Phil walks in on an Intro to Real Estate course, which is starting the semester off with microeconomic analysis of real estate. Phil isn’t as impressed with the teacher’s style and focusing too much on the boring numbers and not enough on the exciting emotional connections of real estate. Similar to teaching economics as a whole, some instructors get wrapped up in the numbers of the graphs and lose site of the emotional connections of the theory.
The teacher takes this opportunity to give away his class and Phil becomes the newest instructor at the community college.
See more: college, education, human capital, human capital investments, skills, student motivation
Claire and Cam want to flip a house, but Phil and Mitch are against it. Phil pretends he is for it leaving Mitch to put his foot down, but eventually Mitch decides to play the good cop as well and leave Phil to put the brakes on the house.
See more:game theory, incentives, interdependent utility functions, prisoner’s dilemma, sequential moves
Claire is feeling a like she is not contributing to the family because she doesn’t have a job. She has applied to 5 jobs recently, but despite her college degree is rejected from all of them. Because she has been out of the labor force for so many years, he human capital has depreciated.
See more: college, education, human capital, human capital investments, human capital depreciation, job search, labor force, labor force participation, labor market, skills, unemployment
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
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.
See more: gender roles, nature vs. nurture, pre-market discrimination, societal discrimination, specialization
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
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.
See more: college, education, human capital, human capital investments, signaling, signals, skill building
It is the first day back to school for the kids, but also Claire’s first day at her new job working for her father, Jay. Claire’s husband Phil tries to be supportive, but refers to the last 20 years that Claire has spent as a stay at home mom as a vacation.
See more: employment, household labor supply, household production, labor force participation, specialization, tradeoffs, unemployment
Lily lost her first tooth and got $100 from the Tooth Fairy. Cam and Mitch are trying to convince her that the Tooth Fairy made a mistake and she should give the money back, but Lily wants to keep the money until Hayley tells her this would almost certainly put her on Santa’s naughty list. Now Lily has to decide what she values more: $100 or Christmas presents.
See more: opportunity cost, rationality, tradeoffs
It is career day at Luke’s school, and the teacher asks Claire to speak about her job as a stay at home mom. She points out that she actually has a lot of different jobs, and while she would like to go back to work, it is hard to find a job after you have been out of the labor force for 15 years.
See more: household labor supply, household production, human capital depreciation, job search, labor force, labor force participation, labor market, skills, tradeoffs, unemployment
Cam and Mitch have decided to get Jay and Gloria a special gift off registry for their new baby’s nursery. Mitch seems concerned that they will not appreciate it.
See more: altruism, gift giving, imperfect information, irrationality, rationality
Luke and Manny’s class is having a yard sale to benefit UNICEF, but Jay hates when people haggle. Someone goes into Jay’s house and tries to buy his toaster, but isn’t willing to commit because it’s a used toaster and he’s unsure of its quality.
See more: asymmetric information, insurance, market for lemons, used goods, willingness to buy, willingness to sell
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
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.
See more: behavioral, signaling, signals
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
Since Lilly is now in school and Cam and Mitchell are not adopting another baby, Mitchell thinks it is time for Cam to get a job. Their friend Longeness offers him a job at his boutique to help Mitchell out. Cam accepts because it does seem like a great match for his tastes and skill set, but Jeoux let’s the cat out of the bag that it wasn’t a sincere offer, and Cam is very offended that Mitch thinks he is too lazy to get a job.
See more: household production, human capital, labor force, labor-leisure tradeoff, marginally attached, nonpecuniary benefits, search, tastes and preferences, tradeoffs, unemployment
Cam’s dad is down for a visit, and Jay is upset because he feels like he treats Mitchell like the “woman” in the relationship. Jay confronts Cams dad and they realize that gender roles are not the same today as they were when they were growing up, but it makes both of them feel a little better to ascribe certain traditionally female characteristics to their son’s partner.
See more: bargaining power, comparative advantage, gender roles, household labor supply, household production, specialization
Phil went on a gameshow in his early 20s and won a lifetime supply of dual blade razors, which was cutting edge razor technology at the time, though now it is not uncommon to find razors with 3, 4, or 5 blades. Phil is very disappointed to see that his “lifetime supply” has run out.
See more: behavioral, endowment effect, growth, technological change
Kenneth, an old neighbor who idolized Phil, comes back to visit. He tells the Dunphy family that he dropped out of college and bounced around at small jobs until he started an investment company. Haley who is currently evaluating her college options realizes that if he had gone to college, he would have become successful 4 years later. Kenneth’s opportunity cost of college would have been very high making his decision to drop out a good one.
See more: acquisitions, college, education, entrepreneurism, human capital, human capital investments, mergers, opportunity cost, tradeoffs
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.
