The economics of Halloween

by on October 31, 2007 at 8:36 am in Economics | Permalink

A reform proposal from Kevin Hassett: "So let’s do something to reform Halloween. The first step would be for Halloween donors to give kids money instead of candy. Kids could then go to the supermarket the next day and binge on the candies they really like. That solution would get an A-plus in economics."

Linked here.  But alas, in-kind transfers are often more efficient than cash gifts, and that holds for public policy as well.  (Imagine giving "money to buy kidney dialysis," instead of "kidney dialysis," and see how many people fake kidney disease.)  The candy transfer insures that a) mostly young kids do the asking, and b) at some point everyone just stops and goes home.  I’ve long wanted to know how much movie attendance rises on Halloween evening, given that the real cost of going is suddenly and temporarily much lower.

Addendum: Here is a new paper on cash vs. in-kind transfers.

1 Bob Knaus October 31, 2007 at 8:47 am

When I was very young, the kindly retired schoolteacher a few doors down used to put a dime in our bags, along with the candy. Perhaps she was a fan of John D. Rockefeller. I always put my dime in my pocket. I already had plenty of candy.

2 Cynical Masters Student October 31, 2007 at 8:59 am

There’s a Friends episode where Rachel forgets to buy candy and starts to hand out cheques.

So this has even been done in popular culture 😉

3 Michael Fisk October 31, 2007 at 9:39 am

Although there’s nothing that says they have to give out candy… just “treats”. Since, if you give a child token amounts of money, the end result (said child going into the store and making an impulse purchase) would be as much “treat” as anything else.

The problem is, however, just as was stated indirectly in the post… money is more universally desirable due to its nature. I could only imagine what would happen in an environment where numbers of very small children are walking around the streets at night with baskets of money…

4 Bruce H. October 31, 2007 at 11:57 am

>> … there’s nothing that says they have to give
>> out candy… just “treats”.

I enjoyed the Coneheads episode where they gave fried eggs and beer.

5 Christina October 31, 2007 at 1:33 pm

I remember the people who gave away baggies of pennies, and they were always considered about as lame as the people who gave out raisins. Kids just want the candy, primarily because they typically don’t have the means to go shopping on their own. How many young kids do you know who can/are allowed to walk or bike to the grocery store alone? Plus who wants to deal with the lag time? When you get home from trick-or-treating, you want to dig into your haul.

In additions, everyone knows that you take your candy into school and trade the pieces you don’t want with your friends. The kids who don’t like chocolate trade with the kids who don’t like Smarties or Jolly Ranchers. That’s as much a part of the tradition as the trick-or-treating.

Of course, in my house, we see Halloween as an excuse to buy bags of candy that we want to eat. If only two groups of kids come by the house, that just leaves more for us! If the tradition was to give out money, then we would be more likely to turn off the porch light.

6 Paul J. Reber October 31, 2007 at 2:39 pm

From the perspective of this suburban household with 4 kids, a nontrivial part of the cost of acquiring candy is getting to the store to get it. There are no candy stores within my kids’ roaming distance around the house. To convert cash to the target good requires the parents to drive them to the store. Given that they’d want this as soon as possible (they have good discount rates — promises of benefit off in the future are dramatically less valuable than benefit *right now*), this puts a large cost on me to get organized, find time to schedule a trip to the store (amongst homework, music practice, soccer practice times) and deal with a pack of kids with widely varying decision-making abilities to pick out the candies they desire at that minute (and hope they can rationally guess what they’ll desire later to avoid buyers’ regret).

This is dramatically less efficient than getting the candy directly. Not only can the candy-giver pick a convenient moment to purchase the candy, their best guess as to what my kids will enjoy is at least as good as my kids ability to express good decision-making in the store. Any error in perfectly optimal choise is also probably more than outweighed by the extra value of surprise and variety of getting candy from neighbors.

