When I was a kid in Minnesota my family had a huge Scandinavian feast every Christmas Eve, complete with two dozen relatives, three feet of snow, a mountainous evergreen trimmed to the top, a six-course dinner with lutefisk and turkey and eight or ten pies, long-winded after-dinner stories about baseball and World War II, and, of course, lots of brightly wrapped presents. It has taken me three decades of rigorous economics training and life on the East Coast to shake off the warm nostalgia of those holidays. But I am now willing to say out loud what I suspect many Americans are muttering all across the country at this time of year: Christmas has become a net loss as a socioeconomic institution.
Although for many years Christmas has been justified on the grounds that it is “merry,’’ rigorous quantitative analysis establishes that the opposite is the case. Despite claims advanced by proponents that the holiday promotes a desirable “spirit,’’ makes people ``jolly,’’ etc., the data show that the yuletide time period is marked by environmental degradation, hazardous products and travel, and -- perhaps most important -- inefficient uses of key resources. The holiday is an insidious and overlooked factor in America’s dwindling savings rates, slack worth ethic, and high crime rates. Nor does Christmas truly fulfill its purported distributional objective: the transfer of gifts to those who need them. Moreover, the number of people rendered “joyous’’ by Christmas is probably equaled or excelled by the number made to feel rather blue. In short, as shown below, although Christmas is an important religious observance that provides wintertime fun for children (who would probably be having fun anyway), it fails the test of cost-effectiveness.
Christmas consumes vast resources in the dubious and uncharitable activity of “forced giving.’’ First, it is necessary to factor in all the time spent searching for “just the right gifts,’’ writing and mailing cards to people one ignores the rest of the year, decorating trees, attending dreary holiday parties with highly fattening, cholesterol-rich eggnog drinks and false cheer, and returning presents. Assuming conservatively that each U.S. adult spends an average of two days per year on Christmas activities, this represents an investment of nearly one million person-years per season. Just as important is the amount that Americans spend on gratuitous gifts each year -- $40 billion to $50 billion, according to the U.S. Commerce Department’s monthly retail trade sales. Extra consumer spending is often considered beneficial because it stimulates the economy, but the massive yuletide spike creates numerous harmful externalities.
Mistargeted giving is one indication of this waste. According to New York department stores, each year about 15 percent of all retail dollar purchases at Christmas are returned. Allowing for the fact that many misdirected gifts are retained because people feel obliged to keep them (such as appliances, tablecloths, etc., which must be displayed when the relative who gave them to you comes for a visit), and allowing for the widespread inability of children to return gifts, this indicates that up to a third of purchases may be ill-suited to their recipients. Christmas is really a throwback to all the inefficiencies of the barter economy, in which people have to match other people’s wants to their offerings. Of course, money was invented precisely to solve this “double coincidence of wants’’ problem. One solution would be to require people to give each other cash as presents, but that would quickly reveal the absurdity of the whole institution.
“Forced giving’’ also artificially pumps up consumption and reduces savings, since it is unlikely that all the silly and expensive presents given at Christmas would be given at other times of the year. One particularly noxious aspect of Christmas consumption is “conspicuous giving,’’ which involves luxury gifts such as Tiffany eggs, crystal paperweights, and $15,000 watches that are designed precisely for those who are least in need of any present at all (“the person who has everything’’). Most such high-priced gifts are given at Christmas; the fourth quarter, according to a sampling of New York department stores, provides more than half the year’s diamond, watch, and fur sales.
Naturally, gratuitous spending delights retailers. Christmas accounts for more than a fifth of their sales and two-fifths of their profits, which suggests a Marxist explanation for the holiday -- a powerful economic interest underlying the season’s gift-centered ideology. But for the nation as a whole it increases the burden of consumer debt (almost a quarter of Christmas season sales are financed by credit cards or charge accounts, and January is the peak month for credit card delinquencies) and reduces our flagging savings rate (now below 5 percent of national income).
For parents, one especially exasperating aspect of Christmas is mindless toy fetishism. Christmas now accounts for 60 percent of the United States’ annual $17 billion expenditure on toys and video games, according to the Toy Manufacturers Association. Much of this rapidly depreciating toy capital consists of TV-show tie-ins (there are 350 separate Teenage Mutant Ninja Turtle products and scores more of Ghostbusters and Bart Simpson figures) and expensive gadgets that do not work or hold interest for more than a day. According to the toy association, the country now spends nearly as much on video games like Nintendo’s Super Mario and Gameboy (nearly $4 billion), activity figures like World Wrestlers ($500 million), and dolls like Barbie and My Pretty Ballerina ($1.1 billion) as on all retail book sales ($6.6 billion). Since six of the top ten toys are made by Japanese companies, one might adduce a subtle long-run Japanese strategy here.
