Cam has setup a panel that includes Alex, Haley, Manny, and Luke. His original goal was to showcase alternative options beyond college for the high school. It turns out the principal isn’t a fan of that idea, but only because he’s more interested in winning the “Golden Apple” award, which is for schools that have 60% of their class going on to college. His self-interest may push some students into a path that they aren’t meant to be on.
At the start of the scene, we learn that Cam’s not sure he believes everyone should go to college, but he isn’t sure how to proceed once he finds out that his principal is encouraging him to only talk about the benefits of college. Midway through the show, Mitch convinces Cam that if he can make it wear the principal doesn’t get the Golden Apple award, Cam may be promoted to Head Principal which comes with more perks. Cam goes along with it, and switches the theme of the panel to focus on non-college options.
See more: college, education, human capital, human capital investments, incentives, self interest, signaling, signals, skill building
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 sight of the emotional connections of the theory. For what it’s worth, the instructor isn’t very good at his job given that he has the x-axis labeled on the vertical axis.
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 feels 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, she is rejected from all of them. Because she has been out of the labor force for so many years, her human capital has depreciated. The second important component of this scene is to consider the non-pecuniary benefits of work. Not all workers are income maximizers as some have other motivations for working in paid employment.
See more: college, education, human capital, human capital investments, human capital depreciation, job search, labor force, labor force participation, labor market, nonpecuniary benefits, skills, unemployment
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 entry requirements or competitiveness in the application process. Haley, on the other hand, may be completing drawn out tasks that don’t improve her productivity after completion. If Haley isn’t really learning skills at community college, but Phil and Claire are paying for her to go there to learn skills, are they really investing in Haley’s education?
See more: college, education, human capital, human capital investments, signaling, signals, skill building
With Lilly in school and Cam & Mitchell unsure about adopting another baby, Mitchell thinks it’s a good time for Cam to get a job. Mitchell works with his friend Longeness to secure Cam a job at a local boutique under the guise that the shop needs someone to work and Cam just happens to be available. Cam initially accepts because it seems like a great match for his tastes and skill set, but Jeoux lets the cat out of the bag that it wasn’t a sincere offer, and Cam is offended that Mitch thinks he is too lazy to get a job.
In the Household Production model, decision makers must decide whether to supply their labor for paid employment or supply their labor at home in household production. Cam lists many of the household production items that he produces with his labor, including paying bills, grocery shopping, and maintaining the house. Each of these items produce utility for the household, which could be purchased with Cam’s income. A secondary consideration of work, beyond the household production model is nonpecuiniary benefits of work like social interaction and purpose.
See more: household production, human capital, labor force, labor-leisure tradeoff, labor supply, marginally attached, nonpecuniary benefits, search, tastes and preferences, tradeoffs, unemployment
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
Haley is at a staff meeting. She’s worried that she hasn’t had enough good ideas lately. Her fear is that this will lead her boss to believe that she isn’t working hard on behalf of the company. Haley signals that she’s a good worker by suggesting that Gloria sell a family recipe to the company (NERP). Gloria has long held the recipe secret. The recipe is an example of private technological knowledge. The recipe is valuable to Gloria because of the family tradition. The recipe is valuable to NERP because it could give them an edge in the lifestyle industry. Will Gloria sell? (Note: Jay also makes a fantastic joke about the value of a bachelor’s degree that can be used for discussion on human capital).
See more: entrepreneurism, human capital, human capital investments, moral hazard, signaling, signals, technological knowledge
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
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 thinks 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 that may not be the correct counterfactual for his decision. The items that he considers free (meals, cable, and laundry) are just being paid for by his parents.
See more: college, cost benefit analysis, counterfactual, human capital, human capital investments, psychic costs, skill building
The Dunphy girls both have new boyfriends, but they are opposite of their traditional matches, and Phil and Claire would like to get to know them better. Haley’s dating an astrophysics professors and Alex is dating a firefighter. Astrophysics professors require years of high level education, while firefighters don’t require a college degree, but are skilled and well trained in their speciality.
