Assignment:

In "Silas Stingy", The Who describe a man so in love with his money that he cannot bear to be away from it. Silas even denies himself basic necessities, such as food, to keep as much money as possible. The song ends with a description of how Silas goes to great lengths to protect his existing money from thieves, only to discover that he spent it all in the process. Putting aside Silas' unhealthy obsession with currency, explain how the fractional reserve banking system can help him expand his supply of money through the system of required and excess reserves and loans. On the other hand, explain to Silas why FDIC insurance is necessary to guarantee his money, and how these conditions may make his money safer in a bank than under his mattress. Be sure to also explain inflation and how it can gradually erode the real purchasing power of Silas' money when stored in a bank, even when the money is protected by FDIC insurance and being expanded by the fractional reserve banking system. Finally, make a case for Silas to deposit his money in an FDIC-insured banking institution or keep his hard assets, based on your own opinion of the pros and cons for Silas of fractional reserve banking, FDIC insurance, and the accompanying inflation.

[Provided by Derek Lyndes, Beloit College]

Assignment:

Bruce Springsteen sings about the demand and supply of sex and the subsequent equilibrium prices of different acts in "Reno". Why might some activities result in a higher price than others? Steven Levitt and Stephen Dubner in SuperFreakonomics provide some evidence that the price of vaginal sex with prostitutes in Chicago is about $80 and oral sex is $37. Why, if Springsteen can be believed, might sex more expensive in Reno than Chicago?

[Provided by Simon Medcalfe - Augusta State University]

Assignment:

In the song "Slow Motion" we see a young man appearing to make several bad decisions. To many, these decisions are irrational. But are they? Explain the young man's actions as a rational. Your answer should discuss the marginal benefits of conducting the violence, drug intake, and sex as compared to the marginal costs of each action.

[Provided by Rajeev Viswanathan - Beloit College]

Assignment:

What was the economic advantage to engaging in slavery? Why did they choose to engage in economic ventures in Barbados rather than remaining in their home country, especially given the high start up costs (ship construction, supplies for the voyage, etc)? What are the opportunity costs of starting up a overseas economic venture? Given the high levels of unemployment in Enlightenment-era Europe, why didn’t more Europeans join colonization efforts in order to escape
their economic plight? What could be some long term costs of natural resource consumption associated with such “ghostly crimes?”

[Provided by Tim Schutt - Beloit College]

Assignment:

Many rock stars like Neil Young get a maid. Why don’t they do their own cleaning and fix their own meals? If you were thinking about getting a maid what information would you need to make that decision? For example, if you could hire a maid for $100 per day to cook and clean, would you hire her? Does your answer differ if you are a successful lawyer or a burger flipper? Why?

[Provided by Simon Medcalfe (Brenau U.)]

Assignment:

Economists use GDP to measure the total production in an economy. Sometimes GDP is used as a measure of well-being. However, as Neil Young points out, GDP is not a perfect measure of well being. For example, it is not adjusted for inequality (the homeless man), crime (a kinder, gentler, machine gun hand), and pollution (Styrofoam boxes for the ozone layer). What other factors affect our well being but are not calculated in GDP? If we included these other factors that affect our well being, does GDP over estimate or underestimate our well being?

[Provided by Simon Medcalfe (Brenau U.)]

Assignment:

Economists divide unemployment into three categories: frictional, structural, and cyclical. What type of unemployment does Bruce Springsteen suffer from? What is today’s unemployment rate? How much of today’s unemployment is frictional unemployment? How much is structural unemployment? How much is cyclical unemployment?

[Provided by Simon Medcalfe (Brenau U.)]

Assignment:

Draw a supply and demand diagram that shows the boss receiving “the lions share bliss” while someone who scrubs floors gets much less. In other words, what factors would affect supply and demand such that CEO’s receive 300 times the compensation of average workers? Are CEO’s paid too much?

[Provided by Simon Medcalfe (Brenau U.)]

Assignment:

Mark Knopfler claims that musicians get money for nothing. Do you agree with this statement? Can you get anything for nothing? What are the costs of being a musician? Make sure you discuss the opportunity costs.

[Provided by Simon Medcalfe (Brenau U.)]

Assignment:

What does this song have to do with sunk costs? Explain in your own words.

Hat tip: Bryan Caplan

Assignment:

Billy Joel laments the loss of the way things were in Allentown. At one time it was a boom town, but now "they've taken all the coal from the ground." Assume that the presence of coal is the primary reason Allentown exists at all (like mining towns in the old west). (See here for a more complex history of Allentown). If coal and water access for easy shipping brought people flooding to the area upon its initial discovery, why don't people leave as quickly as they came once the coal is gone? Which do you think will decline faster: population or housing prices? Why? Based on your answer, can it be utility maximizing to stay in a declining city?

