Contemporary Film and Economics

Lights! Camera! Econ!

Samuel R. Staley

• Publisher: Taylor & Francis
• Year: 2018
• Print ISBN: 9780815367031
• eBook ISBN: 9781351258180
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

What does the movie Lion tell us about why some societies grow rich and others remain poor? What can the global box office juggernaut, Jurassic World tell us about entrepreneurs and the ethics of business? Can the movie Passengers give us insight into human motivation and decision making? This book surveys more than 40 movies to answer these questions and much more.

Movies do more than entertain. They project important insights, often unintentional, into the way the world works and the values society cares about. Indeed, their stories are often grounded in the real-world experiences of everyday people. As part of this, movies also provide a window into understanding and evaluating economic behavior. Economics is, after all, the study of how scarce resources like labor, capital, and technology are used to improve (or reduce) our welfare. It also helps us to more fully understand the consequences in our lives that result from those choices and decisions. Through exploring a wide range of films from Passengers to Victoria and Abdul, this book delves into economic concepts such as opportunity costs, profit maximization, greed, business ethics, monopoly, economic growth, and entrepreneurship.

Contemporary Film and Economics is a must read for anyone interested in how movies project and interpret economic ideas, craft popular narratives for how economies operate, and explore motivations for economic behavior. Economists will find it useful in starting discussions on key concepts, while filmmakers will find the discussions of economic concepts a provocative way of thinking about how to craft engaging stories that are grounded in practical experience.

1
The economics in film

What makes Australians so rich they are willing to forego having their own children and spend tens of thousands of dollars to adopt an uneducated, undernourished kid from the streets of Calcutta, India (Lion)? What pressures would drive a business executive to break a contract with the very people who gave him the ideas he needed to create a global industry “disruptor” (The Founder)? Why do interest groups provide the seeds of their own destruction (Divergent)? These questions and many more are examined in this book through the prism of “economic thinking.”

At its heart, modern economics is grounded in the fundamental idea that human society prospers, or becomes impoverished, based on choices individuals make, how we make them, and how we use scarce resources to achieve our goals in public and private life. If we make good choices, we prosper by building wealth and freeing up resources to live our lives more closely aligned with personal goals and objectives. We are less focused on staying alive, putting a roof over our heads, or worrying about whether we have enough food to eat. Good choices increase our productivity, so we can spend more time investing in the future by upgrading our skills or spending more time with family, friends, and in leisure. If we make poor choices, our wealth falls, and our opportunities become more narrow. Poor choices almost inevitably lead to a lower standard of living. Our personal choices have profound effects on the communities within which we live and interact as well. Sometimes, these choices can result in unsustainable impoverishment—death. The stakes for making the wrong choices can be quite high.

These choices are bounded by practical constraints on how we decide to use the resources available to us—our labor and talents, machinery and equipment, ability to innovate, and access to natural resources such as land or water—and how we use them to solve everyday problems. These constraints are sometimes physical, such as the time available to perform a task, and sometimes financial. Sometimes the constraints are formal, but not physical, such as laws and regulations that limit how we apply our talents and other assets to the production of certain goods and services. For example, laws against drug trafficking limit the ability of drug dealers to use private capital to establish and run formal businesses that can scale to serve large markets. In other cases, the constraints are informal or a consequence of social norms, such as preferences for organic or local food. Sometimes the outcomes frustrate us. Sometimes they inspire us to bigger and better things. All of these decisions, as well as the constraints that guide them, fall into the realm of economics and economic analysis. Legions of economists are trained every year, and tens of thousands are employed worldwide, to help us understand these choices, why we make them, and their consequences.

Economics as backstory

Unfortunately, this “choice framework” is not the one most people think of when they hear the term “economics.” For many, economics consists of graphs showing demand curves, supply curves, and their intersection at an abstraction unconnected to the real world called “equilibrium.” Others might think of equations and formulas that seem to distill complex decisions into one or two overly simplified factors. After all, profits do equal revenues minus costs, or P = R - C, right? Maybe not. Or at least the basic profit equation is not a particularly helpful one when applied to the choices people make on a daily basis about how to set a price for sale in their store, or what to pay their workers, or how to use technology to increase productivity.

At the root of all modern economics, however, is the analysis of how individuals use scarce resources to achieve their personally determined goals and ends. In the modern economy, this most often happens through a market economy, a system of producing goods and services where choices about resource use are guided by prices determined largely by the consumers making purchases and suppliers providing them for sale. Changes in price can determine whether an item on the market—a house, a computer, a smart phone—will be profitable, a financial disaster, or successful enough to just get by.

For the most part, predicting the financial success of goods and services launched on the market has been difficult, providing substantial scope for entrepreneurs to experiment with new ideas and configurations to meet customer needs. Few people saw the potential of how changing the way hamburgers were made, or what ingredients were used in milkshakes, would fundamentally shape the world’s eating habits. Few people fully understood the potential of social media to transform the way generations communicate. Few people thought that using the internet to fulfill orders for books would radically transform retail merchandising. Few people were willing to bet on how a new way of storing music would radically transform entertainment and communication. Yet each of these innovations—pioneered by Ray Kroc at the McDonalds Corporation, Mark Zuckerberg with Facebook, Jeff Bozos with Amazon.com, and Steve Jobs at the Apple Corporation with the iPod—transformed the ordinary lives of billions of people thanks to their ability to take their visions of what people wanted and were willing to buy to a market where consumers could make the final decision. Each individual decision aggregated to a series of revolutions that changed society, the economy, culture, and politics.

