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The recursion of pop-econ

Dave Berri posted the following at the Freakonomics blog:

The “best” picture of 2012 was Argo. At least that’s the film that won the Oscar for best picture. According to the Oscars, the decision to give this award to Argo was made by the nearly 6,000 voting members of the Academy of Motion Picture Arts and Sciences. . . . In other words, this choice is made by the “experts.” There is, though, another group that we could have listened to on Sunday night. That group would be the people who actually spend money to go to the movies. . . . According to that group, Marvel’s the Avengers was the “best” picture in 2012. With domestic revenues in excess of $600 million, this filmed earned nearly $200 million more than any other picture. And when we look at world-wide revenues, this film brought in more than $1.5 billion. . . . Despite what seems like a clear endorsement by the customers of this industry, the Avengers was ignored by the Oscars. Perhaps this is just because I am an economist, but this strikes me as odd. Movies are not a product made just for the members the academy. These ventures are primarily made for the general public. And yet, when it comes time to decide which picture is “best,” the opinion of the general public seems to be ignored. Essentially the Oscars are an industry statement to their customers that says: “We don’t think our customers are smart enough to tell us which of our products are good. So we created a ceremony to correct our customers.”

He keeps going along those lines for awhile and concludes:

One would hope the Academy would at least pay a bit more attention to the people paying the bills. Not only does it seem wrong (at least to this economist) to argue that movies many people like are simply not that good, focusing on the box office would seem to make good financial sense for the Oscars as well. A recent Slate article argued that the Oscars’ telecast tends to have higher ratings when more commercially successful films are nominated for best picture. So in the future, maybe voters for the Oscars will pay a bit more attention to their customers. These customers may not be thought of as “movie experts.” But these are the people who pay the bills, and therefore, ultimately it is their opinion that should matter to this industry.

What strikes me about this discussion is the mix of descriptive and normative that seems so characteristic of pop-microeconomics. (I should emphasize here that I’m not using “pop” in any sort of derogatory way. I’m speaking of serious economic writing that is intended for a popular audience.)

1. On one hand, you have the purely descriptive perspective: economist as person-from-Mars, looking at human society objectively, the way a scientist studies cell cultures in a test tube. Consumer sovereignty is what it’s all about, with a slightly offended tone that anyone could think otherwise. Who are you, smartypants, to think you know better than the average ticket-buyer, etc. I’m reminded of the perhaps-apocryphal story of the “some academics” who “conclude that bookmakers simply aren’t very smart.”

2. At the same time, we’re given a moral lesson. The Avengers is the best movie because it made more money. It is “the people who pay the bills” whose “opinion that should matter to this industry.”

The difficulty, of course, is that lesson 2 gets blurred if it is folded into lesson 1.

Berri’s argument is that moviemakers should not be paternalistically ignoring the attitudes of their customers in giving awards. But this argument dissolves if you take one step back and consider moviemakers as independent business operators. In that case, their business decisions (to do the Oscars however they want) should be given as much respect as that of moviegoers to choose which movies to watch.

As far as I’m concerned, the Academy can do whatever they want. What’s interesting to me here is to see how the economist’s explicitly non-normative ideology (his implication that the “best” picture must be the one with most revenue, and that any other criteria would be disrespectful of moviegoers) so quickly becomes normative (that it’s “wrong . . . to argue that movies many people like are simply not that good”). To me, it’s a strange mixture of idealism and cynicism. The man from Mars has become a scold.

52 Comments

  1. Zach says:

    Agreed. Also, I don’t know why he thinks ticket sales are such a great indicator of how much audiences enjoyed a movie. People make the decision to buy a ticket before they see the movie. Ticket sales are only a direct indicator of how much audiences think they’ll like the movie before seeing it. Or, really, they’re only a good indicator of how many people predict they (or their kids, etc.) will like the movie at least a certain threshold amount. (Granted, a movie can’t become a great success like The Avengers without positive word of mouth and even some repeat viewings, but still.)

    • Zach says:

      That said, I don’t dispute that if somebody forced everyone in the country to watch every nominated movie and then vote on the best The Avengers would win.