Assignment:

This song sings the virtues of having $1M and all that it can buy. However, millionaires are far more common today than when the Barenaked Ladies first released this song in 1992. Use the consumer price index to find the equivalent amount of money you'd need to possess today to buy what $1M dollars bought in 1992. Also, there are several items mentioned in the song that money can't buy. Discuss.

Assignment:

Researchers have questioned whether you can design a welfare system that provides a generous safety net, but not so generous that the effective marginal tax rate that the poor face when contemplating leaving welfare is too onerous. Explain why creating the right incentives to get productive people to leave welfare is so difficult.

Assignment:

Mick Jagger dropped out of the London School of Economics to pursue a career with the Rolling Stones. His decision to quit proves that he learned something about opportunity cost! However, in the song he is never satisfied which is atypical. Most people become satisfied as they do more of something. Explain the theory of diminishing marginal utility and how it is applied throughout the song.

Assignment:

Losing it all is pretty rare; likewise, striking it rich is rare. But how rare? Go to your textbook or the internet (use a reputable source!) to find out how much income mobility exists in the U.S. economy. How common is it for someone in the top quintile of the income distribution to fall to the bottom quintile within (say) a decade? Is this more income mobility or less than you would have expected? What are some common explanations for such a decline in income?

Assignment:

Economics is sometimes dubbed the dismal science, in part because it emphasizes that there are costs/tradeoffs associated with everything we do. Why, according to economists, is getting people enough food, shoes, housing, etc. actually not as easy as the song suggests? If we could get everybody all the food, shoes, and housing they wanted, would we have any economic choices facing us?

Assignment:

This classic 1969/1970 song advocates that we "share the land." Do you think simply sharing the land is likely to lead to the good results suggested in the song ("no more sadness, no more sorrow...")? In writing your answer you might want to consider the idea of the "tragedy of the commons".

Assignment:

In this song the maples are upset about the "greedy" oaks and demand equality. Do you see any parallels between this song and policy issues such as anti-discrimination laws, affirmative action, set-asides, etc.? In your discussion be sure to highlight the notions of efficiency and equity/equality and the trade-offs that may exist in achieving these goals.

Assignment:

What does it mean to be 'unemployable'? Is the person who is 'unemployable' more likely to be frictionally unemployed or structurally unemployed? The lyrics state that "this life is sacrifice ... to a stranger's bottom line." To what extent do you think this statement is generalizable? What makes some occupations more rewarding than others?

Assignment:

In "The Day the Dollar Die", Peter Tosh appears to be longing for a world without money. What would a world without dollars look like? Do you think there would be less corruption or that scarcity would be eliminated in a world without money? What other problems would arise? Your answer should address the coincidence of wants.

What if Tosh is only talking about fiat money? Do you think his lyrics can be read to be anti- fiat money? Give an example.

Assignment:

Explain how the forces of supply and demand, steep rent-gradients, taxes, and the Tiebout Hypothesis all combine to drive people away from the more densely populated central city areas (where economies of scale exist) and into the surrounding communities.

Assignment:

The song "Signs," originally performed by the Five Man Electrical Band and also covered by Tesla, takes a stand for communal ownership of property. What are the costs and benefits of communal ownership of property? Assume that "keeping mother nature in" is purely selfish - does the invisible hand principle still apply? How about in a situation where fences are illegal?

Assignment:

In the song “Moneytalks” by AC/DC, lead singer Brian Johnson is providing a list of financial inducements to a young lady urging her to “listen to the money.” Do you think people think about money when choosing their mates? Explain. Can you speculate as to why prostitution is illegal in most places?

Assignment:

In “Piece of Crap,” Neil Young sings about how everything he buys is junk. With reference to the song, under what conditions do you think consumers are more likely to be disappointed in their purchases? What market mechanisms help to alleviate these problems? Does Neil Young think these mechanisms work well (use examples from the song)?

Assignment:

In markets, resources tend to move to their highest valued use. Evaluate the statement that "they have a value you can't see..." in light of what you know about resource allocation. Construct an economic argument of why apartment residents might not be able to purchase the apartment from the landlord before its demolition, assuming that they value it higher than in an alternative use. (Hint: liquidity constraints)

Assignment:

The principle of substitution says that a consumer is willing to give up some of one good to get more of another good. This principle is implicit in indifference curve analysis since the indifference curve represents this trade-off of one good for another. One violation of this principle is lexicographic preferences. A person having lexicographic preferences will always prefer to have more of good x - so much so that she will be unwilling to trade for a different bundle with slightly less x but a lot more y. Is MeatLoaf saying he has a lexicographic preference against "that"? Suppose that he is unwilling to do "that" - what does that imply for the marginal rate of substitution of love for "that"?

Assignment:

Near the middle of the song Sheryl Crow sings, "I'm gonna soak up the sun while it's still free." Comment on the accuracy of this statement from an opportunity cost perspective. What are some of the contrasts mentioned in the song between the affluent and the poor?