Others see the boat as having a negative externality. As there is a relatively low number of people impacted by the boat (the Dunphy’s and other nearby neighbors), Coase theorem suggests that an efficient outcome can be negotiated. But will the Dunphy’s be able to get to it? Claire is immediately interested in finding regulations that restrict how residents can store large property like a boat. Many communities, especially home owner associations (HOAs), have rules pertaining to this situation. These rules are designed to lower the transaction costs associated with these externalities by providing a standardized process for dealing with conflicts between neighbors that settles disputes, thereby increasing the likelihood that an efficient outcome is attained. However, often these processes can end up creating problems themselves. What happens, for example, if the neighbors get together and decide that it’s OK to store the boat in a visible place? If they do and the enforcement agency requires a change, it can make things worse.

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Fallback Turkey

 

It’s Thanksgiving. For the first time, Claire is leaving the cooking to Phil…. or is she? She’s not. She made a fallback turkey, just in case Phil’s doesn’t work out. This demonstrates fallback position. Economists who study the family suggest that a person will stay in a relationship as long as the in-relationship utility is higher than the fallback position. While Claire isn’t considering leaving Phil for her fallback turkey, this clip can be used to discuss fallback positions. Claire has entered into a contract with Phil in allowing him to cook the family turkey. She will remain in that contract only as long as the benefit of eating Phil’s turkey is greater than the utility of eating her own turkey.

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Tankless Job

 

Phil is trying to sell the house next door to a couple. In order to make the house as desirable as possible, he wants to put his family’s best foot forward. He wants the buyers to want to live beside his family. So, he has the kids outside gardening. This demonstrates adverse selection, signaling and the importance of spillover effects/positive externalities. Good, helpful neighbors are desirable and can increase a property’s value, especially if they take good care of their yard. Thus, there are positive externalities associated with landscaping. To discuss signaling and adverse selection, consider that someone is less likely to move if the neighbors are good than if they are bad. So, it’s entirely reasonable to consider the housing market as being characterized by adverse selection. Phil is doing all he can to signal that he and his family are good neighbors in order to get the couple to by the house and to pay a high price for it. But are they good neighbors? (At the end of this clip, you’ll see the other possible new neighbors. Which new family would each of the Dunphys prefer to live beside? Why?)

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Preferences and Tradeoffs for Cal Tech

 

Alex is graduating from high school soon so Phil, Claire and the kids are visiting Cal Tech. Claire thinks Cal Tech is the perfect place for Alex but she’ll find out soon that she and Alex have different preferences. College is one of the ways that we build human capital. As we learn more things, we become more productive and our labor is more valuable. Alex is already really bright and loves academics so college is a good fit to set her up for doing impressive things in the future.

Claire wants a great school that’s close. Alex wants a great school that’s far away. We also learn that Cal Tech has 5 Nobel Laureates on staff, suggesting that Cal Tech itself has a lot of human capital, making it a highly productive college.

Alex learns why Cal Tech might be a better choice for her than an East Coast school. What is more important: the quality of the program or proximity to home? Choices are tough and everything has a cost. Here’s Alex’s current dilemma: stay close to home and attend the best program in the country OR go to a college on the east coast with a weaker program.

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Working Girl

 

Claire is going to meet an old friend from work, but her kids are surprised to find out that she once had a job. She describes why she chose to leave the workforce.

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Everyone Confess!

 

When Claire and Phil cancel Christmas after finding what looks like a cigarette burn in the sofa, Alex suggests she and her siblings all confess so that their parents will reinstate Christmas and go easy on them for protecting their siblings. Unfortunately there is an incentive to cheat, but Luke isn’t smart enough and ends up confessing to something he didn’t do.

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Ugly Christmas Sweaters

 

The Dunphy’s call Phil’s parents in the sweaters they were given as gifts. The call goes awry when Claire sees what looks like a cigarette burn in the sofa. In her anger she calls the sweaters ugly while still on the phone with Phil’s dad.

Demand for Cellos

 

Alex chooses the cello to play in the orchestra because she thinks cellos are in demand in university orchestras. Claire and Phil had recommended she play the violin so that she wouldn’t have to carry around so much, but Alex thinks she’s made the right choice.

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Unlosable Position

 

Alex has landed a dream internship but it’s really high stakes and stressful. Meanwhile, Phil has a tough choice to make in a board game. Every time we choose to do something, we are also choosing NOT to do something else. Does Alex really want the internship? What is its opportunity cost? Also, what should Phil do?

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Selling Shoes

 

Luke discovers that used women’s shoes command a higher price when he sells to people with very specific tastes. He and Alex join forces to supply goods to this niche market. By differentiating their product from just reselling shoes, the two can earn big profits.

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Unhealthy Competition

 

Economics often suggests that competition improves efficiency. Jay seems to agree. He fosters competition within his family to help them achieve their goals. But are they really achieving those goals? The truth comes out in this clip. It turns out that they’re a family of cheaters and not a family of winners.

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Coming Up Claire

 

Phil and Claire get a special coin made to determine decisions they disagree on. As a final decision, they flip to decide how to spend their retirement account. Unfortunately for the kids, the coin decides that they spend it on a beach condo.

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Gangster Attire Optional

 

On their way to Phil’s father’s wedding, Phil asks his family to dress like 1920 gangsters, but it seems like they are the only guests their in costume. Phil is notorious for embarrassing his family and each member relates a time Phil did something that made him happy, but imposed social costs on others.

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Externalities in a Small Room

 

The Dunphys are having their house fumigated so they have to squeeze into a small hotel room. The neighboring dogs are barking all night and a train runs through around night time. Luke tries to set off a cologne bomb and ends up stinking up the whole room.

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Alex Ruins Everything

 

The Dunphys are having a great summer while Alex is away building houses for the less fortunate, but as soon as she returns everything takes a turn for the worse. Everything seems to think Alex is the cause of the tension and as soon as she leaves then things start to look better. While these actions may be correlated with Alex’s presence in the house, she certainly can’t be the cause of the tension, could she?

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