Learning economics from the world's best boss
It's the last day of the fiscal year at Dunder Mifflin and Michael must spend the last $4300 in his budget or lose it for all subsequent years. This clip illustrates the unintended consequences of perverse incentives.
Oscar and Jim team up with a few other employees to lobby for a new copier. Pam, Stanley and Meredith form a group to lobby for new chairs. Michael is the World’s Best Boss, and also the one who ultimately decides if the $4300 will be spent on new chairs or a new copier. Oscar and Jim waste valuable resources, time that they could spend working, to take Michael out for lunch to convince him they need a new copier. When they get back from lunch, Pam diverts time away from her job and toward chair-seeking efforts. Others go out of their way to open doors for Michael and bring him hot chocolate. All the employees allocate resources in an attempt to “win” the rent. These rent-seeking efforts and expenditures result in negative social value. Thanks to Lizzie Banks, an econ major at the University of Virginia, for suggesting this clip.