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The economics of Halloween
A reform proposal from Kevin Hassett: "So let's do something to reform Halloween. The first step would be for Halloween donors to give kids money instead of candy. Kids could then go to the supermarket the next day and binge on the candies they really like. That solution would get an A-plus in economics."
Linked here. But alas, in-kind transfers are often more efficient than cash gifts, and that holds for public policy as well. (Imagine giving "money to buy kidney dialysis," instead of "kidney dialysis," and see how many people fake kidney disease.) The candy transfer insures that a) mostly young kids do the asking, and b) at some point everyone just stops and goes home. I've long wanted to know how much movie attendance rises on Halloween evening, given that the real cost of going is suddenly and temporarily much lower.
Addendum: Here is a new paper on cash vs. in-kind transfers.
Posted by Tyler Cowen on October 31, 2007 at 08:36 AM in Economics | Permalink
Comments
When I was very young, the kindly retired schoolteacher a few doors down used to put a dime in our bags, along with the candy. Perhaps she was a fan of John D. Rockefeller. I always put my dime in my pocket. I already had plenty of candy.
Posted by: Bob Knaus at Oct 31, 2007 8:47:28 AM
Bob has a good point. It is optimal to give money, in the moment, as a surprise. Not everyone can do this but at the margin more (surprise) money is better.
Posted by: Tyler Cowen at Oct 31, 2007 8:50:46 AM
There's a Friends episode where Rachel forgets to buy candy and starts to hand out cheques. So this has even been done in popular culture ;)
Posted by: Cynical Masters Student at Oct 31, 2007 8:59:26 AM
Isn't it optimal to turn your lights off and watch a movie?
Posted by: 8 at Oct 31, 2007 9:11:24 AM
Although there's nothing that says they have to give out candy... just "treats". Since, if you give a child token amounts of money, the end result (said child going into the store and making an impulse purchase) would be as much "treat" as anything else.
The problem is, however, just as was stated indirectly in the post... money is more universally desirable due to its nature. I could only imagine what would happen in an environment where numbers of very small children are walking around the streets at night with baskets of money...
Posted by: Michael Fisk at Oct 31, 2007 9:39:45 AM
Let's say everyone gives out dimes. The kids now have $(.1)*N to spend on candy (assuming they spend it on candy) where N is the # of houses. They go to the grocery store, and now they can get a candy bar (their favorite) after 10 houses or a bag of candy (typically one type of candy comes in a bag I believe) after 20 or 30 houses (how much does one of those bags cost?). So now they get the same candy over and over again, whereas by going house-to-house they might get some variety. Sure, they end up with a few pieces they don't like, but then maybe they can learn how to create value from exchanging goods (say SweeTarts for Snickers).
Posted by: AZ at Oct 31, 2007 10:05:01 AM
>> ... there's nothing that says they have to give
>> out candy... just "treats".
I enjoyed the Coneheads episode where they gave fried eggs and beer.
Posted by: Bruce H. at Oct 31, 2007 11:57:44 AM
If everyone does this, candy sales will jump AFTER, not before Halloween. In a GE framework, kids lose utility from variety (as above), we lose utility from treat choice and stores do the same. Let's not get to "first step" if it means everyone.
Posted by: David Zetland at Oct 31, 2007 12:38:21 PM
I remember the people who gave away baggies of pennies, and they were always considered about as lame as the people who gave out raisins. Kids just want the candy, primarily because they typically don't have the means to go shopping on their own. How many young kids do you know who can/are allowed to walk or bike to the grocery store alone? Plus who wants to deal with the lag time? When you get home from trick-or-treating, you want to dig into your haul.
In additions, everyone knows that you take your candy into school and trade the pieces you don't want with your friends. The kids who don't like chocolate trade with the kids who don't like Smarties or Jolly Ranchers. That's as much a part of the tradition as the trick-or-treating.
Of course, in my house, we see Halloween as an excuse to buy bags of candy that we want to eat. If only two groups of kids come by the house, that just leaves more for us! If the tradition was to give out money, then we would be more likely to turn off the porch light.
Posted by: Christina at Oct 31, 2007 1:33:37 PM
Giving out candy is more fun, because then you get to push your own "sweet tooth agenda" on others. Some candies have a small following of devoted fans and giving it out will recruit more fans. No such advantage exists with giving out money.
Posted by: Macneil at Oct 31, 2007 2:26:46 PM
From the perspective of this suburban household with 4 kids, a nontrivial part of the cost of acquiring candy is getting to the store to get it. There are no candy stores within my kids' roaming distance around the house. To convert cash to the target good requires the parents to drive them to the store. Given that they'd want this as soon as possible (they have good discount rates -- promises of benefit off in the future are dramatically less valuable than benefit *right now*), this puts a large cost on me to get organized, find time to schedule a trip to the store (amongst homework, music practice, soccer practice times) and deal with a pack of kids with widely varying decision-making abilities to pick out the candies they desire at that minute (and hope they can rationally guess what they'll desire later to avoid buyers' regret).
This is dramatically less efficient than getting the candy directly. Not only can the candy-giver pick a convenient moment to purchase the candy, their best guess as to what my kids will enjoy is at least as good as my kids ability to express good decision-making in the store. Any error in perfectly optimal choise is also probably more than outweighed by the extra value of surprise and variety of getting candy from neighbors.
And then there's the social and practical value of making Halloween a one-day special event. A big part of the value of the candy gift is watching the colors and weight accumulate over the evening.
It's also very useful to make Halloween night a celebration where different rules about eating sweets apply. We normally adhere to strong regulations about sweet eating (have a little, infrequently). Breaking a habit for one night and returning to the habit is easier for practical regulations than letting the candy acquisition celebration extend past one day.
