I just ran across an interesting article on Bloomberg by Kevin Hassett that looks at Halloween through the eyes of an economist. In it, the author argued (somewhat tongue-in-cheek) that:

Economists haven’t … 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.

So what can we do to improve things?

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.

Actually, this option is even better than Hassett thinks, as these kids would be buying all their Halloween candy on sale!

But wait, it gets better…

Many schools prohibit children from taking Halloween candy onto the premises. That is exactly the wrong policy. Schools should encourage all children to bring their entire haul to school, and allow them a lengthy period to trade candies among themselves. That way, the Take 5s and the 100 Grand bars will find their way to individuals who cherish them.

Ahh… An efficient candy market!

A final measure would be to take on inefficient candy-giving at the source. As a conservative, I usually oppose heavy-handed regulation, but in this case, the stakes are too high. Perhaps confectioners should be required to only sell their Halloween candy in bags that mix many different types. That way, when families put the candy out for the trick-or-treaters, bowls will be filled with a wide variety of different types of candy, and each new child will be able to pick the confection that suits his or her fancy.

So there you have it… The cure for Halloween’s economic ills.

Have a safe and Happy Halloween. And try not to worry too much about all those Halloween urban legends that have haunted us since childhood.

[Source: Bloomberg.com]