– August 4, 2019
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In December, the Twitter account Cinesnark posted a picture of hulking Aquaman star Jason Momoa and his two (relatively) diminutive bodyguards with the question “What even is the point of Jason Momoa’s bodyguards“?

As an economist, my first thought was “Relative to these guys, he might have an absolute advantage in violence but a comparative advantage in something else, like making movies.”

So I tweeted something to that effect. The tweet kind of blew up a bit, so I thought I’d write out an example. The law of comparative advantage is an important and counterintuitive concept, and as Herbert Spencer said and James M. Buchanan often repeated, “Only by varied iteration can alien concepts be forced on reluctant minds.” So here’s yet another varied iteration that, I hope, helps to make the alien concept of gains from specialization and exchange more intuitive.

Imagine there are two people, Jason and Namor, and they have these production possibilities for crimes prevented and movies made per year.

 

Crimes Prevented

Movies Made

 

Jason

360

4

Namor

180

1

 

Jason has what economists call an absolute advantage in crime prevention and movies made, meaning that in a year he could prevent more crimes than Namor (360 versus 180) or make more movies (four versus one).

Importantly, these production possibilities represent or, not and. Jason can prevent 360 crimes, or he could make 4 movies. By choosing to do one, he has to give up the opportunity to do the other. To make more movies, he has to solve fewer crimes, and to solve more crimes he has to make fewer movies. Since he can solve 360 crimes or make 4 movies every year, he gives up the opportunity to solve 90 crimes in order to make 1 movie. Conversely, he gives up 1/90 of a movie in order to solve a crime (assume for the sake of the argument that he can pick anything on the straight line between the combinations “0 movies, 360 crimes” and “4 movies, 0 crimes”).

Namor, on the other hand, can prevent 180 crimes or make 1 movie. His opportunity cost of making a movie — what he gives up in order to be in a movie — is the 180 crimes he could have solved. His opportunity cost of solving a crime, on the other hand, is just 1/180th of a movie.

Now here’s where the alien concept comes in. Jason has an absolute advantage in crimes prevented per year because he could prevent more of them than Namor could, but Namor has a comparative advantage in crime prevention because preventing a crime costs him less in terms of movies made.

If they specialize, they can increase their little two-person economy’s output. Suppose we start with Jason spending half his time making movies and half his time stopping crimes while Namor spends all his time making a movie. That gives us this for society’s annual output of crimes prevented and movies made:

 

Crimes Prevented

Movies Made

Jason

180

2

Namor

0

1

 

In total, we get 180 crimes prevented and three movies made.

Now suppose they specialize. Jason goes into movie-making full time and hires Namor to quit making movies and go into full-time crime prevention. Now, they have the following output:

 

Crimes Prevented

Movies Made

Jason

0

4

Namor

180

0

 

With specialization and exchange, they get the same amount of crime-fighting as before, but they now get one more movie per year.

So “what even is the point of Jason Momoa’s bodyguards”? They defend someone who looks like he could destroy them in a fight but whose time and energy is better spent making movies. By taking the mental (and possibly physical) burden that comes with self-defense off of Momoa’s shoulders, they make the world richer by freeing Momoa up to make more movies. 

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Art Carden

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Art Carden is a Senior Fellow at the American Institute for Economic Research. He is also an Associate Professor of Economics at Samford University in Birmingham, Alabama.

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