Homer Economicus Part 2 Summary

Dr. Joshua Hall’s book, Homer Economicus: The Simpsons and Economics tells stories from the popular television series The Simpsons to show how economics are visible in everyday life. The popularity of the show helps portray different economic concepts in a new light that are relatable and easy to understand for all new economic readers. The book gives comedic examples of the most important economic principles to the most difficult economic principles, but truly helps every reader master the microeconomic fundamentals within a three part book. Part I focuses on economic decision making and how certain behaviors affect economic output and viability. Part II focuses on money, markets, and government and how much effect they have in economics.

The final part, Part III discusses the application of microeconomics to common policy areas and topics.

Part I of Homer Economicus discusses the economic way of thinking.

The economic way of thinking is not just about being able to understand economics and how they work, but how to apply it to everything around you. It’s understanding that “economics is about people, the choices they make, and the consequences of those choices (19).” In Chapter One, the Ten Basic Concepts are introduced and later discussed into further detail relating to specific Simpsons episodes. The Ten Basic Concepts as stated are “Scarcity Necessitates Choice, Opportunity Cost, Efficiency, Economizing, Comparative Advantage, Specialization and the Division of Labor, The Law of Demand, A Market is a Process, Exchange is Mutually Beneficial, and Wealth is What We Value (6-18).” Chapter Two discusses Adam Smith’s Invisible Hand Principle and how economizing and exchanging are critical aspects of human behavior. Chapter Three discusses incentives and the unintended consequences that

come along with decision making. For example, the chapter talks about Simpsons episode “King-Size Homer” where Homer tries to gain unhealthy weight just to be able to work from home because he hates his job but quickly discovers the pros do not outweigh the cons. It is also very intriguing that the chapter discusses the “Austrian School” of economics thought on individual actions. The episode “King-Size Homer” actually depicts several important economic principles throughout the chapter including human action, rationality, incentives, costs, benefits, trade-offs, thinking at the margin, and unintended consequences. “ Home’s decision to gain weight in order to qualify for disability and work from home shows how people respond to incentives, how they make decisions at the margin, and how policies often have negative unintended consequences (37).”

Part II of Homer Economicus discusses money, markets, and the government.

Chapter Four basically covers the four fundamentals of money (widely valued, portable, divisible, and durable) and what makes the United States dollar acceptable. The chapter then goes into further detail of how “the ability of something to serve as money rests on individuals’ confidence that other individuals will accept it as a payment for goods and services (50)” and not in the government’s power. Chapters Five and Six focus on the profit scheming ways of Simpsons characters and the underlying concepts of entrepreneurship. The book goes on talking about Homers numerous fails of searching for profit opportunities and how that has affected his business ventures in a negative way. For example, in the episode “Lisa’s Rival” Homer and Bart find an overturned truck of sugar on the highway and plan to take it back to Springfield to sell to individuals. Since Homer obtained the sugar for free, he does not think that he incurs any costs in his entrepreneur scheme. However, Homer fails to consider the value of his time in the calculation of his costs and later realizes he lost $40 because he spent the day working on his sugar scheme rather than going to work and that he could possibly lose his job if he doesn’t show up the next day. This episode clearly shows the pros and cons of profits, opportunity costs, and entrepreneurship and that there will always be hidden costs to every endeavor. Chapter Six focuses

primarily on entrepreneurship and the many ups and downs that come with it along with key aspects of being an entrepreneur, judgement, alertness, innovation, adaptation, and leadership.

Chapters Seven and Eight in Homer Economicus discuss markets and externalities. A main focus of Chapter Seven is monopolies. The chapter goes to present the Simpsons episode where the Nuclear Power Plant is under investigation for pollution, but was only able to get to that point because they had no competitors (making them a monopoly). This example goes to show that because monopolies do not have to compete in the market, they often are intervened by the government because of their bad reputation and high prices. Chapter Eight’s spill on externalities
discuss the effects of “actions or exchange on a nonparticipating party that causes a change in the amount of a real good or service being provided (81).” The many graphical explanations in this chapter make understanding externalities and the misallocation of resources much easier to understand. This chapter helps to show that no solution is without its tradeoffs. Finally, Chapter Nine of Part II overviews the government failures of Springfield. The Simpsons clearly addresses the issues of private interests not aligning with public interests and how eventually government failure in inevitable.