Jay is shocked that Manny won’t eat pickles, so he won’t let him leave the table until he tried one. Gloria thinks Jay is being a hypocrite and forces him to try blood sausage. Then Jay decides Gloria need to try something new too: scratching the dog, Stella’s, belly. While they all seem to hate what they try at the time, we see Gloria petting Stella’s belly voluntarily and Manny surreptitiously eating a pickle at the end of the episode. This highlights the need for full information in order to know your true preferences.
See more: behavioral, full information, preferences, tastes and preferences, utility
Manny puts up a fiber optic Christmas Tree, because it is better for the environment, but Jay thinks it is ugly and does not want it in his house. This clip highlights both positive externalities of the fiber optic tree (environmental benefits) and negative externalities of the tree (Jay’s psychic costs). Jay and Manny have been trying to cut down their own Christmas tree for hours, but it is not budging and keeps ruining their tools. Jay has finally had enough and says Pritchetts know when to give up. All their previous effort is a sunk cost, and it would take too much effort relative to the reward of a half burned tree to keep going.
See more: behavioral, negative externalities, positive externalities, private benefits, private costs, social benefits, sunk cost, technological change
Gloria and Jay have been having some issues with baby Joe’s behavior, so Gloria consults a priest. Gloria thinks the med in her family have been kissed by the devil, but the priest insists it is the families that shape who children become. This is a great clip to introduce the nature versus nurture debate.
See more: causation, correlation, nature vs. nurture
This scene takes place immediately following the Supreme Court decision that legalized gay marriage. If we think about the gay marriage market, a law that prevents gay marriage is essentially like a quota of 0, which leads to huge amounts of deadweight loss. As soon as the quota is removed/the law is changed, the lines at the courthouse are long as all of those previously prevented from marrying rush to get married.
See more: demand, efficiency, inefficiency, markets, quotas, role of government, supply, transaction barriers
Luke and Manny’s class is having a yard sale to benefit UNICEF. When Mitchel doesn’t want to donate Cam’s pants, Luke tries to re-frame the charity attempt to guilt his uncle into donating more money. Framing is one tactic to get people to do something they may not have done under the original design.
See more: altruism, behavioral, charity, framing, incentives, inequality, poverty
Luke and Manny’s class is having a yard sale to benefit UNICEF. Manny thinks the point is for them to learn about global altruism, while Luke thinks to point is to beat the other class.
See more: altruism, charity, donations, incentives
Manny is playing the stock market game at school and gets so involve that he doesn’t enjoy the family’s trip to Disneyland because he is worried about the market volatility.
See more: income, income inequality, inequality, money, personal finance, stock market, volatility, wealth
When a classmate’s house burns down, the Pritchett family bands together to find things to donate to their cause. Manny and Luke are put in charge of a remote controlled helicopter that Manny has been coveting. Luke convinces Manny to fly it and they promptly lose the helicopter. Manny is scared of what Gloria will do when she finds out and threatens to walk to Canada if they do not find it. Luke replies that he hopes Manny likes taxes. Canada does tend to have higher tax rates than the United States, but there are also differences in the services provided by the two governments.
See more: budget balance, comparative systems, inequality, macro, role of government, taxation
After receiving a nomination to a major closet expo, Jay receives a phone call who expects to be full of congratulatory remarks. He instead finds the dial tone from a fax machine that has misdialed the number the intended. Jay, who isn’t the most technologically savvy member of the family, wonders why anyone might still be using a fax machine.
See more: demand, growth, innovation, technological change
There’s a lot going on in this clip. The main focus is on Claire and Jay. Pritchett Closets (which Jay founded and Claire runs) has been selected to participate in the Expo Internationale du Closet! Both Claire and Jay are over the moon excited. But why? Participating in this event exposes them to an international market. They can expect a big increase in demand for their product. The second focus is on Manny. Manny has moved out but found that there are certain things about living at home that he really misses. This is something that a lot of people discover when they move out. These early lessons in personal finance can be tough!
See more: demand, expectations, international trade, personal finance, trade
Jay has a great new invention that he believes will revolutionize the closet industry. It’s a sock dispenser. In competitive industries, product differentiation can lead to short term profits – especially for early adopters. Why is Jay concerned that his son, Manny, has a new friend who has seen this idea?
