Matilda the Musical puts Roald Dawl’s classic book to musical form, and does a great job. The show is great on stage (it’s still running in London) and the movie musical also does a nice job with the story.
Two songs in the show do a wonderful job of illustrating economic lessons and we examine them in this post and in the accompanying YouTube videos.
Bruce Teaches about Diminishing Marginal Utility
The sadistic principal, Miss Trunchbull, discovers that Bruce stole a piece of her cake. As punishment, she wants Bruce to eat an entire cake. Bruce really enjoyed the first piece of cake but is full and apprehensive about eating more. A second piece – he’d probably enjoy that as well, but it wouldn’t be as tasty. But after two pieces of cake, he could actually get sick. That means additional consumption of the cake actually negatively affects Bruce’s well-being.
Click here to watch full song.
This song beautifully illustrates the law of diminishing marginal utility. Recall that the law of diminishing marginal utility says that as a person consumes more of a product, each subsequent unit consumed is less valuable than the one before. In other words, their marginal utility – in this case it is Bruce’s marginal utility from consuming an additional piece of cake – is always declining.
In fact, given that too much cake could make Bruce sick, as Miss Honey notes early in the song, marginal utility eventually can be negative. Meaning each extra piece of cake that Bruce eats makes him worse off.
For almost all products, the law of diminishing marginal utility holds. Think about the size of a house (or apartment, dorm room, etc.). Would an extra 100 square feet have value? For most people – of course! But think about for whom that extra 100 square feet would be most valuable? Would it mean more to somebody crammed in a 350 square foot studio apartment? To someone who has a 900 square foot place? Or someone with a house that has 2500 square feet of living space? While the extra space likely has value for everybody it will mean the most to – and therefore give the most utility to – the person who currently lives in the smallest place. The importance of 100 additional square feet diminishes as the size of the home gets bigger. If you looked at two mansions and one had 10,000 square feet and the other had 10,100 – would you even notice?
My House Teaches about Property Rights
Miss Honey sings about that while she has a small house, it provides what she needs and it is hers. This song highlights the importance of property rights. Property rights, as defined by Arman Alchian are “the exclusive authority to determine how a resource is used, whether that resource is owned by government or by individuals.” Hoover Institution Fellows Terry Anderson and Laura Huggins have researched property rights extensively and define property rights as “the rules of the game that determine who gets to do what and who must compensate whom if damages occur”. While the idea of property rights might either seem like they only matter for those who are rich – they are crucial to have a well-functioning economy.
As we learn in the video, property rights are key to a well functioning economy, environment quality, economic growth, safe drinking water, and much more. So while Miss Honey’s house is small, the fact that she owns it is incredibly important for her and for society.
Watch the video below to learn more
The video below is where I share my thoughts and you can watch short clips from each song. Check it out. Also, please subscribe if you haven’t already as I’ll be posting regularly about Economic Lessons from Broadway in the next few weeks leading up to the Tony Awards!