Various fearsome characters will soon be chanting "trick or treat" at doors all over America. That peculiar threat would seem to be a long way from the dismal science, but actually, Halloween reflects economics' central precept that people choose by comparing the benefits and costs they expect to bear as a result.Happy Halloween!
Modern jack-o-lanterns are carved out of pumpkins because of economics, for example. They originated in Ireland as hollowed-out turnips, but pumpkins were more plentiful in America and made better lanterns, so immigrants carried on their tradition with pumpkins instead.
Dark houses and scary costumes originate from benefit-cost comparisons. In the fifth century B.C., Celts celebrated their New Year -- Samhain -- on October 31. According to legend, on that day the spirits of those who had died during the year searched for living bodies to possess as their only hope of an afterlife. Therefore, they made themselves unattractive "candidates." Houses were left dark, cold and undesirable, and people dressed ghoulishly to scare away the "shopping" spirits.
Trick-or-treating has economic roots. It originated with "souling" in ninth century Europe. On All Soul's Day, poor Christians would go door-to-door asking for "soul cakes"-- bread studded with currants. The more cakes they received, the more prayers they would say for the donor's dead relatives. This theological exchange of bread for prayers was viable because of the belief that prayers by the faithful could hasten their passage to heaven.
Current Halloween practices also reflect economics. Second only to Christmas as a shopping holiday, Halloween generates about $5 billion in sales, reflecting the three-fourths of Americans who mark the occasion in some way. It is the biggest payday for candy makers, who have turned when daylight savings time "falls back" into a major issue, in search of added sales from an extra hour of trick-or-treating.
Because Halloween is the biggest night for costume rentals and purchases and behind only New Year's and the Super Bowl for alcohol sales, sellers in these industries pray for a weekend Halloween so more adult parties will take place. The Halloween Association trade group even proposed permanently making Halloween the last Saturday in October, to get more economic bang out of the holiday.
Halloween is one of many children's first experiences with economic decision-making. How long should you continue to trick or treat? You stop when the costs in terms of tiredness and sore feet outweigh the benefits of the additional candy take. Is it really worth walking to the dentist's house to get a toothbrush? Which streets should you hit? That reflects costs (how far do I have to walk?) versus likely treat benefits. The number of lights on, the income level and number of kids in the neighborhood all enter this calculation, and children learn to ask others about a street's loot before heading down it. Some parents even drive their children to other neighborhoods to increase their trick-or-treat haul. When are you too old to trick or treat? When the cost of the hassles you get about it outweigh the benefits of the candy you expect. Children staying with friends Halloween night also learn how markets work, via candy exchange negotiations.
The economics of Halloween affects others as well. Homeowners learn why the trick-or-treater's dream -- a bowl of candy with a sign saying "take all you want" -- doesn't work very well. Primary school teachers are much more likely to call in sick after Halloween because the children are either still going to be on their sugar high or suffering from the low that follows, and what meager learning will take place doesn't justify the cost of containing the pandemonium.Economics may be the dismal science. But it can shed real insight even on "non-economic" matters such as Halloween. And the fact that we extort treats with threats of tricks the same month that the federal fiscal year begins and just before major elections is also a useful analytical reminder.
Saturday, October 31, 2009
Economics of Halloween
Or should I call it, Eekonomics: