Holiday Economics

In America the “holiday season” typically involves the end of November, including Thanksgiving, December, for several religious reasons, and New Year’s Day celebrations. Many non-Christian families join in the Christmas celebrations even if it just includes giving / receiving presents and eating larger portions of food (my own family). As this holiday season reaches the final days, I couldn’t help but wonder about “holiday economics”.

There are a few basic economic factors at work within this interesting study. One is the decline in economic productivity due to extended vacation time. The other is the increased consumption (something that is perhaps more important in our economic climate). I will not try to gauge either of these phenomena in an in-depth study, but instead will just try to make logical educated inferences.

My theory is that some holidays, such as Thanksgiving or Christmas, are probably beneficial to the economy, while celebrations like New Year’s Day or Veteran’s day pose little benefit. Christmas has the obvious benefit of highly increased consumption of both staple and luxury goods. On the other hand New Year’s Day is often marked by little increases in consumption (except perhaps alcohol).

Still, there is another factor at work. Societies are different, but all societies need vacation time to relax so that they may be productive during the rest of the working year. Therefore, the question is: does the morale boost of a work-free New Year’s Day compensate for 1/260 of GDP (assuming there are approximately 260 work days per year)?

“Holiday economics” is not a new field of study. Shifting holiday observances to better fit a nation’s economy has been experimented on in the Philippines. It would seem that some problems have arisen from the model applied there, but the study is nonetheless important. My hypothesis to the question regarding morale boost and the comparison with yearly GDP figures is largely sociological. Europeans have been given some of the most lenient vacation times and would balk at the thought of losing them (meaning morale would decline disproportionally because they are used to larger numbers of holidays). Americans on the other hand already have fewer holidays, but reducing our number would cause larger problems than it is worth. Once the holiday catches on it is very difficult to pry it from citizens’ rights.

Without proper research material and time I couldn’t hope to answer the question fully or even scrape the surface. This may be a crude analysis, but this post is only food for thought and perhaps my colleagues at the Freakonomics blog could answer these questions in a better fashion.