See more: competition, entrepreneurism, innovation, monopolistic competition, trade names
Jay got new glasses that make him look like an old man but they work really well. So well that he realizes that Gloria’s family members in Columbia are wearing his old clothes. Notice that Gloria says that they sometimes send the clothes back. In the US, people frequently donate clothing to people in less developed countries. Many economists argue that this is counterproductive and leads to a surplus of clothing in these countries. That surplus can hurt markets and cost jobs.
See more: charity, donations, efficiency, emerging markets, gift giving, growth, interdependent utility functions, preferences, utility
Manny lost Luke in a “sketchy” neighborhood. He and Phil enlist Gloria’s help to track him down. When they arrive in the neighborhood, they find that it has changed quite a bit since Gloria lived there. When searching for a girl, they have the option of visiting one of the four area cupcake stores, each specializing in a different area.
See more: gentrification, growth, imperfect competition, incentives, income inequality, market structures, monopolistic competition, preferences, product differentiation
Jay takes Joe out to the driving range and discovers that Joe is a natural. Joe’s natural skill is a form of human capital that gives him the potential to earn a large salary in the future. Human capital is often acquired through years of training, education and hard work. But sometimes, luck gives some people an edge over others. If Joe works hard and practices, he could follow the path of other young golfers with natural talent like Tiger Woods and Lexi Thompson. Jay wants to do all he can to make that happen.
See more: human capital, incentives, income inequality, labor, productivity, tournaments, wages, winner take all
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.
See more: cheating, competition, ethics, incentives, moral hazard, motivation, self interest, unintended consequences
Luke is baby-sitting for Gloria. She expects him to care for her son in a responsible way. When Luke posts a selfie on social media, Gloria worries that her son might be in danger. This represents the principal-agent problem. Luke is the agent and Gloria is the principal. Is he acting in her best interest? Of course not! He’s shirking. To cover up his shirking, Luke tells Gloria that he has a series of photographs of her son in dangerous situation but they’re all fake. Now, he needs a series of photoshopped pictures but doesn’t use photoshop. So, he decides to only give Manny something that he wants if he photoshops Gloria’s younger son in to dangerous situations. This represents trade through barter. Luke has a pass that Manny wants. Manny has a skill that Luke needs. They trade because they have a double coincidence of wants.
See more: barter, double coincidence of wants, exchange, labor, moral hazard, network externalities, principle agent problem, social media, trade
Manny is the first member of the family to graduate from high school despite the fact that he has an uncle who “just does orthopedic surgery.” Apparently you only need a degree to do heart and brain surgery.
See more: ability bias, education, human capital, human capital investments, signaling
On their way out the door for their big night, Manny and his father walk through a mist of cologne. Gloria notes that despite the terrible smell, she’s never seen him get a mosquito bite.
See more: externalities, negative externalities, private benefits, social benefits, social costs
Gloria is sick and Cam tries to help around the house. Gloria’s family remedy for colds is a bit smelly and Cam accidentally uses Joe’s cape. Gloria points out that Joe has a strict ranking set when it comes to that cape and he even places the cape above his own father.
See more: preferences, ranking, subjective value, transitivity, utility
Mitch gets sick on his honeymoon, but spreads it to everyone else in the family. Each member goes through the pain they endured because Mitch didn’t quarantine himself. Only later in the episode do they find out that Mitch isn’t patient zero.
See more: externalities, gift giving, health care, negative externalities, private benefits, social costs, substitutes
It’s time for Jay and Gloria to exchange gifts and Jay is anxious about his gift from his wife. He struggles finding the right gift because it always seems like a competition. If the two didn’t exchange gifts then the extra psychic costs wouldn’t exist. It turns out that Gloria actually really loves Jay’s gift, but Jay really wanted that watch.
See more: gift giving, inefficiency, irrationality, psychic costs, subjective value
One of the tougher topics to get across to students is why older Americans start to leave the labor force. One explanation for the leave is that they see a decrease in their human capital and that some of their previous training is no longer relevant. This clip does a good job bringing humor to a topic that often sounds derogatory.
See more: human capital depreciation, innovation, labor, life cycle considerations, technological change, technological knowledge