Economics eductor. Follow me @Wootenomics
What would you do if you won the lottery? This clip fits nicely with two different sections of an economics course. The first is how people respond to income increases in terms of purchasing normal goods or luxury goods. For labor economics, this discussion is a good segue to discussion how increases in income decrease the time people devote to work assuming leisure is a normal good.
Cheyenne and Mateo are trying to pick numbers for the upcoming Missouri jackpot and are discussing how random their numbers are. While each combination is no more lucky than any other combination, there are particular numbers that people pick because they feel lucky. The odds of the lottery being 1-2-3-4-5 are just as likely as any other combination of five numbers, but the likelihood of sharing the jackpot with another person is probably pretty low.
A customer is checking out at the pharmacy, but asks Tate if he can ring up just a few more items. Even though is main job is a pharmacist, he obliges the customer. With a long line behind the customer, Tate recognizes that his Doctorate of Pharmacy is probably better spent helping his customers with medical needs rather than helping the customer avoid another line at the front of the store.
There’s a long line of customers hoping to get a flu shot, but there’s only one vaccine left. Jonah has been tasked with identifying which customer will get the last flu shot for the day. Jonah argues that it should go to the person who needs it most, which would be an argument based on equity. The next person in line believes that he should receive the shot, which could be an argument in favor of efficiency. Because of the low price, there appears to be a temporary shortage. Rationing and a lack of a market for price adjustments creates shortages and inefficient allocations. The store could raise the price of the last remaining few shot as an incentive to have others return tomorrow for the normal price.
Tate has no problem sharing his salary, but it’s unclear the main driver of the salary. In reality, salaries are comprised of a variety of skill and compensating differentials as well as potential efficiency payments. Tate has a doctorate of pharmacy, which should result in higher pay for human capital investments. In the clip above he mentions that people could die if he messes up, which probably adds a lot of pressure to his workday. This pressure could be a compensating differential that increases his pay. However, there’s also a chance he’s paid highly so that he doesn’t goof off, which would be an efficiency payment.
Garrett and Jonah became roommates after a tornado destroyed Jonah’s apartment, but it turns out that their habits aren’t exactly conducive to being roommates. Garrett passively aggressively lets Jonah know that he’s messy when it comes to taking a shower so he buys Jonah a bathmat. In return, Jonah suggests that he get Garrett a pair of noise-canceling headphones since he’s so bothered by every noise Jonah makes. The two go back-and-forth listing the various ways they annoy each other.
Mateo comes down with an ear infection and Jonah comes up with an idea to create a store insurance policy. Originally, the store raised money for medical bills by putting a donation jar out for customers to donate spare change. When Jonah realizes that takes a lot of work, he proposes creating a pool of funds from the employees and have them contribute monthly to cover someone’s bills. Unfortunately, he’s created a semi-pyramid scheme that requires individuals to donate money to help one individual.
After a coworker comes down with an ear infection, the team members decide to try and raise money to help cover the costs of medicine. Jonah decides to come up with a group health plan where each member donates money from their check and then covers the medical costs of store members whenever the become sick. Amy sarcastically points out that this is basically what health insurance is meant to do.
When Mateo gets sick, Jonah comes up with an insurance fund to help cover employee medical bills because the store does not offer health insurance. The team members join the plan because it only costs $20 each month, but Jonah has promised to pay previous medical bills. Jonah and Amy quickly find out each team member, especially Sandra, has a lot of pre-existing conditions and they realize that they can’t cover everyone’s costs at one time. The two try to break the two groups apart, but the members in the pre-existing condition group will have to pay significantly more to cover all their costs.
Glenn wanted to see Saw because he thought it was about carpentry, but he quickly realized it was a horror movie. He wasn’t having a good time and even threw up in his lap, but his wife didn’t want to leave because they paid for the ticket and it was date night. Glenn and his wife should have left if they weren’t enjoying their movie since the tickets were non-refundable, but like many people, Glenn and his wife fell for the sunk cost fallacy.
Teaching with Superstore