by As the cost of living crisis and high interest rates and inflation prevail, the average spending per person for Christmas 2023 in the U.K. is projected to reach a staggering £974. Despite these economic challenges, retailers, advertisers, and tradition continue to encourage excessive levels of consumption during the holiday season.
The issue of excessive consumerism during the holidays has been a cause for concern for quite some time. However, what if indulging ourselves and our loved ones during the coldest and darkest time of the year actually brings happiness and joy?
Let’s explore what some of the greatest economic philosophers of history would have to say about the modern Christmas rush.
Adam Smith (1723–1790), the Scottish economist and philosopher, would likely view the frenzy of shopping for gifts, food, and decorations with disdain. He would consider many of the items we convince ourselves we need as excessive, frivolous, and useless. Smith believed that consumption should satisfy genuine needs, such as those related to physical well-being, like water and warmth, rather than material desires.
On the other hand, the English philosopher John Stuart Mill (1806–1873), who followed a more hedonistic concept of utility, might argue that the satisfaction we seek from excessive consumption during Christmas aligns with his views. Mill believed that utility also derives from the pleasure we experience through consumption. However, Mill would likely agree with Smith that the pursuit of pleasure and increased utility becomes significant only after the basic needs of individuals are met, implying that the wealthy may have a greater capacity to derive utility during the holiday season.
Thorstein Veblen (1857–1929), an American economist critical of capitalism, would focus on the concept of conspicuous consumption. Veblen would view the grand Christmas trees, lavish decorations, and expensive gifts as a way to display high status and impress others. This form of consumption serves as a demonstration of wealth and generosity, not just limited to invited guests but also extending to the entire neighborhood through eye-catching Christmas lights.
Another aspect of Christmas consumption that resonates with economic theory is the concept of diminishing marginal utility. This theory suggests that with each additional unit consumed, the overall satisfaction derived decreases. As the Christmas meal progresses, the pleasure obtained from each subsequent serving declines. This notion of diminishing marginal utility became part of mainstream economics in the late 19th century, affecting retail pricing strategies and government tax decisions.
Considering these perspectives, how can we maximize our satisfaction and well-being during Christmas? Should we redistribute our wealth to those in need, give extravagant gifts, or invest in lavish decorations to impress others?
Hermann Gossen (1810–1858), a German economist, proposes diversifying our activities to maximize utility. However, Gossen emphasizes that each activity only brings satisfaction until a certain point. For example, we eat slices of turkey until the last mouthful provides the same degree of pleasure as opening the last gift. Once the pleasure diminishes, it is time to move on to a different activity. This approach can help avoid overconsumption and regret.
In conclusion, the economic philosophers of the past would have varying opinions regarding Christmas consumption. While some would critique excessive consumerism as frivolous and unnecessary, others would recognize the pleasure and utility derived from indulging in the holiday festivities. It is essential to strike a balance and remember that true happiness and satisfaction during Christmas come from genuine experiences rather than material possessions.
*Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it
Money Singh is a seasoned content writer with over four years of experience in the market research sector. Her expertise spans various industries, including food and beverages, biotechnology, chemical and materials, defense and aerospace, consumer goods, etc.
