11/30/2005

The Economics of Santa

A man giving away free presents (manufactured most likely on slave labor--poor little elves) seems too good to be true. For those who don't know yet, I hate to be the bearer of bad news, but there really is no Santa. Now that we've cleared that up consider for a moment what the economic effects of a real Santa would be. Parents would not be spending hundreds of dollars on presents for the children. What would this mean for the economy. This year many plan to cut their holdiay spending according to many national surveys. Even though black friday seemed to show good profits, this is not always the best forecast of season spending. If there were a Santa Claus living in the North Pole and making all of our presents, even if he paid his elves--which I'm sure he doesn't--most likely that money, whatever currency it may be, would not be cycled back into our economy. How often do you see elves at Wal-Mart?

5 comments:

Nate said...

I was heartbroken to read the news that Santa does not exist. I had never really thought about the effects Santa would have on the economy but your argument makes complete sense. The increase in labor and the effect that Christmas has on the economy is one of the driving forces behind so many retail outlets. Just think about the amount of temporary stores and products that are available during the holiday season alone and the effect is noticeable.

Elijah said...

Wow! Santa is the key to all economic activity! Really though, if we didn't celebrate Christmas, I don't think that a lot of marketing strategies would exist. Many people look forward to shopping in sales. How often would that happen if there never was any particular reason to go shopping for something other than our needs?

Dr. Tufte said...

-1 on Maddy's post for poor punctuation.

Economists Joke: didn't you know that Santa Claus is a Keynesian?

Chistmas is actually the opposite of the broken window/forgotten man fallacy. In those, we do something nonsensical - like break a window - and claim that it increases jobs. With Christmas, we do something nonsensical - buy because of the date on a calendar - and claim that it increases jobs too. Trust me, if we didn't have Christmas, we'd still shop just as much. We might even invent a name like Festivus to give us an excuse.

Matthew said...

Dr. Tufte said that we would shop just as much if we didn't have Christmas. I believe that is true. Most holidays and events have just been marketed in a way to make customers want to buy. Even the diamond ring – a girl feels like she needs one to show she's married, but she's can still be married without one. Without Christmas, more sales and events would just be created to encourage people to buy more.

Dr. Tufte said...

That isn't what I meant. Instead, I think Christmas shifts when we make purchases, but it doesn't actually create any new ones in the aggregate.