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SPEAKER_00: I wrote this episode to be part of the second season of 50 Things That Made the Modern Economy, but my editor's the kind of chap who always peeks at his Christmas presents early, so he insisted we broadcast it last year. Well, it's Christmas again, and so we've decided to give you it again, this time with some extra facts about Santa.
SPEAKER_03: 50 Things That Made the Modern Economy with Tim Harford.
SPEAKER_05: Kentucky, Christmas! A curious ritual takes place each year in Japan. It's called Kurisumasu ni wa Kentaki,
SPEAKER_00: or Kentucky for Christmas, the habit of eating Kentucky Fried Chicken on the 24th of December. It began as an inspired bit of marketing when KFC noticed in the 1970s that expatriates who craved Christmas turkey were turning to fried chicken as the closest available substitute. It's since become a popular Japanese tradition. There are queues around the block, and customers will pre-order their chicken as early as October. Christmas, of course, is not a religious holiday in Japan, where a tiny minority of the population is Christian. But Kurisumasu ni wa Kentaki demonstrates how easily commercial interests can hijack religious festivals, from Diwali in India to Passover and Rosh Hashanah in Israel, but most notoriously, Christmas in America. Why after all does Santa Claus wear red and white? Many people will tell you that the modern Santa is dressed to match the red and white colours of a can of coke, and was popularised by Coca Cola's advertising in the 1930s. A good story. But the red and white Santa wasn't created to advertise Coca Cola. Why, he was touting the rival beverage, White Rock, back in 1923. Rudolph the Red-Nosed Reindeer was the one who was invented as a marketing gimmick. The modern Santa Claus is actually a century older, adapted from Dutch traditions in the once Dutch city of New York by prosperous Manhattanites such as Washington Irving and Clement Clark Moore in the early 1800s. Irving and Moore also wanted to turn Christmas Eve from a raucous partying of street gangs into a hushed family affair. Everyone tucked up in bed and not a creature stirring. Not even a mouse. Moore, who penned the line, "'Twas the night before Christmas," in 1823, did as much as anyone to create the American idea of Santa Claus, the patron saint of giving presents to everyone, whether they want them or not. It was in the 1820s too that advertisements for Christmas presents became common in the United States. By the 1840s, Santa himself was a frequent commercial icon in advertisements. The gift-giving tradition took firm hold. Ten thousand people paid to see Charles Dickens give readings of his Christmas Carol in Boston in 1867. It's a story light on biblical details and heavy on the idea of generosity. Down the coast in New York the same year, Macy's department store decided it was worth keeping the doors open until midnight on Christmas Eve for last-minute Christmas shoppers. The Christmas blowout, then, isn't new. Joel Waldfogel, an economist and author of Scrudgeonomics, has been able to track the impact of Santa on the US economy across the decades. By comparing retail sales in December with sales in November and January, Professor Waldfogel has estimated the size of the Christmas spending bump all the way back to 1935, the era of the Coca-Cola Santa. It may surprise some to know that relative to the size of the economy, Christmas spending was three times bigger then than now. Waldfogel has also compared the Christmas boom in the United States to other high-income countries around the world. Again, perhaps surprisingly, the December spending boom in the US is not particularly large relative to other countries. Portugal, Italy, South Africa, Mexico and the United Kingdom have the largest Christmas retail boom compared to the size of their economies. The US is an also-ran. In the grand scheme of things, Christmas is a modest affair, financially speaking. In the US, for every $1,000 spent across the year, just $3 are specifically attributable to Christmas. After all, you are going to have lunch anyway and pay your rent and fill your car with petrol and buy clothes to wear. For certain retail sectors, however, notably jewellery, department stores, electronics and useless tat, Christmas is a very big deal indeed. And a small fraction of a big number is still a big number. Waldfogel reckons that at least $60 or $70 billion is spent on Christmas in the United States alone, and worldwide perhaps $200 billion. Is that money well spent? There are worlds of money wasted at this time
SPEAKER_06: of year in getting things that nobody wants and nobody cares for after they are gone.
