Continuing Education... Adam Davidson on Hollywood

EconTalk Extra
by Amy Willis
Adam Davidson on Hollywood and... Morten Jerven on African Econo...

Go Hollywood this week as Russ chats with Adam Davidson of Planet Money, who recently served as technical advisor on the upcoming film The Big Short.

We hope you're looking forward to the film, too. In the meantime, help us continue to expand our learning and conversation at EconTalk, using the prompts below.


1. What are your top three takeaways from this week's episode?

2. In discussing the attempts at authenticity in the film, Davidson stresses that the filmmakers were insistent that this remain "a real story and an important story" that people ought to understand. He also notes that 99% of the people who watch will go in with very little understanding. How do you think the director would justify his focus on making sure that all of the details as well as the bigger picture is accurate for the movie given how few people in the audience will know it's accurate? Yet in other movies, like The Imitation Game, the movie is only loosely accurate. How do you reconcile these two approaches?

3. Davidson and Roberts talked about Ronald Coase's theory of the firm and how it might apply to the film industry. How does the "firm" making a film in Hollywood compare to the sort of firms Coase had in mind? (Hint: You might want to watch this interview with Coase. He discusses the theory of the firm from approximately 6:55 to 15:00.)

4. Have you ever worked as a member of a team that came together for one project and then disbanded. Share your experience with us and let us know how this episode made you think about that experience.

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COMMENTS (6 to date)
SJ writes:

4: As a few commenters pointed out in the last thread, there's another industry- much larger than Hollywood- that operates on the project-based model: the construction industry.

Joe Topp writes:

3. I think that the project oriented firm behaves much differently than the firm that Coase describes, because it is much more market oriented. Davidson mentioned how Taylorism and the assembly line-mentality strove to insulate the workers from market forces-labor is treated as an interchangeable commodity, and the individual workers don't receive market signals about the value of their labor. I believe that this is the type of firm that Coase based his theory of the firm on.

In Hollywood, by contrast, workers are, as Davidson says, constantly being exposed to market signals about the value of their skills, and they return to the market after every project, rather than staying in a particular firm. Thus, in Hollywood, the "two systems" that Coase describes don't exist--the market handles everything.

Sarah writes:

One of Davidson’s observations about “this world where you need a team to come together very quickly and work well together” was that “not being a jerk is a hugely valuable thing.” That is, he implies that team cooperation carries greater weight and value when project turnover is high, presumably because your current performance more effectively affects what kind of job you’ll get next (if any).

I imagine that freelancers don’t typically have the option to choose their co-workers. If so, how can they have a strong influence on each other’s reputation? The logic would depend on the importance of co-worker recommendations in the hiring process. Seeing as technological improvements tend to reduce information costs and thus reduce the importance of recommendations, how might that affect team cooperation?

From my personal experience, I’ve found that long-term projects tend to encourage greater team cooperation than short-term ones. In short-term projects, the incentive to cooperate is less because the benefits of increased team collegiality is not worth the investment in our social relationship. Equivalently, my long-term teams have made more of an effort to invest in team bonding/cooperation in anticipation of improved team performance over time.

Michael Redchanskiy writes:

1). a. Adam Davidson spoke about how many individuals come together to specialize in their specific task on the movie set. This is not done from a direct central planner telling everyone what to do, but from intuitive knowledge of knowing your role on the set and where to go and what to do.

b. I also enjoyed how Adam spoke about the market signals people working on a movie set receive. This is because usually the making of a movie lasts 2 months so 4 times a year a person wanting a job in the move industry must go out and look for employment to continue earning money. During this process, they find out their market wage, how much they are worth in this particular industry, and the market signals regularly what skills need to be polished and what skills need to be replaced such as the focus puller job. This is the hollywood model.

c. I liked Adam's analysis on the entrepreneur and how the economy is always changing meaning your skills need to always be evolving. This not only relates to the film industry but can also apply to any industry. Russ then brings up UBER and how it is innovating the transportation industry. Adam closes the discussion by saying the best way to make customers happy and improving your standing in the market is to just give consumers what they need. Adam brings up the soap story he mentioned earlier in the podcast and how this soap is just right and doesnt scratch your skin or cause you to smell weird(assuming this is what Russ meant using his kids soap).

Nathan C. writes:

I don't know whether I can reconcile the realistic approach with the reinvention/fantasy approach, but I can certainly plug for realism. Since the movie is based on a real event which will surely be studied in world history for years to come, if the moviemakers want to make the movie at all accurate to detail, they ought to go as far as pragmatically possible in that direction. As with any complicated subject, be it religion, politics, or the economy, the population at large has a wide array of perceptions and stereotypes regarding the subject at hand, many of which are necessarily inaccurate to a greater or lesser degree. The last thing a serious nonfiction filmmaker ought to do is add a misconception to pop culture in the form of a movie whose goal is to sell tickets and DVDs and be viewed as much as possible.

In other words, people already have bad ideas of what the economy even is, let alone who kicked it in the stomach a few years ago. It's better to have a 99% accurate movie which can be used as a coherent tool of explanation (and cinematic enjoyment) to the general population than one that is 55% accurate with a couple of memorable scenes which describe true events poorly. Filmmakers roll out movies "based on a true story" all the time, and I always disclaim that statement in my head, saying "yeah, based on...." Whereas if a truly realistic film existed, one who understood better could relate to his friend who understood less well, saying (pretending for a moment that The Imitation Game was also about the recession) that "the recession was less like The Imitation Game and more like The Big Short." In that way, the recession could be taught through pop culture to the general population with a significant degree of understanding.

guthrie writes:


I live in LA and have an eye to enter the entertainment industry, so this was a most interesting discussion.

As for takeaways, I would say the strategy of 'explaining what one has to offer' (to boil it down) was most prescient to me as someone who is attempting to more closely fit into that world. The other anecdotes he describes match my own (limited) experience, and this perspective will likely alter my approach to future projects.

I noticed a significant lack of discussion of the influence exerted by the entertainment Unions, which is considerable. I would be very interested in a conversation exploring the impact Unions have on the 'Hollywood Model', how they might differ from Unions in other industries (if at all), and what a possible future might hold for Unionization if the corporate world at large adopted a similar model.

Regarding 'authenticity', I think there's a difference between being 'accurate' in terms of the cold facts behind the financial crisis of '08, and being 'authentic' to how it impacted individuals. People going in might not ever grasp what happened with the meltdown, but they are very familiar with what they personally had to deal with. What the director is after (it would seem) is honestly and 'authentically' reflecting that impact (as opposed to his other - mentioned - films, which are far more cartoonish and absurd).

This authenticity requires knowing the facts as the filmmaker, but that's not a requirement for the audience. The filmmakers aren't even required to convey the facts or convey them well, necessarily, but use them as a springboard for conveying the impact on people in a more emotional and personal manner.

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