Bruce Springsteen On Broadway Comes With An Economics Lesson
ROBERT SIEGEL, HOST:
One of the hottest tickets on Broadway is for a one-of-a-kind one-man show. For a limited time only, Bruce Springsteen is playing a 960-seat theater. And the luckiest fans are now learning a valuable, Nobel-Prize-winning economics lesson. Kenny Malone of our Planet Money team explains.
KENNY MALONE, BYLINE: What date - so what date are your tickets for?
DANIEL FLYNN: December...
MALONE: The biggest Bruce Springsteen fan I know, my friend Daniel Flynn, actually snagged two Bruce on Broadway tickets when they went on sale.
Fifteen - and how much did you pay for them?
FLYNN: Four-hundred plus fees.
MALONE: Four-hundred dollars plus fees per ticket - that is the face value. Now, Daniel knows he could resell these for a lot of money.
Have you looked at what they're going for?
FLYNN: I have not.
MALONE: You still haven't.
MALONE: Because Daniel worries that if he sees what he could resell the tickets for, it would ruin the show for him.
FLYNN: I mean, it's self-protection - right? - because I don't want to know what a stupid decision from an economic standpoint I'm making.
MALONE: (Laughter) I mean, it is pretty stupid.
MALONE: Stupid because he does have another choice. Sell the tickets. Classical economic theory says that if you use a ticket that's worth, say, a thousand bucks, it is like buying a ticket for a $1,000 because you're choosing to give up $1,000 to see the show. Daniel would never pay $1,000 to see this show, but classical economic theory does not seem to apply to Bruce Springsteen tickets.
RICHARD THALER: Hello.
MALONE: This is Richard Thaler.
THALER: Professor at the Booth School of Business, University of Chicago.
MALONE: Thaler won the Nobel Prize in Economics this year for studying the many irrational ways human beings deal with money. And he did this famous study where he and two other colleagues told a classroom of students...
THALER: Bring money to class this day. We're running an experiment.
MALONE: The kids walked in that day, and Thaler gave brand new coffee mugs to half of the students in the class.
THALER: Forty-four students - so 22 mugs.
MALONE: Then he basically said, sell your mug if you want to. And what they found was that people who had been randomly handed a mug suddenly really valued that mug.
If didn't have this mug, I didn't care about this mug. But now that I have it...
THALER: Yeah. I'm not giving that mug up.
MALONE: The discovery was that simply having a thing makes you overvalue the thing.
THALER: I ended up calling this the Endowment Effect.
MALONE: And this Endowment Effect - one of the places you'll see it a lot is with concert tickets.
Are you and the orchestra?
MALONE: You are in the orchestra.
FLYNN: I am in orchestra, and I know the row number.
MALONE: And so the way that I see my friend Daniel Flynn and his refusal to even look at how much his Bruce Springsteen tickets are worth is that he's sort of accepting that he is a human and he is susceptible to this Endowment Effect. Once he had that ticket in his hand, he knew he was going to go with his dad even though it might be economically irrational.
I do have StubHub pulled up in front of me.
FLYNN: OK, great (laughter).
MALONE: I mean, do you want to know? You don't have to.
I also checked with the ticket website SeatGeek about this, and they said there is a range, but tickets like Daniel's have sold for as much as $4,000 each.
FLYNN: Oh my gosh, wow, yeah, man.
MALONE: Would you be willing to pay $4,000 to go to it?
FLYNN: (Laughter) Of course not. I wouldn't even pay close to that. But I am honestly surprised it's that high. But Bruce Springsteen is incredible. And how often do you get to see him in a theater with less than a thousand people?
MALONE: Well, I understand all of that, but now you're just rationalizing spending $4,000 on it.
FLYNN: Right. It's Bruce on Broadway, man.
MALONE: Kenny Malone, NPR News.
(SOUNDBITE OF BRUCE SPRINGSTEEN SONG, "DANCING IN THE DARK") Transcript provided by NPR, Copyright NPR.