Christmas: Happiness and Economics

In 2016, the London School of Economics conducted an expert survey[1]to explore the relationship between populations’ wellbeing and national holidays. The results showed that 15 out of the 28 professors surveyed agreed that major festive periods, such as Christmas increased wellbeing and overall happiness of populations, while just 5 disagreed, and others abstained. The second question, exploring whether average wellbeing could be increased with more mandatory holidays, had a stronger support, with 21 of the surveyed in agreement with the statement. But how do we know if holidays actually raise our average, year-round wellbeing, or if their effects just temporary, as many experts suggest? And how can we measure if Christmas generally makes people happier and more relaxed?

As the experts who abstained admitted, there is insufficient evidence and means of measuring this yet, however some conducted research possibly contradicts expert reasoning on the subject. A professor noted that “research on 11 European countries actually suggests that mood is lower around Christmas time, though a bit higher in the United States”, enforcing the negative view on the scarcely researched issue of holiday wellbeing. In fact, research increasingly suggests that “the Christmas period is related to a decrease in life satisfaction and emotional wellbeing”[2]  (Michael Mutz, 2016), and while suicide rates fall around Christmas[3](EMJ, 2004), and older research implies that people tend to be satisfied with Christmas, there are some fundamental problems around the holiday that make people experience Christmas differently, based on existing inequalities.

Inequalities give rise to a range of anxieties: it can be a significantly socially and financially draining time, depending on the person’s original stance on such aspects. Regarding the commercialism of the holiday, as author Harriet Beecher Stowe phrased, “There are worlds of money wasted, at this time of year, in getting things that nobody wants, and nobody cares for after they are got.” This time of the year has been centered around spending more money for consumers, and convincing to spend more money for producers for decades.

This is where the economics involved in Christmas comes into play, as the largely increased consuming inevitably gives rise to the wasting of scarce resources, linking to Beecher Stowe’s quote. And while resources in the form of gifts are wasted, regarding the economy, the excessive Christmas consumption shows that there is also significant wasted potential and capacity year-round, which is only used to its maximum around this time. Resources such as capital and labor are fully exploited around the holidays as consumption of certain goods rises, and excess capacity is created the rest of the year, which leads to missing out on producing and earning more. And if earning more money brings utility, Christmas has made us worse-off year-round, and has reduced happiness.

While the holiday season proves to mostly lead to wasted spending, Keynesians might argue that any spending increases economic activity, such as creates more jobs, which leads to happiness overall, and increased economic activity is an especially useful tool to recover from a recession, also a positive aspect. However, in economically steady times a short period of excessive spending and consuming still is not an efficient allocation of resources for an economy.

Nevertheless, returning to the original discussion of happiness and Christmas, the strict economics of the festive season might not be the best indicator of whether this period is good for the economy and the wellbeing of people. We all know that the holidays bring more than overconsumption and spending, and this has important implication for the wellbeing of populations. Without the festive cheer, the spreading of kindness, quality family time, religious or social rituals, reflection on our values, and countless other positive Christmas activities, the significant impact on our human capital of the holiday season would not exist. As these activities tend to increase our wellbeing, rather than decreasing it, as the majority of existing research suggests, the economy may benefit from a resulting improved individual human capital, an improvement in the economic value of individuals.



Financial Times, A guide to having an actually happy Christmas by Tim Harford at

Vice, Let’s Ruin Christmas by Turning It into an Economics Lesson by Pascal-Emmanuel Gobry at


Econpapers, Christmas and Subjective Well-Being: a Research Note by Michael Mutz at [2]

BMJ Journals, Suicide at Christmas by Simon Carley, Consultant and Mark Hamilton, Emergency Physician at [3]

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