So Strange
I’m afraid to post what I’ve been ruminating mentally over the last day or so, because it sounds so bloody despicable. Not in a depraved way, but more in a “You’re a mean one, Mr. Grinch” way. And I don’t really think this stuff is valid; it’s more just an interesting proposition followed through a little too far. I’m all for Christmas and presents and all that good stuff. So, now that I’ve managed expectations drastically enough, allow me to unimpress:
Is Christmas Economically Efficient?
The thought hit me today. Do we come out ahead? We all know the retailers depend upon Christmas to put them into the black for the year, and fiscal years are typically arranged so that these earnings make it into the statements at the last moment. But the evidence seems to lead to a negative.
Revenue is one thing; efficiency is another. So, let’s break down the “Christmas transaction,” which is effectively an indirect form of barter. Social culture dictates that for every present there is another present. It may or may not be ‘equal and opposite.” Luckily, we eliminate the need for a double coincidence of wants, as money moderates this exchange.
Let’s assume that the ideal Christmas involves an exchange of gift(s) totaling an equal value. We can say that “gift expectations” are in equilibrium when this event occurs, as sufficient time has elapsed for the gift exchangers to settle upon a mutually-acceptable dollar value for presents.
Therefore, we must arrive at the conclusion that a long-run Christmas transaction is merely an inefficient means of reducing liquidity; people are converting money into an equal-value good, then exchanging that good for a good of equal value. Obviously economically inefficient, especially considering the amount of rent-seeking that must occur in order to accumulate, package, transport, and exchange presents. The picture becomes more interesting in the short-run, as presents of unequal value are exchanged. Clearly, the person who has less expenditure gains more in the transaction, thus actually appearing to penalize generosity.
Black clouds aside, we might actually gain from the coincidence of discounts present around Christmastime, thus making it more efficient to “trade” during this time period. In this way, Christmas serves as a sort of external market in which discounted goods are traded. However, it is difficult to avoid consideration of the short-run losses of disequilibria in gift value.
In the long run, it’s probably a wash.
Merry Christmas.