The Oscars® are handed out on March 2, and, in many Canadian provinces, Spring Break for high school students is soon after. So, now is a good time to remember that some movies present important economic ideas entertainingly. Most movies do a bad job of conveying economic ideas precisely.
Some reasons are obvious. Movies tend to tell stories by focusing attention on a hero or heroine who overcomes a challenge. Stories about fighting the “system” can succeed but, when the villain (say, a CEO) personifies an “economic system”, the story misleads: the equilibrium principle should remind you of why removing this villain may not change the system. Second, movies simplify the complications. Consider a movie which is “based on a true story”: the economic content may be a subplot relative to a love story between the lead actors.
One reason may be less obvious. Consider this list of 26 movies chosen to represent the “Economy”. Two-thirds focus on misdeeds in the finance sector. That fraction is not too surprising since banks are both familiar and vaguely villainous (why do banks pay 0.5% on a checking account and charge 21% on a credit card?!). That fraction is misleading: financial markets are a small, unrepresentative sample and Economics is a behavioural science. For this reason, learning economics through movies matches the idea of this blog: that economic ideas are often hidden in plain sight.
The following recommendations are sorted by principle. They tend to focus on award winners and have developed a reputation. So, few are recent.
Movies benefit from the drama of a big choice. Fewer movies have a plot with many small choices, such as 50 First Dates. The training montage in your favourite sports movie, before the hero wins, is also relevant. Movies about misaligned incentives or a “conflict of interest” create tension because a character acts in ways which seem too small to be detected: The Shawshank Redemption.
Honourable Mention (HM): Many movies have been “reimagined” or have a “Director’s Cut”. Which version of “Romeo and Juliet” , “A Star is Born” or “A Christmas Carol” is the best? Given that the story does not change, which differences make it better?
Movies offer emotional truths with stories not logic. Emotions may lead to action but, since constraints on actions exist, opportunity costs cannot be ignored. Some movies focus on choice: Field of Dreams, Apollo 13.
HM: Superman: A movie about a hero with invincible superpowers is boring. So, the story has to include a weakness which the villain exploits: e.g., Superman vs. kryptonite or magic. Overcoming it requires a choice.
Since the economic system often takes the role of a villain, the most instructive portrayals show the opposite of the current system.
- Rationing during WWII:
- US: Point Rationing
- Canada: Rationing (during WWII) and Price Controls and Rationing (after WWII)
- Managing a strategic situation depends on whether the actions of different players are compatible or not: Thirteen Days
HM: Movies which focus on a disaster, since interrupting the familiar equilibrium causes shortages.
Examples of this principle are hard to find since hero-villain movies work best when the story ends with the hero winning and the villain losing.
- Some movies avoid that oversimplification: Stalag 17.
- Movies about negotiating are excellent choices, such as Bridge of Spies, Moneyball or Jerry Maguire.
HM: Anything related to Star Trek since they suggest that the benefits of good technological innovations spread beyond the innovators. They are confused about money, ownership and rationing scarcity (see also the comments below the video).
To answer the question “What difference would it make if …?”, it is necessary to compare “Before” and “After”. Therefore, the best choices tend to be documentaries related to your favourite market or which focus on the effects (proposed or actual) of a policy related to globalization or the environment. The National Film Board of Canada offers many documentaries and other work on economics.
HM: It’s a Wonderful Life, A Christmas Carol, and Groundhog Day.
Now, it is your turn to write.
- Which movies did I miss?
- Wonka is about a cartel trying to prevent entry by a competitor. What is the significance of the empty shop in the mall? Why didn’t some other type of business fill the space?
- Other people provide lists of movies with scenes that illustrate economics: [1] [2] [3] [4]. In those movies, which scenes do a better than average job of applying a principle correctly?
5 Basic Principles of Economics 
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