Down With Halloween
Jason Kuznicki on Oct 31st 2006
But not for that reason. Try this one instead:
Economists haven’t adopted the vainglorious practice of physicists and applied numbers to their laws, but if they did, the first law of economics would be that lump-sum transfers are more economically efficient than in-kind transfers. If you are going to give a gift to somebody, you should just give them the money. They will be a better judge of the best way to spend it.
If instead, you give them a specific good, then you make them worse off, unless you somehow miraculously anticipate what the recipient would purchase if he received the money instead.
Now if you know someone well, perhaps you can anticipate the type of gift they might like. But Halloween is no time for thoughtful, targeted gift-giving. At Halloween, each house on a typical American block picks out one type of candy, and they give that exact same candy willy-nilly to everyone who shows up at the door. It’s an economic nightmare.
I might add that even if you did miraculously anticipate what the recipient would purchase, you’ll still only about break even when compared to giving him money.
Unlike Christmas, where the deadweight loss in gift-giving arguably reinforces the ties of fellowship with friends and family, Halloween’s deadweight loss encourages a something-for-nothing ethos among the kids three blocks down from me, who frankly are total strangers. I know my neighbors, and my friends, and my family, but let’s face it: Those kids might as well live in Idaho for all that I know about them. And Halloween candy just isn’t going to change that.
(Oh, and let’s define our terms while we’re at it: Break-even for me would be a whole bag full of Lindt Excellence 85%. That or coussins de Lyon, which I don’t think you can even get in the United States. But they are the best candies in the entire world, and I’d gladly take just one rather than an entire bag of the more ordinary stuff. Is it just me, or are they flavored with Chartreuse, too?)
Filed in The Boardroom
The problem with the analysis is that it assumes that children are free to buy what they wish. Children’ spending greatly limited and controlled by their parents. If the children were given cash there is a good chance that they would not be allowed to purchase what they wished or even worse it could be forced into purchase they do not desire, such as a savings bond (to teach them the importance of saving). Under normal circumstances candy is effectively illegal or highly regulated and so a night to get any candy even poor ones such as Sweet Tarts, Smarties and Tootsie Rolls is highly desired.
Also the something for nothing ethos is not being created. You do not give candy to children without costumes. You are basically paying them to look adorable in costumes.
Also it is worth considering that for children candy is a form of currency. I would argue that children use candy as currency in trade analogous to the way prisoners use cigarettes as currency. Adult currency has less value for children since the lack the ability to go to places where the money can be spent and what they can spend the money on is prohibited.
Halloween is the one time all the kids in the neighborhood come to our house and visit with our dogs, who give them a big lick.
Yes, but presumably you can buy candy in bulk and distribute a little to each child, cheaper than they could purchase the same quantities of each entity since they aren’t buying all the same candy in such bulk. This is especially the case if they would prefer a variety of different things and be forced to purchase at a higher price one of each thing.
Ditto Mr. Woertink’s sentiments: for kids, candy is fungible. (Now why teenagers go around picking up sweets is anybody’s guess.)
Jason, you fail to point out the true dead-weight loss of Halloween: kids buying stupid, ill-fitting costumes to get your candy. We all know Halloween is charity for nippers. Why make them dress up to get it? It’s uncomfortable for them; it’s irritating for you. The only group that benefits is an uninvolved third party. Sounds a lot like sales tax, if you ask me.
Well I guess I’m just a curmudgeon then. Shrug!