Christmas Ambivalence and Business Reality: Christmas Price Index– Scroogenomics, Santanomics, Grinchnomics…

Christmas– Dear Santa, I’ve been good all year… Well, most of the time… Okay, once in a while… Ugh! f*** it… I’ll buy my own s**t~ D Sam.

Christmas is one of those holidays which mean very different things to different people. It can be spiritual time, family time, time for giving, time for partying, or time for just over-eating… Most people (in those countries where it’s the main religious festival of the year) find something to enjoy about Christmas, whether they are Christians or not. But hasn’t Christmas in the consumer age become just bit too big, and much too commercial? There’s much about Christmas shopping that doesn’t make any sense. Wouldn’t we be much happier if we bought what we wanted when we wanted it?

Wouldn’t stores have smoother earnings and more confidence to hire and expand if their income were spread evenly across the year, rather than just exploding every Christmas holiday season? These are just some of the reasons why Christmas ‘brings out the Grinch’ in economists.

According to Mark Whitehouse: In the latest Wall Street Journal forecasting survey, more than two of three economists opined that if Christmas ceased to exist as a holiday, consumers would either spend more on themselves or spread their gift purchases more evenly across other events such as birthdays. That, in the view of some academics, would put more goods into the hands of people who truly value them and improve social welfare as a result. But, ah the gifts: Sweaters, ties, slippers, microwaves, picture frames… that you truly ‘do not’ need.

According to Joel Waldfogel, in his classic paper ‘The Deadweight Loss of Christmas’; calculated that between 10% and third of the value of gifts is waste, or what economists call– deadweight loss.  If one-third of gifts are unwanted and waste, then simply giving ‘cash’ to your friends and relatives to let them buy what they want would introduce tens of billions of dollars worth of satisfaction. In a weird way, the inefficiency of gift giving might be good for a weak economy.

But a weak economy isn’t concerned about efficiency. It’s concerned about activity. For example, if I get $100 worth of ‘channukah’ gifts this year and hate all of them, I’ll either re-sell them online (another round of economic activity) or I’ll buy the things I want on my own (yet another round of activity). The upshot: Christmas is no economist’s idea of an ideal holiday, but Santa can be stimulative…

IBIS-World Forecasts: Holiday spending to grow 3.7% in 2012, from last year to $69.2 billion… Higher disposable income levels will allow consumers to spend more freely on food, decorations and gifts during the winter holiday shopping season, from Nov. 1 to Dec. 25. But 2012 holiday spending will grow at a lower rate than the 4.9% rise in 2011 due to the approaching ‘fiscal cliff’. Nonetheless, retailers are forecast to see expanding holiday sales.

IBIS-World expects consumers to spend a total of $50.8 billion on gifts in 2012, up from $49.0 billion in 2011. The fastest-growing gift segments continues to be electronics and jewelry; electronics are forecast to grow 7.2% to $7.7 billion and jewelry is projected to rise 6.3% to $5.1 billion. Tablet computers, in particular, are expected to be popular gifts with electronics sales accounting for 15.1% of total holiday gift spending. According to Olivia Tang; surge in new products will help this segment capture more holiday spending with releases, such as; Apple’s iPad Mini, Amazon’s Kindle Fire HD, Google’s Nexus 7, Microsoft’s Surface…

Even Leapfrog’s LeapPad2, for children, is already on parents’ radars do to retailers’ early promotions.  Ultra-luxury items are forecast to perform particularly well this holiday season. High-end jewelry, in particular, is expensive but sentimental gift that forms a major sector of the quickly growing luxury market. Cloths remain the largest gift category at 17.6% of total gift, and is anticipated to grow 2.9% to $9.0 billion in 2012.

Most clothing gift will be high-end brand names do, in part, to convenience of shopping at luxury retailers’ online stores. Although home and garden gifts are forecast to increase only 0.9%, and the $5.9 estimated spending for category represents about 11.6% of total gift sales… According to MarketLive; faced with economic uncertainty, online spending is projected to climb 17% to $54.47 billion…

‘Christmas Price Index’ is tongue-in-cheek Christmas economic indicator published by PNC Wealth Management Bank, which tracks the cost of the items in the Christmas song ‘The Twelve Days of Christmas’. The Christmas Price Index was conceived by the bank’s chief economist as a humorous commodity price index to measure the changing cost of goods over time.