    • Christiaan says:

      Or, perhaps, the ticket sales reflect the effectiveness of the advertising campaign. So what we would be really measuring is the best advertising campaign in the movie business, rather than the best movie. It’s certainly a component. Anyway, I see no reason why there should be a one-to-one correspondence to ticket sales and movie quality. Many people (most people?) go to a movie because it entertains them, not because it’s a good movie in general terms. Or is entertaining the most important quality of a movie?

  2. Anonymous says:

    ‘-;

  3. Nate says:

    So I guess he thinks economists should cut back on writing papers and teaching classes, instead focusing on writing bestsellers like Freakonomics (hey, if he’s posting on their site, maybe that’s really what he’s doing).

  4. Rahul says:

    His criticism seems silly. The distinction between the critic’s ratings and popular ratings is well enough known.

    Does Dave Berri grade exams by popular vote? Why not?

    The most moneymaking movie has already been rewarded: Those millions from the box office are the rewards. It’d be silly if the Oscars were to just reinforce that.

    • gwern says:

      > The most moneymaking movie has already been rewarded: Those millions from the box office are the rewards.

      And more importantly, this is already common knowledge. If people want to rank movies by money-making – they can do it! Nothing is stopping them! The knowledge is there. But if the Academy Awards switched to just box-office revenue, a source of info has been destroyed: the ranking by the members of the Academy. By the usual economics logics of options, destroying the awards destroys values since consumers are being deprived of information they might have used.

      More amusingly, the logic may not even be coherent: what’s one of the most popular and widely discussed TV shows every year? The Academy Awards. So, it must be doing something right…

      • Erin Jonaitis says:

        Bwahaha! Your point about incoherence gave me a chuckle :).

      • Wonks Anonymous says:

        “More amusingly, the logic may not even be coherent: what’s one of the most popular and widely discussed TV shows every year? The Academy Awards. So, it must be doing something right…”
        See the second paragraph Gelman quoted. They’d have even higher ratings if they nominated more popular movies. Overall I agree with your point though.

  5. Manoel Galdino says:

    It’s quite ridiculous… If the Best film were always dictated by ticket sales, then why bother to have a vote at all? Moreover, the Oscar already pays attention to the ticket sales. If you’re not convinced, compare Oscar nominees to other film festival nominees. Compute the difference within each festival between the sales of the movies nominees and the movies nominated to the Oscar.

    Finally, if he truly think he was right, as an economist, he would produce a TV show where Oscar’s nominees were dictated by ticket sales. The fact that there isn’t a TV show like this is the market proof that what the audience wants is to see what the so called experts think are the best movies.

    • Jay says:

      Your first paragraph says it perfectly. I could see adding a measure to the voting that makes sure the movies earn a certain amount of revenue (after all, the Oscars are more about commercialization than film festivals are). If we base the winner on box office revenue, I predict a race to bottom when it comes to quality. MORE EXPLOSIONS! LESS PLOT!!

  6. Entsophy says:

    “their business decisions (to do the Oscars however they want) should be given as much respect as that of moviegoers to choose which movies to watch.”

    That’s exactly right. It makes no financial sense for movie makers to advertise (by awarding an Oscar) a movie that’s already had lots of viewers. They do however, have an incentive to hype good but under viewed movies. It all comes down to this:

    X=# of people who weren’t interested enough in Argo originally but were willing to give it a chance after the Oscars.
    Y=# of people who didn’t see Avengers, but would if it got an Oscar endorsement.

    It’s likely that X>>Y.

    It’s likely that X>>Y.

    • Entsophy says:

      For some reason the way this guys arguments are undermined by his own failure to apply them consistently reminds me of that University of Nevada Philosophy professor a few years ago. The University was about to scrap his department so he wrote an article claiming his department was essential because he taught people how to “come to good conclusions on the basis of thoroughly examining the appropriate evidence”. see here :

      http://www.bostonreview.net/BR36.2/todd_edwin_jones_nevada_philosophy.php

      The funny thing was that all the arguments he gave for keeping the funding were either factually wrong, or didn’t follow from the premises he supplied for them. So how important could it possibly be that he be allowed to continue teaching coeds how to evaluate evidence? Economics and Philosophy are great great subjects, but I don’t think anyone would even notice if they just scrapped every econ and phil department.

