'The Simpsons' and Economics

So why use “The Simpsons” to teach economics?

People struggle in economics for two reasons. One, they don’t think intuitively in the same way that our models do, but the other is you need what a friend of mine calls “economic imagination.” You have to figure, “OK, steel prices rise, what’s going to be the impact?” Some firms are going to just absorb that higher cost and try to pass it on to customers. Others are going to try to keep costs down by using less steel in production — maybe get rid of some features that customers don’t want as much or maybe they can substitute some other cheaper metal. There is no right answer, but there’s stuff that’s in the ballpark of how people might respond.

“The Simpsons” gives us an example of how people might respond, sometimes extremely so. The one I always use that’s in the book is Homer Simpson is in a debate in high school and the proposition is that the speed limit should be lowered to 55 mph. His response, which not everyone would agree with, but it makes sense from an economic perspective, is “Fifty-five? That’s ridiculous! Sure, it’ll save a few lives but millions will be late!” And that just recognizes that there are tradeoffs. Now we might say those tradeoffs aren’t worth it, but there are tradeoffs.

I thought it was funny when an author in the book calculates the value of Bart’s soul as sold to his friend Milhouse. 

That raises two great things about using “The Simpsons.” One is that because it’s animated we know them, but we can set aside our normal human reaction to think emotionally. Obviously emotions are very important for society, but you want to get the facts and an understanding of the situation before you decide how to act. We can understand that he wasn’t really selling his soul. That gives us distance. 

The other great thing is people ask is, “Why is it a compilation?” It’s because I don’t have a monopoly on understanding the way we can view these situations. We all have a different economic imagination. For me the best part of editing was seeing what people came up with. My colleague at WVU, Andy Young, takes one little quote from Bart’s friend Milhouse who says, “I can’t go to juvie. They use guys like me as currency,” and he asks, “Well, what does it mean to say Milhouse is money?” He uses that quote to talk about what purposes money serves. It’s a store of value and unit of account. Most important, I would have never thought of using that quote in that way. 

This summer there were a lot of news stories when the show announced that Marge and Homer would separate. What do you think could be some microeconomics lessons from that story line?

If I were writing a chapter on that I would use it as a lesson to talk about understanding statistics. OK, they’ve broken up. Who gets the kids? What happens to median household income after they’ve broken up? A big thing in trying to understand wage stagnation is that the number of households in our income distribution is changing, and it’s changed over the last 30 years. There are more people per household in the upper income range because there are more intact families. Now the Simpsons have two households. They’re poorer. Clearly their combined living standard has fallen, and so let’s talk about other changes to the family that come out of that. You can always find a way to spin it into some lesson.

When in your teaching career did it become clear to you that using examples from “The Simpsons” was a good way to teach economics?

It was actually my second course I ever taught as an adjunct in the early 2000s at a small liberal arts college in Columbus, Ohio, called Capital University. I was teaching MBA courses to nurses, and it was a 3.5-hour course. And you just can’t talk for 3.5 hours. And so I’d try to play music. Clips were more difficult to show at the time because YouTube didn’t exist, so I started bringing DVDs. 

What got you watching “The Simpsons”? 

I actually watched “The Tracey Ullman Show,” which was one of the first four FOX programs back in the day. I watched it because we only had four channels at the time, and “The Simpsons” were little snippets during the show. And so I’ve been a watcher since those snippets. When they started “The Simpsons” I just followed right on. I think that’s true of most of the authors because you can tell so much of the stuff is weighted toward the earlier episodes. Those are the ones they know and have seen dozens of times. 

What’s one of your economics lessons from “The Simpsons” that you come back to a lot?

The one that for many people is most controversial, but I think was a really interesting touch, was the last chapter in “It’s Getting Better All the Time,” [by Steven Horwitz and Stewart Dompe] showing economic progress through “The Simpsons” episodes. They’re always lower-middle class, right? But what do we see? We see in some ways their living standards rising. One of the early episodes is about how they have to pawn their rabbit-ear TV set to afford therapy. Now they have a flat screen TV. The opening montage is a flat screen TV falling off the wall! There are episodes now with the kids having cell phones and dealing with that. I think it’s important not to downplay real income stagnation, and the rise in prices of the goods that people really value like healthcare and education is important. But it’s also important to note the falling cost of important consumption opportunities. “The Simpsons” reflects that change in our society. 

