Monday, October 25, 2010

Economics of Seinfeld

Recently came across a blog,, that uses the "show about nothing" to explain the "dismal science". Here are several of my favorites:

Moral hazard and the car rental: Jerry's car is stolen, so he rents a car. The rental company doesn't give him the car he reserved; he gets a small economy car. They ask if he wants insurance, and he replies, “Yes, because I'm going to beat the hell out of this car.”

Signaling and wedding rings: George discovers that when he wears a wedding band, women come on to him. The band signals 1) that you are not gay, and 2) that you are of marriageable quality. A girl discusses the signal with George; she uses the ring as a screening device.

Cost-benefit analysis and the job offer: George thinks he has been offered a job, but the man offering it to him got interrupted in the middle of the offer, and will be on vacation for the next week. George, unsure whether an offer has actually been extended, decides that his best strategy is to show up. If the job was indeed his, this is the right move. But even if the job is not, he believes that the benefits outweigh the costs.

Costs and the bottle deposit: Kramer and Newman hatch a scheme to arbitrage bottles from NY, where the deposit is 5 cents, to Michigan, where the deposit is 10 cents. They can't figure out how to make the costs work; gas is too expensive (variable costs), and there's too much overhead (fixed costs of tolls, permits, etc.) with using a semi to haul the bottles in volume. Finally, they hatch a scheme to use a mail truck, which lowers their variable and fixed costs to zero.

Altruism and the calzone: George puts a dollar in the tip jar at the pizzeria, but the counterman's head was turned and he didn't see it. George laments that it cost him a dollar, but he got no credit for it. His altruism is not pure—he gets utility not from giving, but from getting credit for giving.

Tragedy of the commons and golf: Kramer has been playing on a private golf course, but has lost his access. He gives an impassioned speech about what it's like to play on a public course—the crowds, the brown patches of grass, etc.

Opportunity cost and friends with benefits: Jerry and Elaine are contemplating having sex. “We can have this...or we can have that." But clearly, they can't have them both, though they try. Later, in the coffee shop, George chastises Jerry for trying to have them both.

Intellectual property rights and the bedroom: Elaine's new boyfriend, Jerry's mechanic David, has stolen a bedroom move from Jerry. Jerry wants him to stop using it, but Elaine wants to continue to enjoy it. In the end, Jerry ends up “selling” the property right for a cheaper bill for car repair.

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