      • Andrew says:

        I don’t know about philosophy, but if they scrapped the econ departments, I think a lot of students who are econ or business majors would be pretty angry!

        • Rahul says:

          Yeah, @Entsophy has a pretty crazy position there. Lot’s of people would notice if the scrapped Econ departments.

          If he thinks people wouldn’t protest the lack of Econ Dept.’s I wonder which one he think they would notice.

        • Entsophy says:

          I think they’d just go get a econ/business internship somewhere and get paid to learn the same stuff. Not taking on a bunch of student loan debt is the just the sort of thing that makes econ/bus types happy.

          All you really need to do econ or phil is free time. It would be an interesting exercise to estimate the total lifetime hours of free time that a typical middle class worker drone today has at their disposal and compare it to the number of free hours that say Adam Smith, or Fermat (a Judge), or Descartes (a mercenary), or Kepler (an unwilling astrologer), or Keynes, and so on.

          • Nietzsche says:

            It is evident that this is the way Entsophy goes about his philosophical musings, and is the basis for his supposition that he could well be a Great Philosopher, given just enough free time. That is why his blog remarks are so often superficial, sophomoric, and revealing of a chip on his shoulder.

            • Entsophy says:

              Most of the great philosophers were not philosophy professors. They had day jobs. Nietzsche for example seems to have made his living variously as a orderly, linguistics teacher, and author. So the idea that philosophy wouldn’t suffer from being less of a profession and more of avocation is hardly radical or unique to me.

              Self funding in this way wouldn’t be a possibility in fields which require expensive laboratories, which is why people in those fields will likely continue to spend 50% of time to writing grant proposals and flooding journals with unimpressive papers, but it might be a possible in fields whose chief requirement is free time. If it were so in Economics, then I think it very possible that neither society nor the economists themselves would suffer from it.

              At any rate, there are quite a few people who love fields like economics and would even like to do serious research in them, but who are strongly turned off by the academic profession of economics as currently constructed. You can’t swing a cat in the business and finance world without hitting such people.

              • Rahul says:

                At any rate, there are quite a few people who love fields like economics and would even like to do serious research in them, but who are strongly turned off by the academic profession of economics as currently constructed

                You could replace “Economics” in that sentence by practically any other discipline, couldn’t you?

                Why do you single out Philosophy? Wouldn’t your arguments apply equally to Sociology, Anthropology, Political Science, Psychology and a whole lot of other fields?

                You only sound bitter and for no reason too…..

              • Entsophy says:

                Yes you could. I only used phil and econ because they interest me. I’ve had no bad experiences with Economics in academia (although I did quite an Econometrics job once because it was so damned booring), but what I did see convinced me that Economics is in rut, hasn’t really made any advances in a while, and whose major insights in the future are far more likely to come from outsiders than from insiders.

              • Erin Jonaitis says:

                That’s surprising… usually those who are “in rut” make lots of advances!

      • K? O'Rourke says:

        But you can’t rule out a hypothesis by how (or by whom) it was generated.

        In any organization x% of staff could be eliminated with little impact – the tricky part is getting the x correct, eliminating just them and doing that with little impact on others.

        Given survival in an academic institution is almost guaranteed by just some publications and good opinions of one’s work by some colleagues, the x’s are likely large in most universities. My sense is it would vary greatly among departments, but that is likely a very personal biased view.

        Some things I needed formal courses to learn others I found them a distraction. For instance, I went to only 5 lectures in my first year economics course and I found the material deficient to my independent economics studies in high school (Keynes and Plumtree). This likely varies by person.

        But the opportunity to reduce staff in universities, I believe only comes by shutting down whole departments. (Think that was how John Hopkins got rid of CS Peirce – they shut down the philosophy department.)

        • Entsophy says:

          No disagreement, but today is little different for two reasons. We are wealthier so the average person can afford more free time, and the portion of academic life wasted on non-productive activities has increased. At any rate, I didn’t think anyone would take it so seriously; it was just funny how that professor claimed to having unique insight into the evaluation of evidence. Just like it was funny how that Economist thought he had some special insight into that the Oscars were about.