What’s more, toys are unusually hazardous consumer products. The Consumer Product Safety Commission estimates that each year there are thirty-three deaths and 148,000 emergency room admissions due to hazardous toys, plus 1.2 million toy recalls. (The comparative figures for deaths caused by books and book recalls are zero and zero, respectively.) If these deaths, injuries, and recalls are allocated in proportion to seasonal sales, Christmas emerges as the cause of most of them. And one has only to visit any Toys ‘R’ Us or Child World at this time of year to see the impact of this season’s extraordinary pressures on child-parent relations: distraught mothers dragging tiny toy addicts kicking and screaming away from the latest high-priced, cheesy offerings. All of this unproductive consumption would be much better spent on pencil sharpeners, calculators, and green eyeshades.
Christmas increases congestion. At least in large urban areas, it is by far the most unpleasant time to shop, travel, dine out, or go to the bathroom in a mall. Just when stores are at their most crowded, shopping becomes mandatory; just when everyone else is making family visitations, they are de rigueur. December 21 and 22 are the year’s peak dates for air travel, according to the Air Transport Association of America, with 1.7 million Americans per day jamming the nation’s airports, as against a year-long daily average of 1.14 million. Twenty-three million travel during the period from December 19 to January 4 -- just when the weather is often at its worst and the airlines charge their highest prices.
According to the U.S. Postal Service, the volume of mail traffic more than doubles to 220 million letters and 6 million parcels per day the week before Christmas, battering a system already weakened by tens of millions of catalogs and advertisements during the previous two months. Telephone calls reach as high as 131 million per day in the month from Thanksgiving to New Year’s Eve, according to AT&T. At many stores and post offices, there are long lines, and costly second and third shifts have to be added to handle them, which consumers ultimately pay for. All of this “peak loading’’ at Christmas means that airlines, mail delivery, stores, banks, warehouses, telephone systems, roads, and parking lots must be built much larger than if activities were distributed more evenly throughout the year. That wastes precious capital.
Christmas destroys the environment and innocent animals and birds. These have perhaps not been traditional concerns for economists. But when one takes account of all the Christmas trees, letters, packages, increased newspaper advertising, wrapping paper, and catalogs and cards, as well as all the animals slaughtered for feast and fur, this holiday is nothing less than a catastrophe for the entire ecosystem. According to the U.S. Forest Service, 33 million Christmas trees are consumed each year. Growing them imposes an artificially short rotation period on millions of acres of forest land, and the piles of needles they shed shorten the life of most household rugs and pets. All the trees and paper have to be disposed of, which places a heavy burden on landfill sites and recycling facilities, especially in the Northeast.
This year, according to the Humane Society, at least 4 million foxes and minks will be butchered just to provide our Christmas furs. To stock our tables, the Department of Agriculture tells me, we’ll also slaughter 22 million turkeys, 2 million pigs, and 2 million to 3 million cattle, plus a disproportionate fraction of the 6 billion chickens that the United States consumes each year. To anyone who has ever been to a turkey farm, Christmas and Thanksgiving take on a new and somewhat less cheerful meaning. Every single day during the run-up to these holidays, thousands of bewildered, debeaked, growth-hormone-saturated birds are hung upside down on assembly-line racks and given electric shocks. Then their throats are slit and they are dropped into boiling water.
Christmas introduces sharp seasonal fluctuations into the money demand. This makes it more difficult for the Federal Reserve to cushion the crests and falls of our economy. This is the peak season for people carrying large denominations around, and currency is a popular Christmas gift mostly among employers. The volume of currency in circulation peaks each year in December, then declines by about 4 to 5 percent.
Christmas leads to a sharp rise in absenteeism and a slump in labor productivity that is unlikely to be recaptured the rest of the year. Many U.S. companies shut down entirely for the two-week period from Christmas to New Year’s. For those that stay open, on-the-job performance often plummets because of the season’s wild parties and high jinks. Although there is no precise data on absenteeism, according to Labor Department experts, industries like manufacturing and construction are likely to have lower productivity while retailing’s productivity is likely to increase.
Far from being “the season to be jolly,’’ Christmas is really the season of sadness and despair. This period’s compulsory merriment, hypercommercialism, heavy drinking, and undue media emphasis on the idealized, two-child, two-parent, orthodox Christian family makes those who don’t share such lifestyles or religious sentiments feel left out, lonely, and even somewhat un-American. And even in so-called normal families, media hype about the season’s merriments often raises expectations and sets up many for disappointment. According to Dr. Quita Mullen, a psychiatrist in Boston, many women in particular exhaust themselves trying to meet both the demands of full-time jobs and the more traditional expectations about what holidays are supposed to be like -- provided in part by their (non-working) mothers.