What’s one aspect of microeconomics you wish more people knew about?

The thing I try to stress most in my class, and I think it’s the hardest for students to get, is we need to have a symmetry in assumptions about behavior no matter what sphere people operate in. If we’re going to put certain motivations on people in the private sector, they must have those same motivations in the public sector or in the nonprofit sector. Now the outcomes might be different because the incentives might be different. But if you’re trying to understand those situations we can’t just say, “It’s not-for-profit; it’s going to be fine.” Why? The people are somehow angels because they’re working there? No, people are just applying for jobs and they’re going to get something. And that’s the hardest thing for folks to get. 

The second exam in my microeconomics class takes everything we learn in microeconomics and applies it to government and the not-for-profit sector. The exam scores go down and back up on the next exam. It’s just hard; I don’t understand it. People just want to say move it over to this sector and everything will be fine. Which is a shame because then you ignore the fact that we actually can make important reforms if we really understand incentives and behavior in the public sphere. 

Some of my research is on the Base Realignment and Closure Act. For 28 years the military in the United States wanted to close or realign domestic bases because of changing Cold War priorities. For example, we didn't need all these bases on the West Coast anymore. However, every single one of those bases was in some member of Congress’ district so they blocked any change. There were zero domestic changes for 28 years! 

In the late 1980s, two economists in Congress who used to be economics professors said, “How do we fix this?” Phil Gramm and Richard Armey bundled the bases all together and everybody had to vote on the package as one. And so now it wasn’t just my district closing it was all these bases. Not only could I be outvoted, all the other members are going to vote for it because it is billions in savings and the military wants it for military readiness. The BRAC process has saved billions of dollars since it was enacted. Gramm and Armey understood the incentive structure of our political system and that allowed them to find a way to overcome inaction. If I can get people to think clearly about the incentives of individuals in the political system, I’d be very happy, but so far I feel I haven’t.

Have you encountered an episode of “The Simpsons” that does not illuminate economics?

Oh, I’m sure there are ones but I pride myself on being able to find economics in just about everything. There are certain episodes that are much more economics-focused or have bigger economics lessons, like when Homer becomes a sanitation engineer. Or the immigration episode. Economics — it’s not everything in life but we can put everything through that lens to get a different and important perspective on what’s going on. It doesn’t tell us what we should do, it just helps us better understand the factors impacting our decision.

I looked at the original paper that you’d written on the “The Simpsons” and economics [“Homer Economicus: Using ‘The Simpsons’ to Teach Economics,” Journal of Private Enterprise, 2005], and what struck me was that you say that it’s hard to get students to think like an economist and that economics is counterintuitive. How do Homer, Marge and the rest of them help with that?

One of the biggest struggles I see when students are in my office after class is that they are using introspection. They say “I wouldn’t do that in that situation.” And they might be perfectly correct. But the relevant question for businesses or public policy is, “Might someone have the incentive to do this, and how big is the effect?” To illustrate this in class I talk about the case of ‘overcooked’ babies. Australia wanted to increase the birthrate so they gave people $5,000 AUD if they had a baby after July 1. Well some people plan to get pregnant, but some people don’t plan to get pregnant. What happens if you don’t plan to get pregnant but you end up being pregnant anyway and due the last week of June? On June 30 nothing — July 1, $5,000. 

Most of my students think there’s nothing you can do about it; you’re pregnant, so this is going to have no effect. Turns out a record-high number of babies were born on July 1, twice the number of the day before! Incentives do matter on the margin, even if they don’t matter for everyone. 

The nice thing with “The Simpsons” is we’ve grown up with those characters. We can see from his extreme behavior that we wouldn’t want to be like Homer but we can understand his motivations. He’s a good foil for that kind of extreme response to incentives.

Is there anything I haven’t asked that you think is either important for people to know about economics or fun to know about “The Simpsons”?

This started in the classroom, but I was hoping this would be the type of thing somebody could give to a dad or an uncle who’s a Simpsons fan and wants to learn some more economics. It’s a good entryway for them. My motivation for this was somebody gave me a copy of “The Simpsons and Philosophy: The D’Oh! of Homer” that came out 20 years ago. One of the editors told me that book sold like 200,000 copies. What other modern philosophy book has sold 200,000 copies? As someone who cares about economic literacy, I thought this book was a great way to reach people.