  7. Anonymous says:

    Nominating the The Avengers isn’t going to contribute much to the audience for the awards show. Its fans can’t stay up that late.

    Why have judges for book awards? Let’s just use the New York Times bestseller list.

  8. Andreas Baumann says:

    What’s more, even within the “quality-as-revenue”-framework, his criticism doesn’t make sense, because he fails to account for the different half-life of blockbusters versus more artistically inclined films. Casablanca, for example, probably didn’t generate as much revenue as other films at the time – and didn’t win an Oscar – but I’m pretty sure that the revenue from this film in the last ten years is far greater than the revenue from the best-selling film of 1941.
    I’m not sure how one should adjust the discounting factor for artistic products – for example, consider Shakespeare, who wasn’t conceived as a master in his time, but has been continually in print for 400 years.

    • Mark Palko says:

      Further muddling the numbers, many films including Gone with the Wind, Wizard of Oz, the original Phantom of the Opera and numerous Disney films have had multiple theatrical releases.

  9. Sam R. says:

    This is so flabbergastingly idiotic, so fruitlessly ridiculous, so bloody inane that I stopped to make sure that (1) the post wasn’t added on the first of April and (2) this wasn’t part of some elaborate omgfreakynomics experiment on their readership.

    I look forward to this brave new world where fast food R&D departments will routinely sweep the James Beard awards, the University of Phoenix sits comfortably atop all college rankings, and E.L. James can expect to receive a call from Sweden in October.

    • Entsophy says:

      How funny would it be if Economics Nobel was awarded each year to either MSNBC or FOX News for their economics coverage? Every time they awarded the prize, announcers could just shrug their shoulders and say “The market has spoken!”

  10. Anonymous says:

    The economic analysis also ignores that many spend their money not only on the basis of the quality of the picture.

    My decision to spend money on a movie = f(whether I’ve heard of it at all, how good the movie appears to be in the trailer and reviews, social pressure from my friends to see it, whether I’ve read the book, my girlfriend forcing me, etc)

    If nothing else the Oscars just try to isolate one (quite relevant) factor from all the others.

  11. Jonathan (another one) says:

    I agree with everybody here that this is not Dave Berri’s finest hour. But from inside knowledge of another (much smaller) industry, Broadway theater, I can tell you that the producers who run this process are genuinely torn between rewarding shows they can help that they didn’t like and shows that have already closed that they did like. And like Broadway, and agreeing with Dave Berri a bit, I think its safe to say that the vast majority of Hollywood filmmakers actually don’t like their bestselling products. And there’s no particular reason they should, is there? Why would we expect the personal esthetic judgment of filmmakers to reflect the esthetic judgments of their customers? There are a few examples where that is true (Steve Jobs, though only in the field of tech design; I expect most of Apple’s customers like to bathe) but plenty where that isn’t true (Clive Davis didn’t much care for pop music, for example). It’s the implied sneering that’s uncalled for in the tone of Berri’s piece. You can produce what your customers want without producing what you yourself want without any pejorative attitude about your customers.

  12. jonathan says:

    This bothers me, perhaps because my kid works in the industry. Besides the pop crap analysis, there is the extremely common issue of doing no research and thus doing little thought other than self-indulgent exposition.

    The Oscars do have a specific charge. Here is the rule for movies themselves: “Academy Awards of Merit shall be given annually to honor outstanding achievements in theatrically released feature-length motion pictures, and to honor other achievements as provided for in these rules and approved by the Board of Governors.” If you read the rest of the rules, you see repeated references to merit, achievement, and high quality.

    That’s one level: the Oscars are specifically designed to reward those people within the industry who have “achieved” “high quality” “merit”. There can be another award for top grossing film.

    Second level: if you try to say the awards are “pop”, then what exactly is an award for cinematography? editing? sound? You may be able to argue the biggest is somehow the best but that falls apart when you look at the technical awards that actually make up most of the awards. And how exactly does acting fit? We only think of the awards for acting. They have value because they at least attempt to judge craft in acting. If they went by movie gross, no one would give a darn.

    You can certainly make an argument that Argo wasn’t best picture but was just the winner of that particular vote. We don’t know how many people actually voted or how they split their votes or, of course, whether it won by 1 vote. Multiple rounds, either independent or some other way, would perhaps generate a different winner. That is an interesting discussion to me; we place so much value on who won an opaque, one time vote.

