Thursday, 19 March 2009

Jay Leno and scalping

Yesterday I read Eric's posting at Offsetting Behaviour on Economics of Scalping: Trent Reznor edition and today I read this from a posting at Greg Mankiw's blog:
As I understand it, here are the facts:

1. Comedian Jay Leno takes his show to Michigan to help "not just the autoworkers -- anybody out of work in Detroit."

2. He gives away tickets for free.

3. Someone tries to sell his ticket on eBay.

4. Mr Leno objects.
So Mr Leno doesn't like scalping either. But why? What does he lose, after all he had already given the tickets away so its not like he is losing an money on forgone ticket sales.

Mankiw writes
So I wonder: If a person down on his luck prefers the cash to the opportunity to watch Leno live, why would Leno object? Is it altruism that is really motivating Leno here? Is he really sure that the unemployed person in Detroit would be better off with an evening of laughs than $800 in his pocket? Or does Leno want to play to a live audience of unemployed workers so he will seem altruistic to his television audience?
The great thing about markets is that they improve the allocation of resources. Both the buyer and the seller engage in the transaction voluntarily, so it must be that both are better off: otherwise they would not trade. So why does Leno object? Does he not like the efficient allocation of resources?

9 comments:

Brad Taylor said...

Vivian Zelizer has a lot to say about this sort of thing. People often find it repugnant when monetary exchange is brought into areas of life where we are not accustomed to it. Leno effectively gave people a gift, and folks normally don't think it's okay to sell gifts. Trade has social meaning and is not only about allocating resources efficiently: there's a whole lot of signaling and whatnot going on too.

I am aware of the inefficiency of not being able to trade gifts, but couldn't help being offended if someone sold a gift I'd given them in order to buy something they want more.

There is a lot of nonsense in economic sociology, but some very interesting and very true stuff as well. (Though a lot of it is present in the New Insitutional Economics of Douglass North and even Oliver Williamson, anyway: culture matters for economic performance, relational contracting, etc)

Brad Taylor said...

One could argue that the economic sociology explanation is just another way of making the 'wanting to seem altruistic' point.

Paul Walker said...

"People often find it repugnant when monetary exchange is brought into areas of life where we are not accustomed to it."

But this isn't such an area. Tickets for things are bought and sold all the time.

"just another way of making the 'wanting to seem altruistic' point."

But isn't the altruistic bit giving the tickets away in the first place? Why care what happens after that? Get upset about trading the tickets just makes you look a bit of a dick.

Brad Taylor said...

"But this isn't such an area. Tickets for things are bought and sold all the time."

The relevant thing is that it was a gift, not that it was a ticket.

I suspect the selling makes it somehow seem like the gift is less 'special' or something, and therefore less valuable, less altruistic. Leno probably intends them to have high sentimental value for the recipients.

I agree that it makes him seem like a bit of a dick, by the way, but I think many people would react in a similar way, even if they wouldn't publicly declare so. The fact that people do get upset about these things requires an explanation.

Paul Walker said...

Brad. I take your point about a gift, but does it really apply here. I don't see Leno's handing out of these tickets a gift so much as a publicity stunt.

Brad Taylor said...

Maybe Leno saw it as a gift while the rest of us saw it as a publicity stunt or him massaging his own ego.

Paul Walker said...

If Leno sees it as a gift, then it's a gift paid for with some else's money. I'm sure he didn't buy the tickets and then hand them out. I'll go for "massaging his own ego" as the most likely explanation.

darynr said...

The idea that Leno wanted to prevent scalping in order to seem selfless doesn't hold any water for at least 2 reasons:

1) The fact that some of the tickets were scalped would have flown under the radar unless Leno himself had made a big deal about it.

2) No one who found out that some of the tickets were scalped would have concluded that Jay Leno is a less generous person because of that.

chartreuse said...

Leno, who I would not pay to see, has every right to be upset about people scalping his tickets.

The point of the show is entertainment for people who can't afford it due to the hard economic times. If the tickets are scalped it defeats the entire purpose of the show.

He's right. Most of the comment here are not.