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What Do Movie-Theater Popcorn And Health Insurance Have In Common? And Other Popcorn-Related Trivia…

October 7th, 2013 · 7 Comments

Have you ever wondered why popcorn in movie theaters is a thing? I do all the time, but I haven’t gotten a satisfactory answer until now. From Centives and The Smithsonian:

  • In 1848, a time before society had the good sense to invent the Xbox, watching popcorn pop was apparently a form of entertainment and thus was a popular addition to circuses and fairs.
  • Its mobility also helped. Steam powered popcorn makers could serve customers anywhere.
  • The aroma of popping popcorn would lure customers further driving its adoption.
  • At the time movie theaters sneered at popcorn. They were still emulating classical theaters and thought popcorn to be a snack for the commoners, not the highbrow patrons they attracted. Besides, think of the carpet.
  • But with the end of silent films, literacy was no longer a requirement at the theaters and movies became a popular pastime for everybody – including the lower classes.
  • During the Great Depression popcorn was an affordable snack. A $10 bag could last for years. And so moviegoers would purchase popcorn from street vendors before going in.
  • Theaters, for their part, tried to prevent this by asking patrons to check in their coats and their popcorn.
  • After a while though theaters realized it’d just be easier to make money by selling popcorn themselves.
  • And anyway during WW2 rationing meant that the sugar used in candy and sodas was too expensive and thus there really weren’t any other snacks left.

So I found most of this to be an interesting and satisfying explanation (though the first point made me a little sad for the state of 19th century entertainment), but the last point was the one that really stuck with me. From what I can tell, it’s often assumed that government regulation is reversible- in other words, that the market impact of a tax, quota, price control, ration, whatever, will go away once the regulation is repealed, and the affected market will just go back to the way it was before the the regulation was imposed. (I think this is particularly true with “tax holidays” and other measures that are specifically framed as being temporary.) Examples like the above, however, suggest that this is likely not the case- after all, explicit sugar rationing ended a long time ago (although a sugar tariff is still going strong, which at least partially explains why high-fructose corn syrup is such a thing), but movie-theater popcorn certainly didn’t go the way of the dodo when Americans were given the option of switching back to their Milk Duds and Red Vines.

Granted, movie-theater popcorn may be a trivial example of the lasting impact of government policy, but health insurance certainly isn’t. History quiz: How did employer-provided health insurance become a thing? I’ll give you a hint- the answer isn’t that different from the story of the movie-theater popcorn. From yours truly:

Historically, one large frustration for many people in the United States has been that, as an individual consumer, it was either logistically near impossible or prohibitively expensive to purchase health insurance. It’s pretty common knowledge that most health insurance in the United States has been provided by employers, and individuals often specifically look for work more as much for the ability to get health insurance as anything else.

This seems like an inefficient system, so how did this employer-provided health insurance come to be? The short answer is “blame World War II”- price controls on wages caused employers to compensate employees via benefits versus direct wages. Combined with legislation that allows employers to provide health insurance tax-free to employees, and it’s not entirely surprising that we have the system that we have. I’m guessing this was not the goal of those 1940’s lawmakers.

(You can see more on this from Bruce Bartlett here.) Granted, having employers either purchase outright or heavily subsidize health insurance for all of their (full-time) employees does help overcome the adverse selection problem inherent in insurance markets, but it seems like that is a fortunate side effect of the system as opposed to a deliberate feature.

Clearly, wage ceilings haven’t been around for a while now, and yet employer-provided health insurance hasn’t faded away as a result. It’s probably obvious by now that regulation is hard, people…maybe we should consider choosing smarter people to write it.* 🙂

* Let it be known that the anti-government snark will continue until my economic data returns.

Tags: Policy

7 responses so far ↓

  • 1 Mike // Oct 7, 2013 at 6:59 pm

    Are you able to edit this article? I’d like to hear more about the ant-government. I’m very interested in insect social behavior.

  • 2 Chris // Oct 8, 2013 at 5:14 am

    “regulation is hard, people…maybe we should consider choosing smarter people to write it”

    Or just realise that it’s pretty much impossible for a person writing regulations to understand the second, third, and higher order negative impacts of that regulation. Therefore, it’s not “who” is writing the regulation that’s the problem, it’s the fact that it’s being written at all.

  • 3 Grace Buck // Oct 8, 2013 at 5:30 pm

    Employers should no longer be responsible, directly, for health insurance. That financial border lessens thief ability to compete in foreign markets or even here at home as religious groups such as Hutterites, with no health insurance or Workers Compensation expense can and often under bid traditional companies.

  • 4 econgirl // Oct 9, 2013 at 10:17 am

    @ Mike: Are you saying that ant-government snark is not something that you would entirely expect to show up here? Those damn insects, what with their hills and their hierarchies and rules and all…

  • 5 Mike // Oct 10, 2013 at 12:45 am

    I’m just saying that ants work as a team, and there’s no “i” in ant-government. But you already fixed it. You squashed my fun like a… like a… like some sort of small thing that one can easily squash.

  • 6 watch movies online // Jul 10, 2014 at 12:03 pm

    Hello there! This post couldn’t be written any better!
    Reading through this post reminds me of my previous room mate!
    He always kept talking about this. I will forward this write-up to him.
    Fairly certain he will have a good read.
    Thank you for sharing!

  • 7 Kirsten // Oct 12, 2014 at 6:28 pm

    Thank you for this new understanding. I found the comparison between the movie-theatre popcorn and the health insurance very insightful, it helped me realise more than just the fact that economics can have an effect on anything from entertainment to employment, it also made me want to question why everything is the way it is and I thank you for this. Now that we no longer have price ceilings, I agree that people should make better choice regarding these issues.

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