  13. Sebastian says:

    “The man from Mars has become a scold” is a great line.”

  14. Manoel Galdino says:

    I just realized that the link to this post is: “the-recursion-of-pop-econ-or-of-trolling”. Ha! The fact that Gelman says that he’s using pop in a positive way shall be discounted by that fact that he seems to think they’re trolling. And, in fact, it looks a lot like trolling!

    So, let’s agree that this is trolling and move on (or maybe some freacknomic experiment, as someone suggested).

  15. Millsy says:

    Goodness. Much ado about nothing. Many comments here are quick to jump on Berri, very obviously without reading the article in full or carefully at all.

    Andrew, I see you very much imputing things that Berri does not say. Berri never says in the article that, as you say, “the ‘best’ picture MUST be the one with most revenue, and that any other criteria would be disrespectful of moviegoers.” He does, however, imply that there is a large amount of useful information from the data that seems to be ignored. Given your area of expertise, I would have thought you would agree with this point. The second implication could be that, at some point, when you continually tell your customers that they don’t know how to judge a good movie, they are going to get sick of you. But Berri nowhere says that the experts are not providing valuable information.

    He even goes on to point out that–given that there is useful information from these experts–the expert information should also be considered. I quote from the article at Freakonomics:

    “In the movies, though, we clearly have revenue data that is directly linked to each movie. So should we simply award the ‘best picture’ to the highest grossing film? Such an approach might be pleasing to an economist. But if we took that approach, something would be lost.”

    “Since the debate itself generates value, we should be hesitant to just look at the numbers.”

    I will say that the analogy to basketball is poor. Much more relevant would be the AP Rankings and BCS systems that get chastised each year.

  16. Walt says:

    What makes this extra absurd is that movies that win Oscars do extra box office. IThere’s a segment of the movie-going public that waits to see what movies win an Oscar, and then go see them. Customers have spoken that the signal provided by the Oscars is valuable.

  17. Peter Dorman says:

    Putting aside the particulars about Oscars, the movies, etc., what interests me is what this example illustrates about the normative stance of (alas) most microeconomics. These have been pointed out above, but I want to highlight them, since they are rather general.

    1. Value in economics is entirely ex ante, not ex post. The measure of benefit is willingness to pay, not some indicator of satisfaction after paying and consuming. This leads to absurd conclusions in many contexts.

    2. Economists talk about the split between positive and normative analysis, but it disappears quickly in practice. Unless there is an explicit demonstration of a market failure, economists simply assume that markets yield optimal outcomes, and that market prices convey the true costs and benefits to society of using resources for particular purposes. Normative is baked in, and the assumptions logically required to get there are forgotten. And so we get the market populism of Berri and the rest. If you disagree it can only be due to paternalism, after all…..

    • Andrew says:

      Peter:

      Your point 1 is interesting; I hadn’t thought of that.

      Regarding your point 2, remember that Berri is expressing a market populism regarding movies but not regarding decisions of the Motion Picture Academy. For the Academy, he’s happy to be paternalistic and recommend a more efficient course of action that he feels would be better for them.

    • GabbyD says:

      “Unless there is an explicit demonstration of a market failure, economists simply assume that markets yield optimal outcomes,”

      i always thought it was the opposite. in class we are taught the efficient, welfare maximizing model as the ideal case, and then proceed to demolish that ideal case “in the real world”.

      there is an expectation that perfect markets exist in some settings more than others, because of what we know of externalities and market power.

      but in general, i thought/think its the opposite. there is always some market power, external effect going on.

      the only question is how large it is, and where its big enough to merit some kind of attention/fix.

  18. GabbyD says:

    Andrew,

    let me disagree…

    1) he writes :One would hope the Academy would at least pay a bit more attention to the people paying the bills.

    and you respond: ” It is “the people who pay the bills” whose “opinion that should matter to this industry.””

    all he is saying is that customer’s preferences should be given SOME (he uses “a bit more”) weight in the decision to call a movie “best”.

    so your response is an exagerration of his position.