Commodity price indices, as compiled by economics, use ‘market basket’ of certain goods and then measure the cost of goods from year-to-year to gauge inflation in different sectors of the economy. The Christmas Price Index chose items in the popular Christmas song ‘The Twelve Days of Christmas’ as its ‘market basket’, includes;  partridge in pear tree, two turtle doves, three French hens, four calling birds, five gold(en) rings, six geese, seven swans, eight maids, nine dancing ladies, ten leaping lords, eleven pipers, and twelve drummers.

The ‘Christmas Price Index’ is calculated by adding the cost of items in the song, and then calculated as instructed in the song, for example; buying partridge in pear tree on each of the twelve days, buying two turtle doves from second day onward, for total of 22 turtle doves, thus complete set of 364 items. As an annual tradition, PNC Wealth Management also tabulates ‘True Cost of Christmas’, which is total cost of items gifted by ‘True Love’ who repeats all of the song’s verses. This holiday is most expensive year ever: Very thoughtful ‘True Loves’ must fork over $107,300.24 for all 364 gifts, an even more generous jump of 6.1% increase compared to last year…

In the article Scroogenomics by Jason Zasky writes: For many people, the holiday season is the most wonderful time of the year. According to Joel Waldfogel, economist; it’s the most wasteful. The problem is in the gift-giving, says Waldfogel, who highlights the fact that gifts frequently ‘leave recipients less than satisfied, creating what economists call a ‘deadweight loss,’ (defined: loss to one party that’s not offset by benefit to another).

In other words, from the standpoint of economic theory, gifts are often poorly matched with recipient’s preferences, so Christmas gift-giving results in what Waldfogel calls– ‘an orgy of value destruction’. However, before you label Waldfogel a ‘grumpy economist’ or decry him for waging war on Christmas, understand that he merely hopes to prompt people to reconsider their gift-giving habits, and reclaim the true spirit of the holiday season. So hold off on buying that present, and resist temptation to bestow an ugly Christmas sweater on that special someone…

In the article Demise of the ‘C’ Word by Jacqueline Wilson writes: Blink and Poof— just like that; Christmas is gone from our vocabularies. Now, we are only allowed to say ‘holiday’. It’s sad: Christmas clearly has a deeper meaning– you know, the celebration of the birth of Christ. Although, I would be lying if I said that even some Christians (like me) don’t get caught up in commercialization of the holiday. I totally do that, too. However, I do try to balance its real meaning by helping others less fortunate…

But, you can’t deny commercialization of Christmas, and this is where I start to get confused about taking the word ‘Christmas’ out of seasonal commercials, ads, conversation… For many, the season is about commercialization and nothing about religion. In fact, there are people of many different religions celebrate Christmas. For example, Jewish people celebrate Hanukkah, but also put up a Christmas tree.

There are people who would never set foot in a church who happily string lights on a prickly tree to the tunes of religious Christmas music… For those people, Christmas is just about– gifting, eating, socializing… But, is it such a bad thing that we can’t even whisper the word ‘Christmas’ in public anymore– no matter your belief? That’s sad…

Is Christmas the spirit of giving? Many will agree that this practice has gotten somewhat out of hand. Christmas is over commercialized and the ‘spirit of indulgence’ has become the rule, with credit card bills to prove it. Christmas is the ‘merchants delight’ and the ‘clerk’s despair’, not to mention the post-Christmas return rat race! $billions will be spent for over 1 billion gifts, plus $millions worth of wrapping paper. Don’t even ask about the booze that will be bought and consumed between Christmas and New Year’s Day.

Strip off the day, the name, Santa and the reindeer, the tree, mistletoe, Yule logs, cards and all the commercialization and what do you have left? Some would say; just one big Excedrin headache... According to Marc Lallanilla: Christmas sucks… But how, you may wonder, can any sensible person dislike a season that’s devoted to peace on Earth and goodwill toward men? You might be surprised to learn that there’s a huge underground of people who all agree that we should just cancel Christmas…

But, until we destroy the monster that Christmas has become, I fear we’re doomed to repeat it, year-after-year, life-after-life, debt-after-debt, suicide-after-suicide… So, why not chuck the whole mess in trash can?  The reason is simple: Christmas is more than day of tradition, commercial, and material indulgence: For millions of people, worldwide, Christmas revolves around the person– Jesus Christ…