SPEAKER_00: That was the author of Uncle Tom's Cabin, Harriet Beecher Stowe, back in 1850, an early example of what is an annual complaint. Economists and religious moralisers don't often find themselves having common cause, but on the subject of Christmas, we do. We think that a lot of Christmas spending is wasteful. Santa's gifts rarely miss the mark. He is, after all, the world's number one toy expert. The same cannot be said of the rest of us. Professor Waldfogel's most famous academic paper is The Deadweight Loss of Christmas, which simply tried to measure the gap between how much various Christmas gifts had cost and how much the recipients valued them, leaving aside the warm glow of it's the thought that counts. He concluded that the typical $100 gift was valued at, on average, just $82 by the recipient. This wastage figure seems to be fairly robust across countries. There's even a research paper by two Indian economists estimating the deadweight loss of Diwali, and it suggests that $35 billion is being thrown away around the world in the form of poorly chosen Christmas gifts. That's about what the World Bank lends to developing country governments each year. This is real money and it's really being wasted. And that's before pondering the strain put on the economy by squeezing the retail spending together in a single month rather than spreading it out, and the time and aggravation devoted to the task of shopping, which is not always pleasant during the December rush. So other economists have examined alternatives to clumsy gift giving. Gift cards and vouchers don't help as much as one might hope. They're often unredeemed or resold online at a discount. If you must buy a gift card, note that vouchers for lingerie sell well below face value on eBay, but vouchers for office supplies and coffee hold up pretty well. Wish lists fare better. Research suggests that recipients are generally delighted to receive a gift they've already specified. Givers are deceiving themselves to think that an off-piece choice will be more welcome. Even Santa Claus likes to receive a polite wish list from children. Who are the rest of us to think that we can do better? Or we could learn from the reformed Ebenezer Scrooge, who, Charles Dickens declares, knew how to keep Christmas well if any man alive possessed the knowledge. On Christmas morning the only physical gift he gave was a prize turkey. The Christmas spirits had shown him that the turkey was sorely needed. Other than that, he gave people his company and his money, including a rise for Bob Cratchit. Money! That's the true spirit of Christmas. God bless us, everyone!
SPEAKER_03:
SPEAKER_00: And Uncoutrements people at home surrounded by their immediate family. And at that point, it doesn't make any sense to make it about gifts of food. It has to be gifts of something else. That's happening in the 1820s, the 1840s. And that's when Christmas becomes a much more commercial business.
SPEAKER_03: How did you go about researching this episode?
SPEAKER_00: The economist Joel Waldfogel produced a very famous research paper, The Deadweight Loss of Christmas, and then more recently wrote a book called Scrutinomics, which looks at really Christmas from every possible angle. How big is the spending boom at Christmas? How long has Christmas been an important retail phenomenon? How efficient is Christmas? We economists love concepts of efficiency. Is there any way to give better Christmas presents? And I think if you wanted to boil down the message of Scrutinomics to a single sentence, Santa is brilliant at giving presents, but the rest of us aren't. How important is Christmas economically?
SPEAKER_03: I think it's easy to overrate the importance of Christmas because it's so spectacular. It's
SPEAKER_00: really in our faces. It feels like it's a tremendously important economic event. It is important, but maybe not as important as people think. So when Joel Waldfogel tried to measure this, he would look at retail spending in November and in January and compare it to retail spending in December. And that's a sort of measure of the retail boom at Christmas. And his estimates are maybe for every hundred pounds that's spent throughout the year, about 30 pence is specifically spent in this Christmas boom. So maybe not as big as people would think. But then when you reflect on what you spend most of your money on, on petrol, on rent, on food throughout the year, maybe you realize that Christmas, it's significant, it's very significant for particular kinds of product and particular kinds of retailer. But it's not the only thing going on in the economy throughout the year.
SPEAKER_00: Thanks for listening to our Christmas episode. Next episode is all about retirement and how it shaped the modern economy. 2019 has been another busy year for BBC World Service podcasts. Some of the subjects from our two seasons of 50 things most likely wouldn't have existed if it wasn't for the space race, the global positioning satellite system and the CubeSat for example. And also I'd argue the interface message processor, the black box that sat at the heart of the early internet. So if you haven't discovered it already, you might be interested in listening to what's been one of our biggest podcasts of the year, 13 Minutes to the Moon. It's the definitive story of the first moon landing in 1969 and how it almost went wrong, told by the people who made it happen. Search for 13 minutes wherever you find your podcasts. To tell you all about it, here's Kevin Fong. I believe that this nation should commit itself to achieving the goal before this decade is
SPEAKER_02: out of landing a man on the moon and returning him safely to the earth.
SPEAKER_04: A story of breathtaking ambition. I thought that he was a little premature on making an announcement just in 10 years since
SPEAKER_03: we hadn't even gone into orbit.
SPEAKER_04: A story of incredible innovation. I'm in charge of this stuff called software, but nobody knew what software was.
SPEAKER_04: A story of amazing human endeavor. It was the lack of fear. It wasn't the lack of knowing it was risky, but just weren't afraid of it. A story of triumph over adversity. As they pitch over and see the moon for the first time, Neil said, we can't land here. A story where we all know the ending. That's one small step for man. But not necessarily the beginning. Three, two, one, zero. The dramatic story of the Apollo moon landings in a podcast from the BBC World Service. We're about to do something that nobody's ever done. Told by the people who made it happen. We were able to do this impossible thing.
SPEAKER_05: That's 13 minutes to the moon.
SPEAKER_04: We did it. We did it. Just search for 13 minutes to the moon wherever you found this podcast.
SPEAKER_01: The eagle has landed.