See more: adverse selection, asymmetric information, college, human capital, human capital investments, imperfect information, interviewing, signaling, signals
It’s Haley’s 21st birthday. She and Claire have decided to get coordinating tattoos. Claire got hers first and now Haley is having a change of heart. In this scene, we see time inconsistency and imperfect information. Haley is concerned that her preferences will change over time so she decides against getting the tattoo. Meanwhile, Claire already regrets her tattoo because Haley won’t be getting one – but it’s too late for Claire. Tattoos do not have a return policy! If Claire had known that Haley would change her mind, she would not have gotten a tattoo (imperfect information). This clip can also be used to compare and contrast two types of games in game theory – sequential games and simultaneous games. If you decide to get a tattoo with a friend but only because you’re doing it with a friend, make sure you get them simultaneously!
See more: behavioral, game theory, imperfect competition, intrinsic rewards, preferences, sequential moves, tastes and preferences, time inconsistency
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.
See more: fallback position, interdependent utility functions, marriage, risk, risk aversion, trust
Claire surprises Phil by purchasing the magic shop of his dreams. The previous owner sold it for very cheap, but then Claire starts to wonder if the magician had information she was unaware of. Despite the concern, this is a unique opportunity for Phil to become an entrepreneur.
See more: asymmetric information, competition, entrepreneurism, free entry
Claire and Phil go to a magic shop and talk business with the legendary Mister Ekshun. The magician laments that he can’t be at the shop everyday because he’s booking “road jobs” which we should infer have a higher payoff than the shop’s profits. Phil is curious about how a magic trick works, but they need to make sure Claire (a non-magic person) isn’t able to hear the trick. Phil learns that he had an opportunity to become a magician on a cruise ship earlier in life, but Claire had never told him about the call because of how busy their lives had been.
See more: counterfactual, licensing, occupational licenses, opportunity cost, physical capital, proprietary technological knowledge, scarcity, substitution effect, technological knowledge
Haley auditions for work on a cruise ship. She didn’t get the job but why? Is it because she’s not in the right sorority or was it because she wasn’t as skilled as the others auditioning. If she was equally skilled and not selected because of some other characteristics (like not being in a sorority) then she would have been discriminated against.
See more: discrimination, human capital, interviewing, skills, talent
Luke hires Haley to work for him at the golf club. Sometimes, her service is a little off putting but she is still his best worker and brings in good tips. She’s going through the process so that she can save up and move out of her parent’s home.
See more: incentives, labor market, savings, training
Haley works for a lifestyle company with a history of selling dodgy products. The latest one is stickers. Her boss wants them tested but can’t use animals. So, she uses the next best thing – her assistants. But first, she has some really important questions to ask. This clip demonstrates the importance of labor law and regulations. Without regulations that are enforced, some employers might require workers to complete dangerous tasks. Even with regulations, this still happens. How does this clip show that Haley’s boss knows about the danger and about the regulations but doesn’t care?
See more: entrepreneurism, incentives, labor law, product differentiation, rationality, regulation, safety, testing
Luke has decided that he’s ready for college and meets with a community college admissions officer. He asks all the important questions like “how hard is it?” and gets some tough but realistic answers. The admissions officers tells him that after years of hard work, he’ll graduate and be qualified for an entry level job and steadily get promoted until, around age 45, he can expect a 3 bedroom house. Luke compares his current situation with this potential future and decides that maybe college isn’t right for him. But is that the correct counterfactual that he should use for this decision?
See more: college, cost benefit analysis, counterfactual, human capital, human capital investments, psychic costs, skill building
The Dunphy girls both have new boyfriends. Phil and Claire have them over for lunch to get to know them better. Haley’s new boyfriend is an astrophysicist. Alex’s new boyfriend is a firefighter. Astrophysicists require years of high level education. Fire fighters are skilled and well trained but the training they go through doesn’t take quite as long. Who has the most human capital? (Meanwhile, Claire and Phil are trying to determine whether or not Claire is smarter than Phil, Haley’s boyfriend is upset because his theory has been debunked, and Like is stirring the pot with trivia questions. He even references another popular clip in economics.).
See more: education, externalities, human capital, innovation, negative externalities, private benefits, skill building, social costs, training
Mitch is working on a big case about the rights of vulnerable workers. In it, he argues that a company is preying on the lack of options available to people who are homeless and hiring them for extremely low wages. He believes that this is a violation of labor laws and tries to get the notice of the press. However, Cam is stealing the spotlight as a successful high school football coach who is openly gay. Traditional economics holds that trades which are voluntary (such as employment) are mutually beneficial. As such, is the company truly taking advantage of its workers or do they benefit from the employment opportunity? Political economics suggests that you cannot ignore the power inequality between the company and the workers. When a large power imbalance is present, exploitation is possible. Which is more in line with Mitch’s perspective? Traditional economics or political economics? Would the people who are homeless be helped by increasing the wage? How would that impact structural unemployment?
See more: altruism, externalities, income inequality, labor law, living wage, negative externalities, political economics, private benefits, social costs, specialization, structural unemployment
It’s Halloween. Jay and Gloria usually coordinate their costumes. Use this scenario to setup a payoff matrix for picking costumes. Gloria and Jay are the players. What choices would you like to give Gloria? What choices would you like to give Jay? What are the payoffs for each possible outcome? What’s the most likely outcome given your matrix? There isn’t a single correct answer. Just have fun with it and discuss.
