Wednesday, December 15, 2010

Economics of Festivus

Frank Costanza: "Many Christmases ago, I went to buy a doll for my son. I reached for the last one they had, but so did another man. As I rained blows upon him, I realized there had to be another way."
Cosmo Kramer: "What happened to the doll?"
Frank Costanza: "It was destroyed. But out of that a new holiday was born: a Festivus for the rest of us!"

If you don't know Festivus, it is a holiday made popular by Seinfeld a late 90s TV show. From the above quote you can see Festivus avoids the problems associated with fighting over gifts. Many economists (not me I like gifts) have pointed out the problems with holiday gifts including the book "Scroogonomics: why you shouldn't buy presents for the holidays"

What about Festivus traditions how would economists judge them?

Decorations: Instead of a Christmas Tree or Menorah, Festivus is celebrated with a alumin pole. On the one hand the pole is likely cheaper and the set up time lowers the opportunity cost of celebrating the holiday. Assuming revealed preferences and rationality I think it is a wash which decoration is better from an economics perspective. However, behavioral economists should look into this further as the Constanzas may not be perfectly rational.

Festivus Dinner: Holiday dinners are very optimal! They build social capital (Ok maybe not the Constanzas) and utilize increasing returns to scale of food production between 1 and 20 people or so.

Airing of Grievances: Many economists are also professors so December is a good time to air our grievances. However, unless airing grievances brings satisfaction or change in relatives behaviour, I'm not sure it is optimal.

Feats of Strength: Awesome potential game theory problem. In the feat of strength the head of household challenges another household member to a wrestling match. This is a great signaling and reputation game similar to the beer and quiche problem. Really the best game theory problem ever.

I'm not sure how many economists celebrate Festivus, but I wish any who do a joyous Festivus.

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1 comment:

Britt said...

I think the Airing of Grievances is compulsory in any gathering of academics in December.