What does all this have to do with movies and contemporary cinema?

This book is not an introductory textbook in economics. At least the primary goal is not to be a substitute for an introductory economics text. Rather, the purpose of this book is to use the world of movies to show how the choices we make, the obstacles we overcome, and the triumphs we experience on a daily basis are often integrally tied to economic principles and concepts. The story of economics is the story of human choices, decisions, and their consequences. Economics is the backstory for many of the characters that unfold on the silver screen.

But this book does much more in the following pages. We go beyond just looking for concepts in an economist’s version of Where’s Waldo? The chapters that follow show how economics and the economic way of thinking can help us understand the deeper and more profound meanings of many films, the motivations of their characters, and even help us understand the real world in which we live. Sometimes an economic lens helps identify consequences unknown even to the directors and screenwriters until the story unfolds in its final form.

For example, the modern reboot of the classic Western movie The Magnificent Seven pits washed-up gunslingers hired to protect a mining town against the ruthless owner of a mining company. Is this just a story of good versus evil? Or is the story itself rooted in economic history? In fact, mining tycoons did exist at the time period set in the film, but the screenwriters might have shortchanged the power of their own story by not digging more deeply into the history surrounding the rise of these 19th century industrialists.

On the other hand, the Academy Award winning urban drama Moonlight is remarkably true to the reality of some inner-city neighborhoods. Set in Miami, Florida, the movie follows the growth of a young boy relentlessly bullied as a young child through his transformation into a drug dealer and street gang leader. The stark circumstances that narrow young Chiron’s possibilities for the future also provide a profound window into labor markets and the consequences of poorly conceived public policies that choke off economic opportunity in poor communities. Indeed, we can learn a lot about economic motivation, the role of entrepreneurship, and the social consequences of economic marginalization in the story of young Chiron and the choices he makes growing up in an impoverished urban neighborhood.

On a more uplifting note, the biopic Joy shows us the value of entrepreneurial persistence and vision. We see a side of entrepreneurship that is often difficult to explain through graphs drawn on a whiteboard or printed in a textbook. Indeed, the entrepreneurship depicted in Joy and other films may well challenge conventional understandings of cornerstone economic concepts found in introductory textbooks or classes. After all, does a market equilibrium accommodate, let alone predict, an innovation such as the “miracle mop” developed by Joy Mangano? Or the difficult choices characters made in seemingly lighthearted films such as La La Land about the meaning of work and visions for ourselves?

Economics in contemporary film

Contemporary film has a surprisingly significant amount to say about these choices and their consequences, in large part because of the storytelling structure of this art form. It’s the everyday character of these decisions that makes cinema such an interesting and useful medium for exploring them. These choices are often embedded in the stories that unfold on the silver (or silicon) screen, fundamentally shaping the way characters behave and react. In fact, the choices made by the characters in films must connect to the human experience, otherwise movies fail to engage their audience. But can we see them? Or, more appropriately, how do we see this economic behavior even when they are not an explicit intention of the filmmaker?

A good movie will not tell us when economics lessons or principles are in play. Rather, it will show us, either visually or through dialogue. This is the essence of storytelling in film, and the crucial difference between, say, reading a novel or a newspaper, and watching a movie. “Film is a visual art,” writes Syd Field, one of the preeminent industry experts on screenwriting (2005 [1979], 19). It “dramatizes a basic story line; it deals in pictures, images, bits and pieces of film … .” But these dramatizations are built around a “story,” a telling of events, whether real or imagined, to entertain or instruct. Famed screenwriting professor Robert McKee adds another dimension to this definition. A good story “unearths a universal human experience, and then wraps itself inside a unique, culture-specific expression” (1997, 4).

Because the stories in movies aspire to communicate universal human truths, a substantial amount of the content—character and plot—revolves around life decisions. Economic decisions, or decisions based on economic principles figure prominently. For example, the choice of a career focuses on our aspirations as individuals. These aspirations direct us toward some jobs and away from others. But our work choices are also constrained by limits imposed by a world bigger than ourselves, as aspiring jazz club owner Sebastian discovers in the Academy Award winning La La Land (2016). On the flip side, sometimes the practical nature of the world induces us into professions or jobs that lead us down a darker path. David Packouz makes this mistake when a high school friend lures him into the underworld of arms dealing in War Dogs (2016). In each of these cases, the choice made by the characters is motivated by their decisions about the best ways to satisfy their personal desires or wants in a world of scarce resources (e.g., money, time, talents). But the choices themselves are rational, almost textbook examples of economic thinking in action albeit with very different consequences.