And then there’s the social and practical value of making Halloween a one-day special event. A big part of the value of the candy gift is watching the colors and weight accumulate over the evening.

It’s also very useful to make Halloween night a celebration where different rules about eating sweets apply. We normally adhere to strong regulations about sweet eating (have a little, infrequently). Breaking a habit for one night and returning to the habit is easier for practical regulations than letting the candy acquisition celebration extend past one day.

I’m sure all of this is obvious to the parents. It’d be a transparently stupid idea to do anything like subsituting cash for goods for the holiday.

More importantly, the mere suggestion to do so runs the risk of supporting the hypothesis that “economic analysis ruins everything.” I’d just like to point out that in this case, *bad* economic analysis could ruin Halloween. Proper accounting for non-financial costs/benefits would show the current system to be much better.

7 JP October 31, 2007 at 5:29 pm

RE: Holloween Night Movie attendance

I live in Atlanta, and Holloween night always has the worst Traffic day of the year. I usually go to the theater near my office to wait for it all to go away. I’m planning on that tonight as well. I’ll try to see if the theater is much more crowded than it usually is.

(However, this theater is at a mall that hosts trick or treating inside the mall. So you could end up with a much bigger draw than a normal wednesday just from all the T&T’ers and their parents.)

8 Mark November 1, 2007 at 8:56 am

Giving out candy means that the recipient receives a greater variety of candy. The kid can then barter with other children and trade their “lesser favorite” candies for “more favorite.” (I say lesser and more because who doesn’t like candy!) This gives the children an opportunity to learn bartering skills, which will be much more valuable in the long run than the sugar rush that they would inevitably get if they got cash and bought their favorite candies at the 7-11. The next question, though, to be asked is what about the children who don’t like candy, they’re left out of the bartering system and in this case they may benefit from cash…but then again, who doesn’t like candy!

9 Anonymous November 2, 2007 at 1:14 am

This is a good idea to me. Nobody ever said that people have to give out candy but only that they hand out “treats” and money would deffinitely be considered a treat in my book. From an economics standpoint just giving the kids the money and letting them buy the candy they want is a good idea because then you give the customer exactly what they want. You can look at it like this…if the kids just get candy all night then the value to them is going to be very low for some things that they do not like but if they get money and buy the candy that they will like then the value for the first piece will be equal to the second and so on and so forth and the marginal value will be the same as the value for the first.

10 Leigh November 4, 2007 at 3:33 pm

I don’t know how to really feel about this idea. On one hand, everyone likes money. But then, you have 3 and 4 year olds out for halloween and they are probably not going to care about money. they would most likely want the candy because that is what we are used to. And even if we get candy that we don’t like, its ok because it is a suprise. And who wants to just get money and buy their own candy after halloween? that sounds like no fun because you can do that anytime. i know that my little sisters go trick or treating for candy, not money. People can do what they want for their “treats” but hopefully we will always have some candy givers around the neighborhoods.

11 wcu1291 November 5, 2007 at 9:42 pm

I don’t think it’s a good idea to have money given out as opposed to candy on Halloween. The fun part of Halloween is going from place to place, not knowing what candy or treats that you will be getting. Getting money every time just takes the fun out of it. Granted the next day the kid could get the specific kind of candy that he wanted, but what kid wants to do that? They want that instant gratification of seeing their bag get bigger and bigger, full of who knows what type of candy. Besides, my favorite part of Halloween was getting back home, dumping out my bag in the middle of the living room floor and checking out all the sweet candy that I had gathered. Giving money to kids on Halloween ruins the fun and anticipation of trick-or-treating and makes it a bland experience. Where’s the excitement in knowing what you’re getting every time?

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14 sonny kwan September 4, 2008 at 12:37 am

wouldn’t it defeat the purpose of giving out money instead of candy on Holloween? Children look forward to this one day when they can dress up and visit their friendly neighbors and get treats. I did and a youngster and ended up giving my candy away. well…most of it.

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