How Should Movies be Ranked?

Its summer in the northern hemisphere and the blockbuster movies are now showing in theatres throughout the world. There are a number of guesses about what movies will do well in the theatres (perhaps with pirates too) and the rest. However, an important feature of these is the extent to which sensible economics is usually put aside in the comparison of which movies are most successful. Zachary Pincus-Roth writes in the Slate Magazine about the inappropriate comparisons on the gross revenues from movies without accounting for inflation.

So many people continue to believe that the highest grossing movie of all time is the Titanic when this is not at all true. As argued there, to compare the nominal revenue figures for movies made over six decades apart is hugely problematic. Depending on the chosen metric, such as nominal or real revenues, the overall number of tickets sold or the population base for the sales, the ranking of the pictures considered varies quite a bit.

However, this merely shows that journalists should be more cautious in taking up the best parameters to suit the point being made. In spite of this, it altogether incorrect to rank movies made years apart on the basis of nominal revenues. As the story concludes, a number of reasonable algorithms can be drawn to provide plausible ranking of movies. In my reckoning though, it would be helpful to consider what proportion of the entertainment budget of households is spent on movies and weight that accordingly.

Finally, it is also worth considering to what Epagogix, a company that uses sophisticated models to predictive the box office takings of a movie, consider inflation.