    2) given (1), the tension you see here ” In that case, their business decisions (to do the Oscars however they want) should be given as much respect as that of moviegoers to choose which movies to watch.”

    …. goes away. of course they should be given as much respect. the issue is simply whether you should ignore sales .

    here i am assuming sales are indeed ignored. i doubt that tho.

    the standard economist argument on social choice is that we have to include everyone’s preferences in the social decision. inefficient outcomes occur when only one group get weight.

    now, what the weights are exactly is the key issue.

    • Andrew says:

      Gabby:

      Berri’s doing an “it is what it is” on the moviegoers’ decisions and a “should” on the Academy’s decisions. For some reason, the viewers movie The Avengers gets the benefit of his descriptive, tolerant attitude, whereas the organizers of the Academy Awards are subject to his technocratic moralism. That’s ok, it’s his choice, I’m just pointing out the contradictions between his two modes of reasoning, a contradiction I see all the time in microeconomics.

      • D.O. says:

        In fact, it is not Marsian posture or scold’s posture, but a typical economist’s posture. As economist Berri considers moviegoers to be consumers who are bound to make idiosyncratic and generally irrational decisions. On the other hand, the Academy is a business (in Berri’s view) and businesses are supposed to make rational decisions (lest they be eliminated by competitors from the market place). He’s model might be grossly inappropriate (the Academy is not a business) or he might not understand their business model, but I guess that’s what it is.

      • GabbyD says:

        Andrew,

        Thats because, by definition, everyone has the same weight in buying a product, i.e. we, as consumers, can choose to watch or not.

        so, control by a select few isnt an issue. This is the same critique how market power lowers social welfare. all individual consumers can choose to watch, and no sub-group can control the outcome.

        the academy, again by definition, is controlled by a small subgroup. So, again by the logic of social choice and market power, they should attempt to be more inclusive and include the preferences of those not included.

      • GabbyD says:

        let me make a specific example. lets say you and i and berri are best friends and we want to decide what the best movie is.

        if only berri is making that decision, coz he is a member of the academy which you and i cannot be a part of (again by definition), then that cannot be a good measure of what the best movie is.

        if all of us are included, via some mechanism, then isnt that the better method?

        that is the point of what berri is saying. its actually quite simple and intuitive. i’m pretty sure it has an analogous concept in unbiasedness in statistics.

  19. Matt says:

    Why is anyone ever surprised by this kind of thing? Economists as a whole are (massively, or more like massively^57) skewed (on the distribution of personality) towards being selfish, arrogant a-holes driven almost exclusively by greed for power, prestige, and/or money. The whole game is to build a normative structure of belief that eases their subconscious guilt about being selfish, arrogant, greedy a-holes by asserting that’s the way everyone actually is, but they’re better because they recognize and admit it. This serves a double purpose by both allaying any subconscious fears that maybe they’re really greed a-holes AND massaging their inflated egos because they always get to talk down to everyone.

  20. Steve Sailer says:

    I think the Oscar voters should try to make sure that the highest quality blockbuster of the year gets rewarded with a Best Picture nomination (not the Oscar itself, but the nomination). The Avengers was an amazingly skillful movie. Similarly, a half-decade back Robert Downey Jr.’s performance as Iron Man was a great piece of leading man work, which launched him to his current status as the world’s biggest movie star. But he didn’t get a Best Actor nomination for it, instead getting a Best Supporting Actor nomination that year for “Tropic Thunder.”

    It wouldn’t hurt the Academy’s mission of promoting the making of movies that Academy voters like to see to recognize the best mass market work in order to lure in to rewards season those intelligent adolescents whose tastes might mature to liking better stuff.

  21. Popeye says:

    Lots of debates are fundamentally about legitimacy: who legitimately can hold power, and who is a fraud without a legitimate claim (to the throne, or to label movies as good or whatever).

    In other words, people like to debate politics.

    Economists are no different, but they often pretend that their political preferences are grounded in logic, and that as a result they are above politics.

    But of course they are just like everyone else — they defend the status quo sometimes, and argue for change at other times. Sometimes they support elitism and other times they oppose it.

    Which is fine, except that it’s not like these distinctions follow purely from some core principles. It’s basically politics.