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Seinfeld Economics: The Chicken Roaster

by Linda Ghent

An externality is a situation in which the private costs or benefits to the producers or purchasers of a good or service differs from the total social costs or benefits entailed in its production and consumption. An externality exists whenever one individual's actions affect the well-being of another individual -- whether for the better (positive externality) or for the worse (negative externality).

Cost-benefit analysis involves, whether explicitly or implicitly, weighing the total expected costs against the total expected benefits of one or more actions in order to choose the best or most profitable option. Rational agents are assumed to never take an action for which the expected benefits are less than the expected costs.

Seinfeld: The Chicken Roaster

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A Kenny Rogers Roaster restaurant opens across the street from Kramer. He can't stand the red glare from Kenny's neon sign, and moves into Jerry's apartment. But he becomes hooked on Kenny's chicken, and eventually accepts the red glare in exchange for access to the chicken. When Kenny's shuts down, the lights go out, and Kramer's overall welfare falls—the benefits of the chicken outweighed the cost of the glare.

from Seinfeld, Season 8 (1996)
Creator: Larry David & Jerry Seinfeld
Posted by Linda Ghent
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