Avatar is A Lesson in Economics

I have recently developed an interest in designing predictive models for important economic and business uses and intend to take a course on statistics and its applications once again. With this background and having watched the movie Avatar, I find articles such as this by Sarah Ball interesting and also of some concern. Since I read about the details of this movie, I have had a strong hunch that it would be quite successful though I could not guess what the box office figures would be. In spite of that inability, I am concerned that Sarah Ball proceeds to compare the two movies in terms of the nominal figures. To her credit, the article clearly states that the figures under comparison have not been adjusted for inflation but then goes ahead to ask whether an extra US$ 800 million of ticket sales is possible.

It is incontrovertible that every journalist must present pieces in a way that meets editorial policy and that is most easily understood by their readers. My view is that given the tendency for many professionals to substitute conventional wisdom for sound economic reasoning, the success of a movie like Avatar would present an ideal opportunity to teach readers about the time value of money. In essence, the opportunity is here to introduce the idea about inflation into the discussion without harming the comparison of the two blockbusters that many movie goers enjoyed. I have argued before that comparing a billion dollars across ten years without adjustment for inflation tells one nothing.