Haven’t you seen the Squid Game series yet? If you like economics, this article shows you the relationships between this popular Korean series and economics.
Globalization, added to a digitization that allows the transfer of knowledge in a matter of seconds, has allowed various phenomena to occur that, years ago, could not have happened; because there were no ways to channel that information, as well as to export it to other territories.
However, social networks, digital media, as well as, in essence, the Internet, have allowed this that we are mentioning today to no longer even be striking.
And it is precisely globalization and digitization, the ways or factors that have allowed millions of people around the world to become addicted to a Korean series, released by the Netflix platform, which has become the premiere most viewed to date on that platform.
Americans, Spanish, Peruvians, Colombians, Argentines, etc. Throughout the world, millions of families, from very diverse cultures, have been hooked on a series that today reaps more than 1,400 million hours of reproduction, as well as a profit that amounts to approximately 900 million dollars.
Thus, The Squid Game, which is the name given to the series in Spain and other places in Latin America, has become a series that, they estimate, have already been seen by 87 million people around the world from beginning to end. However, taking into account the total audience, we are talking about a series that already has more than 130 million viewers who, every day, turn on their television to see this successful series. Well, in a matter of 6 days, we are talking about a production that has been able to attract more than 21 million new viewers who, like the previous ones, end up hooking on this series.
But, beyond the synopsis of the series itself, which already maintains a close relationship with the economy, we are talking about a production that implements numerous scenes in which economic concepts can be identified that, without knowing it, are very present in the vast majority decisions we make in our day to day.
As we always say in Economipedia, economics is a science that is very present in the daily lives of human beings, so, given the large audience registered by Korean production, we are going to see what concepts are present in this series , and that they can help us make better decisions in life.
And, although you may not know it, an economist in The Squid Game, as happened with Sang-woo himself, could have made better decisions, by identifying what we will tell you in this article.
Do I want to participate or should I participate ?: Debts and financial freedom
“Debts condition our ability to act, while making all our decisions subject to their interests.”
If one stops to think about the different reasons that lead players to make the decision to participate in the game, we can realize that we are talking about reasons closely related to the economic situation shown by each of the players.
In this sense, the series begins by showing the life of one of the players –the protagonist–, who has numerous debts –for which they want to assassinate him–, at the same time that he must face various payments to cover an operation that could save his life. from his mother.
Although the player did not want to participate in the game, the truth is that he is one of the first players to return to the game when he is offered the opportunity. This is due to that lack of financial freedom, as well as the numerous debts that drown this individual.
A situation that leads the player to make the decision to return to the game, despite the fact that he did not want to do so. And it is that, although money cannot cover it, nor pay it all, debts represent an obligation that, on many occasions, lead us to have to make decisions that, even though they are not optimal, we must take them due to the bad situation we are going through.
Debts condition our ability to act, while making all our decisions subject to their interests. Therefore, it is important that we understand this lesson, because if we had been in good financial health, many of the players who were risking their lives there would not have played. What’s more, as those who have advanced further in the series know, if they had the resources, they could even have been watching and generating capital with the bets.
And you, what do you prefer? Bet or play? Your financial freedom will decide for you.
Do we quit or return to the game ?: The opportunity cost
“The cost of not playing was 45 billion won, which is the prize money received by the last player standing.”
When the series begins, many are the players who, after seeing the atrocities that take place in the first game (red light, green light), decide to make the decision to leave the game. For which there is a clause in the contract that says that, if there is a majority of players who want to leave the game, they can leave it if, after voting, more than 50% of the players decide to stop it.
However, it is curious that, with the development of the series, in the following chapters there is talk of a return rate of 93%. That is, despite the fact that 51% of the players decided to leave the game, 93% returned. What is this about?
We economists call this “opportunity cost.”
In other words, and to get an idea, when we talk about the opportunity cost, we are talking about the cost of the alternative that we give up when we make a certain decision, including the benefits that we could have obtained from having chosen the alternative option.
In this case, the players feared for their lives, so when looking at the opportunity cost, they decided to quit. Once on the street, and analyzing this opportunity cost without pressure, as well as analyzing the situation that each of the players was going through, they decided to return, since the prize for winning the game was more useful in that opportunity cost analysis than their respective lives, full of debt.
