The (household) production of Christmas

Some economics of Christmas beyond gift-giving and Christmas creep

Most discussions of the economics of Christmas center around either the so-called deadweight loss of Christmas gift giving or the phenomenon of “Christmas creep”. Not that much has been said, however, to my knowledge, about the general production process of what we call Christmas, which includes festive meals, singing, conversations, decorating Christmas trees and watching holiday movies. These activities can be usefully analyzed as a process of “household production”, as in Gary Becker’s classic 1965 allocation of time paper and the literature that has built on it. In the household production framework households or individuals do not just consume goods and services directly, rather, they produce “commodities” that enter directly into their utility function, such as pleasures of the senses, relaxation, conversations, children, meals etc., using market goods (such as food ingredients and TV sets) and their own time (and perhaps also their energy) as inputs. This framework can be fruitfully applied to the production of Christmas or the “spirit of Christmas” as either a composite commodity, or a bundle of commodities, such as Christmas meals, music, movie watching and conversations between household members.

There is often a division of labour (specialization) between household members. For instance, throughout much of human history and across cultures, women have been chiefly responsible for food preparation and many other household tasks. Such specialization (even if it is not obvious ex ante who should do what) makes sense especially when the time inputs of household members are close substitutes in the household production process, that is, when it does not pay much to do the particular things together. In the case of Christmas, we see both specialization and non-specialization, at different levels of analysis. If we consider Christmas as one composite household commodity, most members of the household, sometimes including the children, take part in the production (and consumption) of Christmas. However, when we go down one level and consider the different commodities that can be branched together under the name “Christmas”, there is, in fact, quite a large degree of specialization between certain tasks, while also non-specialization in some other tasks. For instance, often only one member of the household prepares the holiday meal, while multiple members are involved in decorating the Christmas tree or take part in singing and games. The latter are activities where the time of different family members are fairly strong complements: it is not much fun singing Christmas carols alone; it is better when multiple individuals sing them together (on the other hand, they may sing different parts which is a type of specialization!). Because individual time inputs are on net compelments in the production of Christmas, it is not surprising that Christmas feels very different when one spends Christmas alone, and hence, cannot exploit the gains from combining her time with the time inputs of others (and at the same time, also cannot benefit from specialization).

In the production of household commodities, time and goods can often be substituted. In the case of Christmas, the Christmas spirit can be produced by different combinations of market goods (that is, indirectly, money) and own time. Poorer individuals, who do not have much money but whose time is, for the same reason, less expensive, may choose to celebrate Christmas in a more time-intensive fashion, rather than giving each other expensive gifts. It is no accident that as societies grow richer, Christmas becomes relatively more goods-intensive. This lies behind the usual complaint about the “commercialization” or “commodification” of Christmas, which, according to our framework, rather than being an anomaly, is a perfectly natural and predictable manifestation of increasing household incomes and a corresponding increase in the opportunity cost of time.

There are numerous social customs as well as personal habits associated with Christmas. Habits and customs can be analyzed from an economic perspective by considering them as forms of human capital. The “stock” of past Christmas rituals and activities strongly influences how one behaves in the current Christmas season. For this reason, it is not easy to “grow out of Christmas”; once we start celebrating it, we most likely continue to celebrate it throughout our life, even if/when we have to celebrate it alone (which, as we have seen, produces less total utility, but due to the accumulated Christmas capital the utility can still be well above zero for many lonely individuals). If Christmas traditions are a form a capital, we can also make investments to develop and cultivate them. Such investments are typically made in small children. At older ages, investing in developing Christmas habits is less worthwhile, given that the time remaining to collect the returns is shorter, and the amount of different (perhaps: rivalling) habits and customs already accumulated is greater. Someone who is Muslim or Hindu, for instance, will not develop the same (if any) Christmas rituals as those “born in the Christian tradition”. Most atheists raised in a culturally Christian way, on the other hand, are well-equipped with Christmas human capital even though they do not prescribe to the Christian faith, and hence may celebrate it ith great joy. Furthermore, it is worth investing in Christmas capital mostly when close family members or friends also invest in it, due to the already discussed complementarity in producing Christmas. Thus whether someone partakes in Christmas traditions will crucially depend on whether her family, relatives and friends do. Such coordination issues further cement the tradition of Christmas among those already steeped at it, while making it harder for others, at least in the short run, to switch from say celebrating mainly Hanukkah to celebrating mainly Christmas.

Even though much of our enjoyment of Christmas depends on received tradition and habits, the holiday also has its fair share of annoying elements. For instance, hearing “Last Christmas” by Wham! while shopping, for example, can be quite annoying to many, perhaps most people, yet, even though the song lowers the utility level of many, for some reason it is still played by radio stations. This is perhaps because even though it lowers utility, it increases demand for anything related to Christmas. In this respect, it is similar to advertising. An implication of this is that even though there are annoying elements in the production of Christmas, they often, again partly through habituation, become so associated woth the holiday that it is not easy to get rid of them.

Christmas, especially for children, has a magical taste to it. In a paper I coauthored as a PhD student my coauthor and I claim that parents appealing to the supernatural is an important part in the production of Christmas. First, naturally figures such as Santa Claus make the holiday all the more fun, but also, Santa can be a tool in parents’ hands to influence their children’s behaviour. Parents on their own may struggle to commit to disciplining their children; rewarding them when they are “nice” and denying them when they are “naughty”. Santa Claus, who has an infinite lifespan with a corresponding incentive to develop a reputation, faces low monitoring costs (knows who has been naughty and nice!) and frankly, has less altruism toward children than parents, can serve as the parent’s imaginary surrogate in incentivizing children. More affluent parents, being able to buy expensive gifts, are more likely to “Santaize” the disciplinary process.

So far I have concentrated only on the production of Christmas at a household level, yet obviously, much of the Christmas spirit is produced at a larger, “communal” level. Christmas lights and trees in public areas, the already mentioned Christmas music as well as decorations in shopping centers are all parts of this. Here, contrary to what the detractors of commercialized Christmas claim, the communality and the commerciality go hand in hand. Businesses exploit the demand for Christmas in order to sell us things, while in the process helping to create and maintain a certain Christmas spirit. This is one example of a partially decentralized provision of a public good. Of course, many businesses go “Christmassy” too early and too much, the phenomenon of “Christmas creep”. Yet if we had to choose between the Christmas season in its present form in capitalist societies and an alternative without Christmas sales and without the lights on, we may (although not everyone!) still choose the former. Even if we are, from time to time, forced to listen to “Last Christmas”.