And it’s the best time of the year… again!

So it’s almost Chirstmas time. We have shopping to do, we have gifts to wrap and we have food ready to be enjoyed! This year I’m off to visit friends in Paris and Germany. I truly can’t wait since Christmas market in Frankfurt is probably the highlight of the trip.

So Christmas… what do we (economists) think of Christmas?

Let’s imagine a make-believe world, where families have a long wish list. But in this fantasy universe, rather than spread their purchases evenly, they wait until the last six weeks of the calender to do half of their shopping. Half of the purchases are gifted to friends and family in a show of love, but a great deal of the recipients hate their presents, anyway. It doesn’t work out much better for the stores, who encourage this sordid behavior by slashing prices at the same time that they have to hire additional workers to clean up the mess. What civilized society would ever go through with this parade of indignities year after year? Ours, naturally! So, Merry Christmas.

Christmas is good or bad for the economy? Of course, yes. One economist stated that if we lopped December off every shopping calender, the U.S. retail industry would be in a permanent depression.

Mark Whitehouse wrote in a superb 2010 article for the Wall Street Journal: “In the latest Wall Street Journal forecasting survey, more than two of three economists opined that if Christmas ceased to exist as a holiday, consumers would either spend more on themselves or spread their gift purchases more evenly across other events such as birthdays. That, in the view of some academics, would put more goods into the hands of people who truly value them and improve social welfare as a result.”

In my opinion, the holiday shopping season starts earlier and earlier each year. Whether or not the economy is picking up is gauged on holiday sales. Commercialization of Christmas provides a need for part time holiday jobs. Without having Christmas be so commercialized, there are many people who would be without a job during the winter. Just because Christmas has become so commercialized does not mean the reason for the season is completely forgotten, though. In the short-run it’s beneficial and stimulative because it causes consumer spending and part-time holiday jobs. After the holidays, however, it causes damage to the environment (people buying new items and throwing out old ones) and the unemployment effects after the holidays would negatively affect the economy.

What do you think and what’s your plan for this Christmas?

And by the way, VERY MERRY CHRISTMAS