Sunday, April 4, 2010

7th Art: Double Indemnity (1944)

"You're not smarter, Walter... you're just a little taller." Great lines like this set the mood for Billy Wilder's "Double Indemnity" (1944), a classic that stands the test of time. It's a film noir about love, greed and crime, based on the novel by James M. Cain, with a magnificent musical score by Miklós Rózsa.

The movie has many eye candies for someone looking back today at life during the late 30s in Los Angeles. From the risqué depiction of adultery to the constant drinking and smoking, including a car stop at a beer-serving drive-thru around 4:00 PM, it's one of those movies that reflects societal changes very intensely. In some odd sense, you get confirmation through the lens of Wilder that social norms didn't become necessarily freer or less puritan during the last 70 years.

The most interesting aspects of the story however are related to economics. While the foundations of the economics of information asymmetry were established during the 70s, and their main authors only received a Nobel in 2001, you will clearly see the same arguments made by Cain and Wilder in the movie almost 40 years before economists stated them. There you will find examples of adverse selection, moral hazard, and principal-agent problems, all laid out in an almost academic fashion. If you know economic theory, make sure that you watch this movie with an eye on its great microeconomic and insurance finance insights.
Enjoy the trailer!

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