Economic Analysis of Halloween

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]

5 Responses to “Economic Analysis of Halloween”

  1. Anonymous

    and best of all i dont have to make a trip to buy candy and then stuff my face with leftovers. I can just hand the kids cash!
    now if only they’d take paypal!!!

  2. Anonymous

    It doesn’t take into account that Halloween would be much more expensive becasue if money were being handed out, much older children would continue trick or treat and probably for longer periods of time (more houses = more money) Maybe it’s isn’t efficient, but it is cheaper for those giving out the candy.

  3. Anonymous

    This is only true if the main goal of gift-giving is to be economically efficient.

    I have received many gifts that I would not have purchased for myself, but I enjoy them and consider them a better gift than money would have been. (Though there have been plenty of cases where money would have been better …)

  4. Anonymous

    Who knew that an Economist could be the scariest thing on Halloween. I hope that Santa doesn’t try to econmize by just wiring money to the bank account of good little boys and girls. It would mean that all of the elfs would be out of a job and Santa would have a Christmas feast of reindeer since they are no longer needed.

Leave a Reply