The economics of Halloween

30Oct06

Here is an interesting article that argues the inefficiencies of Halloween. For example:

It’s not the dead that concern me about Halloween. And it is not the impact of all that sugar on the weight of our kids. No, it’s the dead-weight loss, or pointless lost utility of the entire enterprise. That likely has a dollar value that exceeds $1.5 billion annually. American citizens squander more than a billion and a half dollars a year on an economically inefficient holiday.

So let’s do something to reform Halloween. The first step would be for Halloween donors to give kids money instead of candy. Kids could then go to the supermarket the next day and binge on the candies they really like. That solution would get an A-plus in economics.

The real problem is with this analysis is that the return to Halloween isn’t “candy” per se, it’s fun — mainly the fun associated with going out, trick or treating, and seeing what you get.

Hasset thinks that he has “solved” Halloween:

We have left Halloween to the ghouls and demons for far too long. It is time we give it to the economists, and let them fix it once and for all.

But he hasn’t. Let all the kids in your neighborhood go door to door and collect $.50 from everyone on the block. They’ll come away with enough cash to keep them in Twix for a year. But see if anyone goes out. My guess would be that only those kids that plan to dress up as investment bankers would enjoy such a holiday.

That’s the problem with some economic models — they forget that money is only a representation of goods, and not always a perfect one. While it’s easy to measure how much candy you can buy for $X, it’s much more difficult to measure how much happiness a kid gets by trick-or-treating and getting Y candy bars. But to conflate the two is a huge mistake.

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