This is the gritty reality of economics. Many people see economists as aloof, awash in theory. In reality, economics is as real as it gets. We do not live in an unconstrained world, or one with complete knowledge about the consequences of our decisions, or accurate foresight about how the decisions of others influence what we can do in the future. We have to allocate our time and our talents based on a twenty-four hour day, our current income, and uncertainty about future events and consequences.

Moreover, stories of people living in a constrained world are embedded deep in the history of economics. The first book on the social science that is now called “economics” was written by a Scottish moral philosopher, Adam Smith, who used the story of a baker to “show” the “invisible hand” of the marketplace at work. He used the illustration of a pin factory to “show” how people working in very specialized tasks, whether pulling the steel to make a pin, cutting the steel at just the right length, or fastening a head onto a thin rod, could produce many more than an artisan toiling alone in a shed. In fact, Smith peppered his thoughts and theories about trade, social welfare, and economic behavior with a vast array of examples taken from the realities of 18th century England and his job as a customs agent for the Crown. These stories captivated the imaginations of those who read his massive book An Inquiry into the Nature and Causes of the Wealth of Nations, jump-starting a revolution in thinking. Within a few decades, a new category of social inquiry, political economy, was well established. Within 100 years, economics was established as an academic field and profession.

Film takes this storytelling to a new level, opening new avenues for economic analysis and showing how economics plays out for ordinary people. By telling stories visually, where we can read reactions and observe decisions through the actions of characters, movies tap into a much broader audience. Economic behavior is a core part of the universal experiences of people making these decisions and living with the consequences. By grounding their stories in an archetype of human experience, economics becomes embedded in the visual storytelling we call film.

The art of visual storytelling

The practical effect of using visual storytelling is hard to underestimate. Here’s a reality check. The first Hunger Games movie brought in $153 million at U.S. commercial theaters on its first weekend (Staley 2012). That translates into about 19.5 million viewers during the film’s first three days. The trilogy required two and half years to sell 17.5 million copies after its initial launch. So the impact of cinema on the consciousness of the general public is exponential.

Contemporary Film and Economics will tap into this increasingly vast archive of visual storytelling to explain the role economics plays in our lives, the consequences of the choices people make, and the social ramifications of scarcity, choice, and profit. The next chapter explores in much more depth the way choice and economic behavior become an integral part of the stories told through film. Core microeconomic concepts of individual choice, utility maximization, opportunity costs, profit maximization, and uncertainty are explored in the context of movies such as Passengers, Castaway, The Founder, and others.

The following two chapters refocus on personal economic decisions and how they impact the economic fortunes of individuals and the economy. Chapter Three delves into a rich set of films including Wall Street, Jurassic World, The Big Short, and War Dogs to examine the role that entrepreneurship, economic motives, greed, risk, and innovation play in motivating behavior and the pitfalls of making the wrong choices. Chapter Four dives deeper. We look at how the labor market shapes choices individuals make about jobs and employment, and the effects of discrimination and economic decline on marginalized populations, through the stories told in films such as Moonlight, La La Land, The Florida Project, and Hidden Figures.

Chapter Five switches gears a bit, using the housing crisis and global financial crisis to show how individual decisions—microeconomic behavior—aggregates to macroeconomic consequences. Deeper examination of films such as Margin Call and The Big Short reveal important accuracies in these works as well their tendency to focus on a small part of a bigger picture. This narrow focus leads to a distorted understanding of a complex phenomenon with worldwide consequences. Similar themes play out in Chapter Six which explores how contemporary movies consider macroeconomic concepts such economic growth, wealth creation, innovation, monopoly, and poverty as they are depicted in movies as varied as Interstellar, Lion, The Magnificent Seven, and Slumdog Millionaire.

Chapter Seven examines how core economic principles and behavior play out in how modern cinema depicts public policy and government decision making. Drawing on films such as Jason Bourne, The Circle, Darkest Hour, Lincoln, and the Divergent Trilogy, we get a glimpse into what Nobel Prize winning economist James Buchanan has called “politics without romance.” Because of the nature of government decision making, where power is concentrated and the effects are felt society wide, movies have found the corruption and misuse of power rich fodder for their stories and for creating the conflict necessary to raise the stakes for their characters. Much of this behavior is consistent with economic principles applied to political behavior, a subdiscipline of economics called “public choice economics.”

Chapter Eight concludes with several brief observations about the importance of economic principles in understanding human behavior and choice, how these observations become inextricably linked to storytelling and movies, and how a clearer understanding of economics might lead to richer and more complex stories that strengthen the storytelling impact of movies.

A few caveats and qualifications

Contemporary Film and Economics aspires to stimulate economists, challenge filmmakers, and engage movie audiences alike. This book provides a broad introduction to the in...

Table of contents

• Cover
• Title
• Copyright
• Dedication
• Contents
• About the author
• Acknowledgements
• 1 The economics in film
• 2 A passage to choice
• 3 The economics of greed, entrepreneurship, and innovation
• 4 The labor market costs of crime, pride, and prejudice
• 5 Financing the housing crisis and the Great Recession
• 6 The nature and causes of wealth in film
• 7 Government without romance
• 8 Conclusion: The economics behind the story
• Subject index
• Movie index