When one thinks about popcorn, little would one think about macroeconomic indicators. And when one thinks about macroeconomic indicators, it’s natural to think about growth and inflation rather than buttered popcorn. But is this dichotomy between the two supposedly unrelated concepts as stark as it appears, or does popcorn add as an important tool in the toolset of economists?
Source: shutterstock.com / 626627051
To settle this conflict between being a munching snack and being an economic indicator, let us understand the role of popcorn in the economics of demand. Popcorn and movies are goods that can be categorized as a luxury. In other words, a household can easily survive, more often than not, by reducing its consumption of the said goods. Naturally, one would expect the demand for movies and popcorn to decrease as incomes in the economy decrease. But does it?
Evidence shows that the demand for popcorn may be counter-cyclical to the performance of the economy as a whole. This means that as economies enter into a recession, with income and employment dipping, the demand and sale of movie tickets and popcorn may actually go up in some cases. This surprising counter-intuitive observation is hard to explain on the basis of conventional economics alone. However, behavioral economics offers some respite and understanding of the phenomenon.
While movies and buttered popcorn can be categorized as a luxury, the consumption of which can be easily reduced/substituted, they are a relatively cheaper luxury as compared to other products like adventure park visits, vacations, concerts, etc. During times of economic hardship, people may desire two things- a cheaper alternative to day-to-day enjoyments of life, and an escapist alternative they can find solace in from the privations of everyday life. Movies provide them with both. Thus, when economic distress poses anxiety about general well-being, movies offer a welcomed and affordable distraction for most people.
There is some evidence of what is termed as the “Buttered Popcorn Index”. According to a statement given by Patrick Corcoran, the then spokesman for the National Association of Theater Owners, “Generally, when economic downturns hit, we have seen an increase in box office and attendance in six of the eight last recessions.” According to the National Association of Theatre Owners, a US-based organization, the number of movie tickets sold in the QI, 2009 increased by greater than 9 percent from last year. Movie sales also rose during the 1973-74 recession and in the 1981-82 economic slowdown, according to the Motion Picture Association of America.
In India too, a controversy stirred up in 2009 when the Union Minister, Ravi Shankar Prasad, commented that three Bollywood movies generated a cumulative of 120 Crore on the holiday of October 2 which must indicate a “sound economy”. Ironically, these comments came at a time when India had fallen by 10 positions in the World Competitive Index Report and factory output had shrunk by over 1 percent in the preceding months, one of the poorest performances in about seven years, which was attributed to a decline in output and production.
Unfortunately for movie lovers, however, the Buttered Popcorn Index should not be taken more seriously than it is intended to. For starters, there has not been much empirical research into studying the validity of using popcorn and movie sales as a proxy for the economic climate. Secondly, these days cinema is no longer a dominant channel of entertainment, with streaming platforms like Netflix and Prime Video taking headway. Specifically, in the current economic downturns of 2020-21, the Covid pandemic does not allow for in-cinema experiences. Thirdly, movie sales don't necessarily soar as the economy takes a hit. For example, during the recession and Persian Gulf War of the 1990s, studios released fewer movies and box office was not soaring.
Lastly, if you think the Popcorn Indicator is the only quirky indicator macroeconomists use these days, you might want to think again. There are multiple peculiar indicators which on a precursory glance seem unrelated to the macroeconomic performance of the economy but have various theories to their credit.
//Content Warning: death//
For example, the “Unclaimed Corpse Index” measures the economic well-being of citizens using the number of corpses unclaimed by relatives or friends. The idea is that owing to high funeral costs, the number of unclaimed corpses will be higher when there is an economic slowdown and income and unemployment are at a low, so that the state bears the funeral costs. Similarly, we have the “First Date Indicator”. The concept is simple. When the economy takes a downturn, the psychological impacts of anxiety and loneliness make people seek comfort in the companies of others. Online dating sites are expected to see a corresponding spike in active users. For example, match.com saw its busiest period in 7 years in the fourth quarter of 2008, a time when the US economy and the world was battling depression and recessions.
You think this is the most bizarre it can get? Think again. Presenting to you the “Penis Length Correlation”. The idea is that there is a surprising correlation between economic development and the average size of the male organ- with the correlation being an inverse U-shape- i.e. countries where the average size of male organs is average do better as compared to countries where average penile length is too large or too little. There are two explanations explored for this: studies show that the size of male organs is related to testosterone levels, and salivary testosterone levels are related to risk-taking. In this manner, then, penile size acts as a proxy to risk-taking behavior. Thus, countries where people take too much or too little risk, are outperformed by countries where people’s risk appetite is average, i.e intermediate levels of risk-taking outperform high and low levels of risk-taking in overall economic performance. The second explanation comes from behavioral aspects of individuals- income and penile size both add to the sense of self-esteem. If individuals have more of the latter, they need less of the former. If individuals have a low penile size, they try to compensate by earning a higher income.
Source: Westling, T. (2011). Male Organ and Economic Growth: Does Size Matter?
It is important to reemphasize that these indicators must be taken with their reservations. For example, the penis-length correlation completely disregards the contributions of women and non-binaries in the assessment of the impacts of risk-taking behaviors on the economy. Similarly, more robust studies are needed to strengthen the claims of any of the said indicators. Nonetheless, these indicators offer a peculiar insight and an unorthodox perspective on economic activities. (Head to additional readings to read about more such indicators.)
So, to answer the question posed in the first paragraph, while it may be a stretch to call popcorn an “important” tool in the toolset of economists, popcorn does offer some interesting insights into the economics of daily life. Next time you go out for movies, remember you are helping some popcorn-addicted macroeconomist to study the economic climate of your country!
Sources:
Additional Readings:
Written By: Muskaan Saxena (saxenamuskaan511@gmail.com)
Edited By: Amogh Sangewar