Introduction to Economics                                 Lesson 19 / 07



In most societies, based on, or linked to, the Christian religion, Christmas, falling as it does, in close proximity to the New Year, is the most significant annual celebration in the calender.  This is despite [or perhaps because] of the fact that many of its origins are secular or pagan rather than Christian.

Some of the aspects associated with Christmas include feasting, decorating and erecting of traditional symbols, exchanging of gifts and cards, attending churches and religious celebrations, holidaying and the expressing of peace, benevolence and good will towards people generally.  We can examine these aspects from an economics viewpoint.


Exchanging of Gifts & Cards

The tradition of exchanging gifts at Christmas time has waxed and waned over the ages.  The modern practice is said to have begun in early C19 North America and to have received much of its impetus from the 1822 poem by C C Moore  “ A Visit from St Nicholas” which begins “ Twas the Night before Xmas”. 

The popular image of the bearer of the gifts, being a roly-poly white-bearded old man referred to by various names, including Santa Claus, Father Xmas or St Nicholas, first appeared as a cartoon character drawn by a Harper’s Weekly cartoonist, Thomas Nast, in 1863, which was adopted and standardised over the next few decades, world-wide, by retailers and advertisers.

Today Xmas has evolved in many countries into the main shopping season, starting in some instances as early as October and extending into January.  It is estimated that in the USA, 25% of retail sales occur between Thanksgiving, [celebrated on the 4th Thursday in November] and Christmas and that this period gives rise to 60% of retailers’ profits. 

The Shopping Season in America is said to begin on Black Friday, [the day after Thanksgiving]. when many stores run major promotions.  During the Great Depression President Roosevelt contemplated moving Thanksgiving forward to extend the Shopping Season for the proposed purpose of boosting the economy, but which gave rise to a storm of protest about commercialising Xmas.

The practice of exchanging Xmas gifts has led some economists to examine the practice critically as being inherently inefficient and wasteful, giving rise to what is referred to as a deadweight loss.  Thus it was calculated in 2001 that Xmas in the USA alone had caused a deadweight loss of US$4 billion.  The supposed deadweight loss allegedly occurs because consumers are said to maximise efficiency when they themselves purchase what they themselves want, rather than when others purchase for them. 

The amount of the deadweight loss is calculated by determining the difference between what the purchasers of the gifts paid for them, compared to what the recipients of the gifts would have paid for them, if they were purchasing such items for themselves. 

Another, [typically lesser,] deadweight loss figure can be calculated if one were to use instead of the amount that the recipients would have paid for their gifts, the amount they would require if they were to sell them.  Many economists however consider the whole concept of deadweight loss as economic nonsense, since it does not take into account the satisfaction that the purchaser of the gift receives from buying and giving the gift or that the recipient receives from getting it.  Comparing what you buy for yourself to a gift you receive is to compare apples with oranges. It can not be done; they are different things.


The Xmas Message

One aspect of Xmas that some economists have examined with a critical eye is the message of Xmas, expressed through the stories, plays, poems and films that we use to amuse and entertain us whilst we enjoy the occasion.  They purport to see in the more endearing examples of such works a consistent misguided economic view of the world.

Dickens “A Christmas Carol” is perhaps the most widely known Christmas story and “Miracle on 34th Street” and “It’s a Wonderful Life” perhaps the 2 most popular Christmas films.  In all of these, it is said, profit and those who pursue it are cast in a bad light, as being pursuits basically contrary to the leading of a good and decent life.  The failure of such works seemingly to see anything worthwhile whatsoever in the lives and work of the driven, miserable but financially successful characters therein reflects and promotes, in the view of such economists, a muddle-headed view of economics.


Feasting, Holidaying and decorating

Such activities reflect the non-spiritual and commercial aspects of Christmas, which are, on occasion, deplored by those who prefer it as an occasion and an opportunity for the expression of spiritual belief, benevolence and compassion.  There is a continuing tension between such activities. 

It appears however that the ability of Christmas to accommodate both the commercial and spiritual at the same time might explain its undoubted ongoing success as arguably the World’s leading festival.  As a result, Christmas provides considerable scope and opportunity for marketeers, much less so for economists. 


                                                  David Sharp

                                                     27 November 2007



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