Holidays help define our culture, but people forget that they are closely connected with economics. Author Holley Hewitt Ulbrich combines her lifelong fascination with our nation's most special occasions and her love of economics in this fascinating account. You'll learn why Punxsutawney Phil might play a role in economic forecasting; how Valentine's Day could just be an example of heartless capitalism; how Earth Day provides insights about property rights; how Father's Day and Mother's Day helps us understand the history of the American family. Holidays are about communities, cultures, history, and our relationship with the natural world, and they offer a way to highlight a context in which we make our choices. Since they are scattered throughout the year, they help us explore emerging ideas of behavioral and neo-institutional economics in small, seasonal doses. Join Ulbrich as she explores what these occasions say about our economic system, our society, and ourselves with Economics Takes a Holiday.

ECONOMICS TAKES A HOLIDAY

Celebrations from the Dismal ScienceBy Holley Hewitt Ulbrich

Abbott Press

Copyright © 2013 Holley Hewitt Ulbrich
All right reserved.
ISBN: 978-1-4582-0761-6

Contents

1. January..................................................................................................11st—New Year's Day: Credible Commitment...............................................................115th—Martin Luther King Jr.: Prophet of Nonviolence...................................................52. February.................................................................................................112nd—Ground Hog Day: Punxatawney Phil and Economic Forecasting.........................................1114th—Valentine's Day: Heartless Capitalism?...........................................................153rd Monday—President's Day: What Makes a Leader?......................................................193. March....................................................................................................2317th—St. Patrick's Day: Snakes and Ants...............................................................2320th/21st—Vernal Equinox: Our Fancy Turns to Better Mousetraps........................................274. April....................................................................................................3115th—Income Tax Day: Flat and Simple, or Fair and Complicated?........................................3122nd—Earth Day: Property Rights.......................................................................355. May......................................................................................................391st—May Day: Fertility and Population.................................................................392nd Sunday—Mother's Day: All Mothers are Working Mothers..............................................446. June.....................................................................................................4714th—Flag Day: How Big Should a Country Be?...........................................................473rd Sunday—Fathers' Day: The Changing American Family.................................................527. July.....................................................................................................57July—The Month of Revolutions.........................................................................5714th—Bastille Day: The Costs of Inequality............................................................618. August...................................................................................................65August—The Month with No Holidays.....................................................................659. September................................................................................................711st Monday—Labor Day: Minimum Wage, Living Wage.......................................................711st Sunday after Labor Day—Grandparent's Day: Paying for the Golden Years.............................7620th/21st—The Autumn Equinox: Turning Points and the Business Cycle...................................8010. October.................................................................................................8512th—Columbus Day: The First Wave of Immigration......................................................8521st—Alfred Nobel's Birthday: The Nobel Prize in Economics............................................8931st—Halloween: Taking Chances........................................................................9411. November................................................................................................9711th—Veterans' Day: Paying What We Owe................................................................974th Thursday—Thanksgiving: Affirming Our Values.......................................................10112. December................................................................................................1055th—National Volunteer Day: Working for Nothing.......................................................1056th—Saint Nicholas Day: Is There a Santa Claus?.......................................................110Late December—Winter Solstice/Christmas/Hanukkah: Throwing Hope into the Darkness.....................11326th—Boxing Day: Opening the Box......................................................................117

Chapter One

JANUARY

1st—New Year's Day: Credible Commitment

The first of January, the start of the new year, is a time of new beginnings. It embodies many traditions of starting over. Partying the night before is about ringing out the old, ringing in the new. In the South, the traditional midday meal of collard greens, black-eyed peas, and fatback is supposed to attract good luck and prosperity for the coming year. Year-end articles recap the best photos, greatest sports moments, celebrity deaths, a kind of closure before moving on to the next twelve months. And then, there are New Year's resolutions. People commit themselves to quitting smoking, losing weight, exercising more, watching television less, spending more time with family, being more frugal, and a variety of other intended improvements in their personal, work, or family and community life.

Economists refer to these commitments to resist temptations as meta-preferences—preferences about preferences. I may prefer French fries to apples, but I also prefer thinner to fatter. At least on New Year's Day, and for as long as possible thereafter, I want to commit to thinner over fatter and thus apples over French fries. I may have to find ways to bind myself to that commitment, much as Ulysses bound himself (literally, to the mast) to resist the call of the sirens in the Odyssey. There are a variety of steps I can take to increase the odds of honoring that commitment. I can join weight watchers. I can diet with a friend. I can keep a food journal in which I have to confess every fall from dietary grace. I can publicly proclaim my goal. All of these devices will increase the likelihood that I will keep my commitment.

Commitment to change, or to staying the course, is not just a personal issue. While we may not expect to keep our New Year's resolutions, we do expect our governments' commitments to be credible. Changes in government policies affect our individual decisions. Tax breaks for fuel efficient cars and better home insulation alter our choices. The Affordable Care Act will certainly change a lot of choices by individuals and firms. Cap and trade on emissions, credit card regulations, bank bailouts, changes in the estatetax—allofthesepoliciesaffectpeople'sdecisionsaboutwork, career choices, risk-taking, borrowing, investing, and lending.

But governments themselves change. Elections often change the party in power, and policy changes come with that shift. While some of our personal decisions are pretty short term, others—choosing a career, buying a house, investing for retirement—are long-term. We need to have some idea of whether a policy change is temporary or permanent, or at least reasonably long term. Nowhere was that demand for a credible commitment by government more evident than in the debate over privatizing Social Security. Individuals who had made life plans that included Social Security as currently structured would be affected adversely by a shift to an individual retirement plan,...