The Economics of Christmas
We created this video in 2016 and given the date we thought it would be a good chance to get into the festive spirit and share it again!
Christmas is a time for goodwill and merriment for many families around the world. However, the festive period is also characterised by significant economic activity as consumers rush to get their goods in time for the big day. During the holiday period, it is estimated that the UK retail sector will generate £76bn worth of sales, therefore exceeding that of any other European country.
Christmas is a period of enormous waste and many unwanted goods are received because of individuals failing to recognise and understand each other’s preferences. If aggregated across the economy, this amounts to a large deadweight loss to society, which threatens to undermine the joys of the festive season.
The video uses the concept of elasticity to help explain and justify the different pricing strategies that firms implement during the Christmas period to capture the higher profits available. It also goes on to explain the economics behind gift giving and why the process of gift-giving during Christmas creates a deadweight loss to society.