Therefore, we are talking about the value of the best option not selected. In the case of players, the best option not selected or the most rational could have been not to play, but of course, in that analysis, the cost of not having played was 45,000 million won, which is the prize money received by the last player standing. And it is that, in this life, every decision we make has an opportunity cost. Everything we do, we do it because we are stopping doing something else. Always.
Based on this opportunity cost, what decision would you have made?
Expected Utility and Allais’s Paradox: Why are they coming back to the game if they are going to die?
“Authors such as the Nobel Prize winner in Economics Daniel Kahneman describe and provide reasons for why they made the decision to return to the game.”
That said, we already know that only one player will remain standing. That is, only one player can survive and win the prize. Taking into account that we are talking about 456 players, the possibility that it is a certain player who wins is very remote. Even in one of the games (the bridge game), there is an economist who calculates the probability of hitting and winning a game, concluding that, statistically, it was impossible to win.
However, why do they return to the game?
In addition to its obligations and the lack of financial freedom, as well as the result of the opportunity cost analysis, we must know that this decision could be influenced by another interesting economic concept, which we call “expected utility”. In turn, the election shows us the existence of another closely related phenomenon, also with economics, which we call “Allais’s paradox”.
Expected utility, or expected utility theory, is a theory that describes a rational choice model with uncertain results. In this way, the theory allows us to classify the results in terms of utility. As we know, the results of the game are uncertain, as in a lottery, so we speak of a very practical theory that could have helped us to rank our priorities in this game, leading us to finally choose the most rational choice.
However, the Allais paradox establishes their presence as soon as they must make the decision.
Thus, this paradox says that, despite the expected utility theory, the decisions of individuals may be unconscious, generating a divergence between the predicted values and those subsequently observed. And it is that, after his observations, what Allais demonstrated is that, ultimately, the preferences of the individual, for example, are decisive in the decision that he makes.
In addition, other authors such as the Nobel Prize in Economics Daniel Kahneman describe another phenomenon (the frame effect) that also invalidates this theory and provides reasons to know why they made the decision to return.
Among his observations, this effect described by Kahneman shows us that both the statement of the problem and the starting and ending point, cause individuals to change their decisions, even if this implies the selection of an option that is not the most useful and therefore, it is also the least rational.
Therefore, taking into account both the preferences and the starting points of the different players, for example, we can understand, in part, why they returned to the game and did not decide to save their lives.
Other relationships between The Squid Game and the economy
“The Squid Game series, or Squid Game if we pronounce it in English, is one more example that learning economics is a very wise decision we could make.”
Thus, we can conclude this article by saying that in almost all the choices made in this life, both financial freedom and the situation of our finances, as well as the opportunity cost and the expected value or utility of a decision, are concepts that they will be very present, and that will lead us to make one or another decision.
Further, in the game we can observe other situations in which economics and its various disciplines of study are very present.
This could be the case of the aforementioned economist and statistician, who wants to calculate the options he has to pass the bridge, and the test, alive. Another example could be that of one of the protagonists, Sang-woo, who studied business at the University of Seoul and knew statistics in the same way.
Another case in which the series once again shows a relationship with the economy is found in the life of this aforementioned character, as well as in the life of the creator of the game. Bankers and economists both, one, due to its passage through the financial markets, had lost a large amount of money having invested in futures, while the other had gotten tired of these, for which he had created new ways of investing money and have fun.
Finally, there are those who see in this series a criticism of the situation that South Korea is going through, as well as the inequalities that many Asian societies live, subjected by them to a life in which well-being does not exist. Well, summarizing some data, household debt in the country where the series is recorded has increased in recent years to exceed 100% of its GDP, the highest in Asia. Similarly, the top 20% in South Korea have a net worth 166 times greater than the bottom 20%, a disparity that has increased by 50% since 2017.
Be that as it may, the truth in this article is that the economy is present in many situations of our life, of our day to day. And the series of The Squid Game, or Squid Game if we pronounce it in English, is one more example that learning economics is a very wise decision that we could make.
That said, and finally, are you joining this game of learning economics with us? TIC Tac.