The debate at dinner (and even among economists) is who has the most human capital? Human capital is the intangible assets that each member has, but since each work in different fields, their assets are not directly comparable. In the middle of lunch, Claire and Phil are also trying to determine who’s the smarter one between the two of them, and Arvin (Haley’s boyfriend) is upset because his theory has been debunked. Luke stirs up the drama with trivia questions, even referencing another popular clip to teach economics.
See more: education, externalities, human capital, innovation, negative externalities, private benefits, skill building, social costs, training
Andy currently works as Jay and Gloria’s “manny” (a male nanny), but he’s interested in changing jobs. He’s been spending a lot of time with Haley, which initially makes Phil and Claire suspicious of a budding romance. In this scene, Andy approaches Phil because he wants to become a real estate agent. He knows that he’s going to need to acquire more human capital before he’s able to do that so he asks to work as Phil’s new assistant.
In this scene, we watch Andy interview for this job. It turns out that Haley and Andy have been spending time together practicing their interview skills. Interviewing is like other productive activities and requires a special set of skills that we can get by practice. The better someone is at interviewing, the shorter the amount of time is that they will be among the frictionally unemployed (unemployment that results because it takes time to match the right worker to the right job). Phil makes Andy prove his dedication to becoming an assistant and highlights one of the crucial elements of job markets: the matching process. Firms don’t hire just any workers, but instead want to identify workers that will make a good “match” with their firm.
See more: frictional unemployment, interviewing, human capital, labor market, job search, matching, unemployment
Lily has the tough teacher but Cam and Mitch just learned of an opening in the “nice” teacher’s class. In this scene, the two approach Ms. Plank about transferring their daughter into Ms. Sparrow’s classroom. Education is one market where consumers have little choice. Some critics argue that this creates inefficiencies in the market while others argue that education consumers may not have enough information to make optimal decisions. Critics insist that 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. In this scene, it was clear that the Cam and Mitch were ill-informed of even their daughter’s preferences, but assume that Lily would have done better in the other teacher’s class despite not actually knowing Ms. Plank’s ability.
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, incentives, human capital, nonpecuniary benefits, opportunity cost, preferences, self interest, school choice, signaling, skill building, tradeoffs, utility
Alex has worked hard her entire life preparing for the perfect future, even learning how to play cello while playing lacrosse. She’s landed her dream internship, but it’s a very high stakes position and an extremely stressful environment.
While this decision troubles Alex, Phil steps into play a board game that Alex was just about to win. Alex has set Phil into a position to all but guarantee victory, but Phil decides to do something unexpected. While Phil uses this as a metaphor for Alex’s internship, it also represents the role of opportunity costs in our everyday decisions.
Every time we choose to do something, we are also choosing NOT to do something else. SO if Alex takes the internship, she’s giving up a relaxing summer that could be a much needed break for her. On the other hand, if she takes the summer offer, she may be missing out of an internship that could greatly influence her future career.
See more: choices, human capital, opportunity cost, preferences, risk aversion, scarcity, tradeoffs
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
Jay and Claire discover that Alex and Luke have started a business selling used shoes online. Jay praises Luke for taking the initiative to build a business from nothing. Claire praises Alex for making the business successful. An argument ensues that makes it clear that this is personal for Jay and Claire. Jay built a closet business but retired a few years ago and let Claire take over. Under Claire’s leadership, the company becomes even more successful and receives international acclaim. They fight over who deserves credit for the success and honors that the business currently has. The reality is that both are responsible. They both demonstrate entrepreneurialism and each played a different and equally important role in building the business. Entrepreneurs start and grow businesses. But can they admit this to each other?
See more: entrepreneurism, human capital, labor, management
Phil goes into the wild to live like the famous Robinson Crusoe. In doing so, he provides a fantastic example of the factors of productivity. Productivity (Phil’s ability to survive in the wild) is determined by his human capital, technological knowledge, physical capital and natural resources. He has natural resources in abundance – fish, sticks, blueberries, honey and fresh water. He has some good technological knowledge because he knows how to build a fire. It’s not clear that he has the experience (human capital) to successfully build the fire. But, having lost his physical capital (fancy camping gear), it’s not clear whether or not he will be able to survive.
See more: factors of production, human capital, natural resources, physical capital, Robinson Crusoe, technological knowledge
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