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With her Eras tour, Taylor Swift has been dominating the news this hot, cruel summer, including the $55 million in bonuses she gave to every member of the team that worked on the tour. But her impact on the people and the places involved with the concert experience extends way beyond that. From the resale prices, to the impact on local economies, to the role of Ticketmaster, we can learn a lot about economics from the pop icon and her tour.
Economists research topics like labor, trade, global markets, healthcare, inequalities, education, etc., but the core of economics - one that Swift's Eras Tour has helped to teach us is How should economies allocate scarce resources?
Macmillan Learning author Paul Krugman (Economics from Krugman/Wells 6e) indicates that we can learn a lot from analyzing the headlines around something like the Eras Tour. Knowing that Swift's Eras Tour provides such strong teachable moments in economics, he created assignments for instructors to use this fall. The assignments are available beginning this August as an added benefit to all instructors using Macmillan Learning’s Achieve, but the team also wanted to make a few of them available for broader use. So … Don't let them slip by, like a moment in time.
Is Taylor Swift Underpaid?
This assignment asks students to think about economic growth as well as demand. Economic growth, the 11th principle in the first chapter of Economics from Krugman/Wells 6e, considers how the increases in an economy’s potential lead to economic growth over time.
Concerts are big business. In fact, according to Bloomberg, Taylor Swift is bringing in ticket sales of more than $13 million a night for each concert, which may make the Eras tour the highest-grossing tour in music history (now that’s an American Dynasty). So how on earth could we even consider that she is underpaid?
Let’s think about the question like an economist. Here are some things to consider:
- Modern superstar musicians don’t make the majority of their money from streaming or music sales. Rather, it comes from concerts.
- Unfortunately for Swift, but fortunately for us, we have the ability to listen to her songs just about any time (though there can also be a monthly subscription associated with that).
- While attending concerts offers a special experience, modern technology (Spotify, Apple Music, SirusXM) provides opportunities to hear Swift’s latest songs and even recordings of her live performances.
- Taylor Swift increased the number of shows on the Eras Tour, more than doubling the original number of shows to 131 shows. Following that announcement, ticket prices continued to soar (people seriously need to calm down!).
- Ticket prices on secondary markets have, in some instances, increased to more than 10 times their face value.
Secondary markets exist because face values don’t reflect actual demand and supply. In the case of Taylor Swift, concerts sell out and prices continue to increase. That means demand continues to exceed expectations -- and when demand exceeds supply, prices will increase.
So … should Taylor Swift have been paid more? What do you think?
Start out your fall term by thinking about economic growth and demand. If you’d like to use this assignment in class, you can use the prompt above or log into Achieve for Krugman Wells 6th edition; there you’ll find a slide deck in the Resources Tab titled First Day of Class Icebreaker: Taylor Swift for even more details on the assignment.
Also, check out the assignment about the cost of attending a Taylor Swift concert & the concept of opportunity cost.