See more: choices, game theory, interdependent utility functions, payoff matrix, preferences, utility
Lily has the tough teacher but Cam and Mitch just learned of an opening in the nice teacher’s class. In this scene, they approach Ms. Plank about transferring Lily into Ms. Sparrow’s classroom. Education is one of the markets where consumers have little choice. Some argue that this creates inefficiencies in the market. Others argue that education consumers may not have enough information to make optimal decisions so giving consumers more choice would not necessarily lead to an improvement in efficiency. This sort of problem is discussed at many levels in education – from school choice to book choice.
See more: education, human capital, human capital investments, information economics, market failure, preferences, school choice, signaling, skill building, textbook choice, tradeoffs
Haley, Phil and Luke are participating in a psychology study. Luke has convinced Phil that they should push the big red button that says “DO NOT PUSH” but Haley stops them. She says one in a million college drop outs go on to become Steve Jobs. The other 99 thousand don’t (her math is a little off). She recently dropped out of college and is having a crisis. This demonstrates several economic concepts including the importance of human capital and time inconsistency. Human capital comes from going to college but Phil reminds her that there are other sources of human capital. Time inconsistency occurs when you regret a decision in the past.
See more: behavioral, counterfactual, education, entrepreneurism, human capital, sunk cost, time inconsistency
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.
See more: cost benefit analysis, human capital, opportunity cost, preferences, school choice, signaling, skill building, tradeoffs, utility
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
Cameron gets Lilly a job as a child actor, but Mitchell is not excited about it and says no. Cameron doesn’t understand why he thinks he gets the final say in household decisions.
See more: access to resources, bargaining power, household labor supply
Claire is feeling under the weather but has too much to do. Phil offers to help her out with her errands and pick up some slack until she feels better. One of the gains of partnerships is that if one person goes down, the other can pick up the slack.
See more: gains from trade, gains to marriage, risk pooling, risk sharing, utility
Phil is trying to sell the family’s station wagon, but it has some issues. Phil words the advertisement in a way to make the car seem unique instead of defective.
See more: asymmetric information, lemon, market failure, market for lemons, marketing
After Mitchell quit his job, Cameron went to work to support them. Both Mitchell and Cameron think their partner is happy with this role reversal, but both are miserable and want to return to their original arrangement.
See more: added worker effect, division of labor, labor supply, preferences, specialization, unemployment
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.
See more: comparative advantage, division of labor, labor force, labor force participation, labor supply, preferences, specialization, tradeoffs
Mitchell complains to Jay about Cam being too nice, and Jay complains to Mitchell about Gloria not liking his dog butler. Jay notes that they are both with people who are very different and that maybe that makes their relationships better.
See more: assortative mating, gains from trade, gains to marriage, matching, preferences, utility
When Phil had a health scare, Claire gets dressed up for the hot firemen who are coming for him. She admits this to Phil before his procedure and her reminds her of it upon waking. After Claire apologizes, Phil says he will be fine with time even though he is fine with it now. Phil believes Claires guilt will grow over time giving him more bargaining power in the future.
See more: bargaining power, markets, prices, reciprocity, trade, value
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.
See more: game theory, incentives, prisoner’s dilemma
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.
Phil surprises Claire with a new bracelet for their anniversary and Claire reciprocates with coupons for 5 free hugs, which Phil points out are usually free already. Claire is proud of her gift because Phil never wants anything, but Phil can list off many things he would like. Gift giving can be inefficient if it’s the two givers aren’t fully aware of the others’ preferences.
See more: coupons, exchange, gift giving, inefficiency, irrationality, medium of exchange, preferences, store of value, unit of account, wants
Luke was supposed to keep a journal all summer, but when school starts again, he realizes he only did one day. Luke’s focus on the present (at the beginning of the summer) imposes large negative externalities on his back when it’s time to turn in the work later in the summer.
See more: discounting, irrationality, negative externalities, present oriented, procrastination, time inconsistency
Phil thinks both he and Claire get up at 7am to start taking care of the kids, but Claire informs him that she actually starts her day as a stay at home mom at 6am. Because Claire has a comparative advantage in getting the kids ready for school in the morning, Phil gets an extra hour of sleep.
See more: comparative advantage, division of labor, specialization
Mitchell is worried that he is a worse parent than Cam, but Cam assures him that they are both great parents because they complement each other. Their decision to specialize in particular tasks allows them to complete more work together and both recognize they wouldn’t accomplish nearly as much if each had to go it alone.
See more: comparative advantage, complements, division of labor, specialization
Cam gives his mother in-law a pair of diamond earrings, but she reciprocated by giving him exercise equipment and salad drier. Cam doesn’t appear to think that the two gifts were of equal value, which shows how gift giving can be considered inefficient.
See more: deadweight loss, exchange, gift giving, inefficiency, irrationality