Parks and Recreation and Economics

Jadrian Wooten

• Publisher: Taylor & Francis
• Year: 2021
• Print ISBN: 9780367557331
• eBook ISBN: 9781000401622
• Edition: 1
• Topic: Economics
• Subtopic: Business General
• Index: Economics

This book provides an in-depth look at the primary foundations of economics explored through the lens of the Pawnee Department of Parks and Recreation. Each episode of the hit television series, Parks and Recreation, includes material to help an eager learner understand the basics of one of the most fascinating fields of study.

Whether you've wondered how economists determine specialization or why fast-food restaurants continue to pop up around your neighborhood, the same situations have occurred in Pawnee. Each chapter highlights key scenes or major episodes that demonstrate how the characters experience economics in exactly the same way the rest of us do. This text primarily builds on the debates that take place between Leslie, Ron, and their co-workers, while also exploring key questions such as whether governments should try to help people through direct intervention or sell off all the swings to private corporations and let businesses handle day-to-day decisions. Learn how incentives can make Jerry appear to be a more productive employee short-term, but end up causing chaos. Do you wonder what it would be like to live in the early 1800s? Thankfully Leslie has already done that for us.

This book is a must-read for anyone looking for a fun way to learn the principles of economics, including as a supplementary text, and for all fans of Parks and Recreation. Take the advice of Tom and Donna and treat yo' self to this key read.

1

Principles of economic analysis

Economics is more than “the economy.” It looks carefully at how people, businesses, and governments make decisions. Parks and Rec serves as a microcosm of these decisions because we observe people who work for the government and interact with businesses. Economists have studied behavior dating back to the late 1700s, but haven’t markets changed a lot since then?

Whether we think of artisan markets from the Renaissance period, floating markets from Asian cultures, or the local farmers market held in Pawnee, markets bring buyers and sellers together to exchange goods and services. Except for perhaps the local chard vendor, the market we see in the “Farmers Market” isn’t much different than any other farmers market around the United States. How those markets choose to organize and the extent of government involvement in each market may vary, but they all contain some semblance of the underlying principles of economics.

Ron and Leslie epitomize the tradeoffs facing decision makers. In “Bailout,” Ron and Leslie meet at a diner to discuss the government’s role in helping a failing local business. Ron takes a market-based approach and argues that capitalism, however ugly it may seem to Leslie, is responsible for innovation and progress.¹ Leslie argues that governments improve community value despite not being profitable. Economics can provide insights to both, but our focus throughout this book will primarily be on market-based economies.

This focus is known as positive analysis. It has measurable outcomes and the discussion focuses on objectivity. In “How a Bill Becomes a Law,” Leslie visits Joan Callamezzo on her show Pawnee Today to discuss the city council’s performance. Joan presents Leslie with a survey showing the city council’s low approval rating, and mentions how the city council has done very little in her opinion. Basing an analysis on opinions, like whether the Pawnee City Council is doing enough for the residents, is a type of normative analysis. Like Joan will do in this scene, it’s easy to mix up normative and positive analysis. Leslie reminds Joan that opinions are not the same as facts. Economists tend to focus their policy analysis on the measurable, positive side of the argument. Debates and critiques about what should be done are left to the normative discussions.

The actual principles

Every episode of Parks and Rec contains content that can help viewers learn economic concepts along the way. In some instances, entire episodes could be used to teach a particular concept, while others may contain references that can be used to support concepts covered in a traditional text. Regardless of the amount of content, you’ll find a reference to every single episode produced.²

Understanding a few key principles of economics opens the door to learning a bit more in later chapters. The following is a list of key concepts that will be described with show segments for more clarity. The main economic principles we’ll cover throughout the book are as follows:

1. Resources are scarce
2. All decisions have an opportunity cost
3. People respond to incentives
4. There are gains from trade
5. Markets move toward equilibrium
6. Resources should be used efficiently
7. Markets usually lead to efficiency
8. Markets sometimes fail
9. Governments can help when markets are inefficient
10. Our actions are interconnected

Resources are scarce

Our wants are unlimited, but our resources are not. “The Pilot” revolved around Leslie’s challenge of building everything she wants on a parcel of land that wasn’t yet hers to build on. Resources, from an economic standpoint, are the means to the end. For consumers of products, resources are often our time and money, but for businesses it may include things like land, labor, and machinery.

