Tim Harford asks whether it is efficient to have the Christmas decorations go up earlier each year. Partly for traditional and aesthetic reasons, he would prefer a shorter Christmas season.
In my basic model, suppliers with P > MC put up decorations to stimulate more buying and gift-giving. Bringing on Christmas early is a form of associative advertising. A shorter Christmas season would mean less overtime work, less spending (more saving), and spending spread more smoothly throughout the year.
What’s the benefit of having all that consumer spending clumped together at Christmas season? I can think of three hypotheses:
1. It yields "thick market" externalities, such as allowing people to do most of their shopping when inventories are highest.
2. It yields a "do or die" season, in which new products can be rapidly and ruthlessly evaluated. Don’t we already have the verdict on Zune?
3. Suppliers are inefficiently "fishing" for early "capture" of consumers as part of a common pool problem. If a given supplier doesn’t grab that consumer’s attention now, someone else will. Of course there can be no property rights in "the attention of consumers," so that attention is consumed inefficiently early.
I believe in #1, #2, and #3, but I suspect #3 is the operative force, leading me to side with Tim. Christmas is fun, but perhaps we have just a little too much of it.
Whatever the causes, the losers are the kids, who don’t receive the utility of playing with the toys during the months when they are hidden in the attic. It is a pure deadweight loss, and in most cases, their returns on Christmas morning rapidly diminish as the number of presents exceeds their capacity for excitement. (I’ve observed this even in charitable adopt-a-poor-family giving programs, so it is not merely a function of wealth.)
As the parent of an 18-month old, I’m having a lot of doubts about saving toys for Christmas morning, since the complexity of the toys and books he can handle seems to double monthly. It would surely be more efficient to get a single Christmas present on the 25th of each month.
Well, at least Thanksgiving limits how early Christmas can start.
@DK – given the rapid decline in utility from any gift, and given a non-uniform distribution of gifts (e.g. Chanukah, a smaller toy every night!) then shouldn’t a parent try to maximize the excitement that comes from anticipation? Don’t put them in the attic, put them on display!
A very interesting example of this is the near-simultaneous launch of Sony PS3 and the nintendo Wii. If you assume they are not for completely different markets, how should they time their launch relative to each other? What if they are not confident about how they will fare in comparative reviews? It’s made even more interesting by the rise of networked games, where an established user base 1) feeds buzz 2) increases the value of the product and 3) can socially lock-in non-early adopters who will buy what their friends have.
1. Not everyone celebrates thanksgiving.
2. Bah Humbug!
“Well, at least Thanksgiving limits how early Christmas can start.”
This is considered a real advantage of the USA from a foriegn perspective. Here in Australia we first get our Christmas decorations up when the Easter stuff comes down.
At least the steady rise of Chinese new year and St. Patricks day means that Christmas decorations come down well before Easter.
I believe that another motivation may be the padding of sales as companies reach the end of their fiscal year. The term “Black Friday” does not indicate the horrific lines at the shopping mall or the feeling one gets when they wait all night for a 45 in plasma only to find it sold out when she reaches the counter. “Black Friday” refers to the sharp increase in sales pulling companies out of the red into the black. By extending the Christmas season, retailers in particular can hit those 4th quarter earnings. Of course it is inefficient and MC may even be declining, but the value of reaching stated goals may outweigh these inefficiencies.
Another phenomenon is what music
gets played on pop music radio stations.
Increasingly there are stations that play
nothing but Christmas music after a certain
point, presumably at the behest of some
advertisers, and it seems to me that the
date of this is moving earlier and earlier,
with ones now starting into it this year
in mid-November, well before Thanksgiving.
There does seem to be a problem here.
The flip side of that is that supposedly
Christmas is to be celebrated until Jan. 6,
but people are so fed up they do not bother
to wait until then, with trees and decorations
mostly down by New Year’s Day, if not on Boxing
Day.
Since I have been old enought to remember Christmas I have noticed that it comes eailer nad eailer each year. I did not put much thought in this untill I read this article. But the whole holiday season has turned into one big shopping season. This means that families are having to save more and are spending more at the ends of the seasons. This has to start a spike in profits for companies and where is the line when we can not start any eailer.
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