If Christmas didn’t exist as a holiday what would happen to consumption and production? I can think of several hypotheses.
1) Consumption would remain the same but people would spend more on themselves and less on others. Would deadweight loss be reduced enough to make such a move wealth-enhancing?
One also wonders how much Christmas spending within the family is actually spending on oneself? Did that catalog on my chair just happen to fall open to the page with the black pearls?
2) Consumption would decline and savings would increase. Many people go into debt to buy Christmas presents. Does Santa Clause reduce the rate of savings? Scrooge says yes!
3) Other holidays would become more important and total consumption and giving would remain the same. Is there a Coase theorem for holiday gift-giving?
Increased giving at other holidays, such as birthdays, would help to smooth production and consumption. Consumption smoothing is welfare enhancing in partial equilibrium but not necessarily in general equilibrium. I want my consumption smoothed but I’d like to get all my gift giving done in one big batch thank you.
Production smoothing is also generally welfare enhancing in partial equilibrium but not necessarily in general equilibrium. In general equilibrium, a big push may be necessary to cover fixed costs. The seasonal cycle may be an implementation boom.
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