In “94 Meetings,” April has accidentally scheduled all of Ron’s meetings for the same day: March 31st. She originally thought she was tricking residents because she didn’t think it was a real day. They’ve all shown up to meet with Ron, and he must decide how to allocate his time for all of these meetings. He brings in other members of the Parks Department to help make sure all of the meetings are held. When the goal of a firm is to achieve some level out output, like meeting with all of the residents who scheduled meetings, they will try to minimize their cost. Ron does this by spreading the meetings among the Parks Department employees.

In other instances, individuals may try to maximize production given a fixed number of resources. In “Two Parties,” Ben’s bachelor party turns into a collection of parties when he finds out his friends never had their own bachelor parties. Chris, Ron, Tom, Ben, and Jerry try to complete as many things as they can in one night so that each of them can experience a bachelor party. Because their time is constrained to that single night, they arrange activities to get the most out of it.

There are tradeoffs to all decisions, regardless of whether the goal is to minimize costs or maximize output. In “94 Meetings,” others in the Parks Department have to sacrifice part of what they’re working on to help Ron. In “Two Parties,” the entire night was originally set aside for Ben, but now he gives up a portion of his night to help others.

All decisions have an opportunity cost

Nothing in Pawnee, nor in our own life, is ever free. Even when things appear to be free, they may only have no monetary price associated with them. Because resources are scarce, every decision has a tradeoff, and the value of what is given up is known as an opportunity cost. In “New Beginnings,” Chris and Ann publicly discuss whether to buy an engagement ring. Another couple overhears their conversation, and reconsiders purchasing an engagement ring. They frame their decision using the concept of opportunity costs: an engagement ring costs thousands of dollars, which could be put towards purchasing a house. Sometimes, the opportunity cost is easy to see.

When decisions don’t have an explicit cost associated with them, it can be harder to see the opportunity cost. Ben provides us with a nice example of economists’ favorite mantra: there’s no such thing as a free lunch. Even decisions that have no price attached to them have an opportunity cost. In “Pawnee Rangers,” Ben laments leaving Pawnee now that the state government has asked him to return to Indianapolis. He wants to stay for Leslie, but his attention quickly diverts to his loyalty card at Ray’s Sandwich Place. Ben is only two sandwiches away from a “free meatball sub,” but he then realizes his loyalty card is expired. Even if the card wasn’t expired, Ben’s meatball sub wouldn’t actually be free. While Ben wouldn’t have to exchange any money for that last sandwich, he must purchase ten sandwiches to get to that point. The cost of the “free” sub is factored into the price of all the other sandwiches he previously purchased.

People respond to incentives

Need help getting people to do something for you? Motivate them with either a “stick or a carrot.” Incentives are familiar to us from an early age, but people don’t often realize they are one of the key foundations in economics. In “Lucky,” Ron and April use snacks to incentivize Andy to study for his Women’s Studies exam. Each time he answers correctly, they feed him a snack.

Well-intentioned incentives, however, may have unintended consequences. Chris and Ron debate leadership styles in “Article Two.” Ron believes the three strongest motivators are money, fear, and hunger while Chris believes that positivity can be just as motivating. Any of these incentives may be effective depending on the situation, but there could also be unintended consequences that occur with the intended outcome.

Policies and incentives, however, should be judged on the outcome, not on their intention. Chris and Ron decide to use different incentives to motivate Jerry to file folders and both seem effective. Under Ron’s incentive structure, Jerry files more folders than under Chris’s incentive structure. Part of the reason Chris’s method wasn’t as effective was that Jerry ended up spending 20 minutes on the phone with his wife telling her about how proud Chris was of him. While Ron’s incentives motivated Jerry to file more folders, they were almost all filed incorrectly.

There are gains from trade

Leslie rarely makes her own breakfast and Jerry doesn’t homeschool his children. Leslie lets JJ make her waffles since she believes he makes the best breakfast in the country, and Jerry lets his daughters attend school in Pawnee. Every decision someone makes has an opportunity cost. If Leslie were to make her own breakfast, she’d give up the opportunity to spend time doing something else she loves. Her time is scarce, so it’s beneficial to specialize in government work and trade her income for JJ’s waffles instead.