I'm sure all of this is obvious to the parents. It'd be a transparently stupid idea to do anything like subsituting cash for goods for the holiday.
More importantly, the mere suggestion to do so runs the risk of supporting the hypothesis that "economic analysis ruins everything." I'd just like to point out that in this case, *bad* economic analysis could ruin Halloween. Proper accounting for non-financial costs/benefits would show the current system to be much better.
Posted by: Paul J. Reber at Oct 31, 2007 2:39:07 PM
I think Reber trounces Hassett.
Posted by: Bernard Yomtov at Oct 31, 2007 3:26:59 PM
RE: Holloween Night Movie attendance
I live in Atlanta, and Holloween night always has the worst Traffic day of the year. I usually go to the theater near my office to wait for it all to go away. I'm planning on that tonight as well. I'll try to see if the theater is much more crowded than it usually is.
(However, this theater is at a mall that hosts trick or treating inside the mall. So you could end up with a much bigger draw than a normal wednesday just from all the T&T'ers and their parents.)
Posted by: JP at Oct 31, 2007 5:29:11 PM
I'm in an Arabic class and the teacher is Lebanese. She told us today this is actually what Christians in Lebanon do for Halloween.
Posted by: at Oct 31, 2007 7:09:13 PM
Giving out candy means that the recipient receives a greater variety of candy. The kid can then barter with other children and trade their "lesser favorite" candies for "more favorite." (I say lesser and more because who doesn't like candy!) This gives the children an opportunity to learn bartering skills, which will be much more valuable in the long run than the sugar rush that they would inevitably get if they got cash and bought their favorite candies at the 7-11. The next question, though, to be asked is what about the children who don't like candy, they're left out of the bartering system and in this case they may benefit from cash...but then again, who doesn't like candy!
Posted by: Mark at Nov 1, 2007 8:56:30 AM
an enterprising child could easily a.) sell his candy for cash or b.) trade it for a Dora the Explorer toy or whatever they play with these days. I used to do it for Army Ants and GI Joes... candy always gave me a headache...
Posted by: james at Nov 1, 2007 6:17:42 PM
This is a good idea to me. Nobody ever said that people have to give out candy but only that they hand out "treats" and money would deffinitely be considered a treat in my book. From an economics standpoint just giving the kids the money and letting them buy the candy they want is a good idea because then you give the customer exactly what they want. You can look at it like this...if the kids just get candy all night then the value to them is going to be very low for some things that they do not like but if they get money and buy the candy that they will like then the value for the first piece will be equal to the second and so on and so forth and the marginal value will be the same as the value for the first.
Posted by: at Nov 2, 2007 1:14:28 AM
There are in fact some countries in Europe (eg in Greece) where the Christmas carols are usually paid in sweets and money. And as you predict, some people tend to exploit this custom, especially newcomers who don't understand it (say immigrant children).
However I seriously doubt that following is true:
"She told us today this is actually what Christians in Lebanon do for Halloween."
There is no Halloween in Europe and I don't think Lebanese Christians (who are orthodox) are very different.
Posted by: S G at Nov 2, 2007 7:56:57 PM
I don't know how to really feel about this idea. On one hand, everyone likes money. But then, you have 3 and 4 year olds out for halloween and they are probably not going to care about money. they would most likely want the candy because that is what we are used to. And even if we get candy that we don't like, its ok because it is a suprise. And who wants to just get money and buy their own candy after halloween? that sounds like no fun because you can do that anytime. i know that my little sisters go trick or treating for candy, not money. People can do what they want for their "treats" but hopefully we will always have some candy givers around the neighborhoods.
Posted by: Leigh at Nov 4, 2007 3:33:28 PM
Reforming Halloween sounds like it could be a good idea at first – giving money to kids instead of candy gives them the opportunity to go and get the kind of candy they want at the store the very next day. And, for those kids who are wise beyond their years, they could even save the money they receive on Halloween night and use it for something they may feel would be more beneficial to them, something they could get more satisfaction or utility out of. But would anyone really do that?
Think of all the candy that goes to waste on Halloween. Despite what one may think, a person can only eat so much candy, and yet, a ton is given out every Halloween. The money and effort put towards Halloween candy could definitely be made better use of elsewhere. I can’t help but wonder, while receiving candy is fun, is it good for everyone?
While the thought of making better use of Halloween candy money makes for interesting thought, that’s pretty much all it is. When it comes down to it, there is no way to really reform Halloween. There is no way to guarantee that children will use the money they receive in place of candy for candy, or even use it wisely elsewhere. Receiving candy directly is easier and more exciting anyways.
There is also the issue that if candy was not given out, Halloween may lose some of its flair. When one thinks of Halloween and dressing up and trick-or-treating, candy is definitely a major part of the equation. It’s a tradition, and while it may not necessarily be the best economical concept – giving away something (a certain candy) that may not be used (or eaten) ever – it is something that we do. It is a cost that we accept, or at least those who take part in Halloween festivities accept.
Posted by: bb8343 at Nov 5, 2007 6:17:43 PM
I don’t think it’s a good idea to have money given out as opposed to candy on Halloween. The fun part of Halloween is going from place to place, not knowing what candy or treats that you will be getting. Getting money every time just takes the fun out of it. Granted the next day the kid could get the specific kind of candy that he wanted, but what kid wants to do that? They want that instant gratification of seeing their bag get bigger and bigger, full of who knows what type of candy. Besides, my favorite part of Halloween was getting back home, dumping out my bag in the middle of the living room floor and checking out all the sweet candy that I had gathered. Giving money to kids on Halloween ruins the fun and anticipation of trick-or-treating and makes it a bland experience. Where’s the excitement in knowing what you’re getting every time?
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