There is also a great deal of emotional stress associated with compulsory overspending and compulsory displays of affection. (Many people reportedly become highly anxious at the sight of mistletoe.) Police, psychiatrists, and hospitals all report that there is a dramatic rise in alcoholic “slips,’’ drug overdoses, domestic quarrels, hotline calls, and emergency medical calls at this time of year. “Any redolent setting can be very sad for people who don’t have a dancing partner,’’ says Mullen. “Christmas is one of those times.’’
Christmas is one of the most hazardous times of the year. The combination of trees, lights, blazing hearths, yuletide passion, and other indoor festivities results in more household fires at this time of year than any other. The fire department in Washington, D.C., reports that fire calls in December are 40 percent above its monthly average; New York City had 2,800 residential fires last December, as compared with a 2,000-per-month average.
According to the National Highway Traffic Safety Administration, December is the peak month for drunk driving and “DWI’’ arrests, which last year totaled 1.8 million. Not surprisingly, it is also the peak month for accidents -- because of drunkenness, congestion, and bad weather -- with more than 460,000 last year, compared with a monthly average of only 386,000. In just the three days around Christmas last year, 374 people died on the nation’s highways. The only consolation is that last year’s Thanksgiving was even worse, with 402 deaths. Of course, weather is a compounding factor -- for most of us in the colder climes, life would be much easier if we could at least agree to observe Christmas in the summer, when the lutefisk is ripe.
December is also the peak month in the United States for robberies. Last year the number reached about 54,000, according to the FBI Uniform Crime Report, and it is the second highest for auto theft, with about 136,000. Police suspect that all this property crime is because criminals too are propelled by the need to fill their family stockings. December 1989 had nearly 1,900 murders, a disproportionate share. “Christmas is a crazy season,’’ says Sag Harbor, New York, Police Chief Joseph Ialacci. “It’s a potpourri of emotional extremes -- either quiet or all hell breaks loose. There are more assaults, barroom brawls, and family altercations.’’
Excessive eating and drinking are used to compensate for the tribulations of Christmas. According to the Distilled Spirits Council and the Department of Agriculture, in the six short weeks from Thanksgiving through New Year’s, this year we will consume $18 billion of alcohol -- including 81 million gallons of hard liquor -- 1.1 billion pounds of turkey, and a huge quantity of ham, cookies, pies, eggnog, stuffing, plum pudding, and other trimmings. All this indulgence does little good for the nation’s waistline: Christmas is one of the single most important contributors to obesity -- the average American consumes more than 3,500 calories at Christmas Day dinner alone. Naturally, January is the peak month for diet plans, many of which end up in failure and despair.
Perhaps most important of all, from a purely distributional standpoint, Christmas almost certainly aggravates inequality, since most gift-giving takes place within the family or the same social class, and doesn’t reach the people who really need our help. Salvation Army drum-beating aside, Christmas almost certainly reduces our capacity for charity by draining us of wealth that we might otherwise give to the needy, and of our charitable impulses. This is hardly what the person for whom the holiday is named had in mind.
Overall, the message is clear: Christmas imposes a huge efficiency tax on our economy, is hazardous to our health and safety, and does little to further social justice. And the efficiency tax may well be growing in real terms -- an analysis of long-term changes in the seasonality of the U.S. economy suggests that the Christmas buying season has been getting longer and longer. Christmas commercialism, of course, is a modern innovation. The ancient Christians did not even observe the holiday until the fifth century, medieval Christians observed it much more modestly, and the Puritans sensibly refused to celebrate it at all. Only in the last fifty years, with the perfection of mass-market advertising and the commercialization of religion in general, has it become such a command performance.
Modern Christmas is like primitive Keynesianism, a short-run-oriented economic experiment that has been tried and found wanting. It is the flipside of the positive contribution the “Protestant ethic’’ once made to capitalism -- Christianity’s high holiday now almost certainly makes us feel worse off. What is to be done? I suggest an experimental two- to three-year moratorium on the whole affair, to let us pay our bills and recover some of the distance we’ve lost. This may sound like tough medicine to youngsters, and to all the other interest groups that have acquired such large commercial stakes in this annual ritual -- from bulb manufacturers to ambulance drivers. But the rest of us can no longer afford it. If we celebrate this holiday at all, we should do so mainly because it is over for at least one more year.
This article appeared in the December 31, 1990, issue of the magazine.