Chris tries to improve efficiency across the Parks Department in “The Bubble” by reassigning people to different tasks. Ron must sit at a circular desk so he can better respond to people. Jerry is promoted to public relations director, April is assigned as an office-wide assistant, Tom is sent to the fourth floor to organize files, and Andy is made Tom’s assistant. The problem with this new arrangement? Everyone in the Parks Department has already specialized in their previous jobs and moving them around has resulted in chaos, not efficiency gains. Tom performs best when he’s in front of people. April has been assigned to work for everyone, but hates people. Jerry is afraid of public speaking! When people specialize, they’re able to produce more and waste fewer resources.

Markets move toward equilibrium

One of the driving forces behind a market-based economy is that no one is in charge, and yet, outcomes seem to naturally occur and “move markets.” In “Jerry’s Retirement,” Ron talks about the social Darwinism of replacing the office goof through natural selection. While it looks like Tom may be the next butt of all jokes, Ron is able to intervene and keep Jerry around. One of the things that sticks out about this cycle, though, is that it’s naturally occurring. We see it through social and business interactions regularly.

Ron’s favorite store is Food and Stuff, but that’s mainly because it’s equidistant from his home and office. If Food and Stuff has too much ground beef, they mark the price down to encourage people to buy more. If they accidentally mark a price too low and customers head to the store in a frenzy to get this great deal, someone at Food and Stuff would likely realize the price is too low and raise the price of the product. The goal of a market-based economy is to ensure that the quantity of products available to purchase is the same as the quantity demanded from consumers purchasing those items.

While prices are often the mechanism by which markets “clear,” occasionally time can be used as an allocation mechanism. People may switch lines at Food and Stuff to minimize their time spent shopping. Regardless of whether the mechanism is time or prices, markets tend to move toward some sort of equilibrium. If there are opportunities to buy products at low prices and resell them at higher prices, or if firms are profitable, new business will enter the market. Profits will decrease across the market as entrepreneurs enter trying to earn a share of profit. In a market-based economy, no one is in charge of these decisions. This principle is the guiding principle behind the concept of Adam Smith’s invisible hand.³

Resources should be used efficiently

It’s helpful to recognize why prices move markets to equilibrium. If prices are set too high, mutually beneficial transactions will not occur. If prices are lowered some, buyers can purchase more products and firms will be able to sell additional products. From an output standpoint, that implies we should arrange markets to achieve some sort of equilibrium level of output.

If firms have too much power in their markets, though, they may hold back what is available in order to maximize their profits. If a firm is forced to pick a single price for their product, they’ll pick a higher price than the cost of producing the item, which will result in fewer people purchasing their product. If governments fix prices at a level above the equilibrium price, sellers may oversupply products to markets, resulting in waste. One outcome of a competitive market is that there are no wasted opportunities, but it doesn’t mean everyone in the market believes the price is fair. People may prefer a more equitable price compared to the efficient price, and they’ll ask their politicians to intervene.

When economists argue that resources should be used efficiently, it’s coming from a positive framework. The efficient use of resources will usually result in the highest amount of social well-being possible. There are times, however, when people may be willing to sacrifice some of this surplus in order to achieve a different outcome. This decision is usually based on a normative perspective. The problem with altering the efficient outcome to achieve a more equitable outcome is that not everyone will agree on what’s considered fair.

Take for example the act of splitting a check when a group of friends goes out together for dinner. In “Tom’s Divorce,” the group goes to dinner to commiserate Tom’s pending divorce, but an issue arises. Tom orders an inordinate amount of wine for the table, and Ann quickly announces to the entire table that she will not be drinking any of the wine. In an aside, she shares how she hates going out to group dinners where people decide to split the check evenly, regardless of what they order.

Splitting a bill evenly across all group members may come across as being an act of fairness since everyone will pay the same amount. People who order something that costs more than the averag...

Table of contents

• Cover
• Half Title
• Series Page
• Title Page
• Copyright Page
• Table of Contents
• List of illustrations
• Acknowledgements
• Introduction
• 1. Principles of economic analysis
• 2. Comparative advantage and trade
• 3. Demand and supply
• 4. Economic efficiency
• 5. Government intervention
• 6. Production and costs
• 7. Market structures
• 8. Labor markets
• 9. Externalities and types of goods
• 10. Game theory and behavioral economics
• 11. Money
• 12. Economic growth
• 13. Inequality
• 14. Public choice
• Conclusion
• Bibliography
• Special Episode
• Subject Index