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The Economics of Christmas

Christmas is typically the largest annual stimulus for many nations. Sales increase dramatically in almost all retail areas and shops introduce new products as people purchase gifts, decorations, and supplies. In the U.S., the Christmas shopping season now begins on Black Friday, the day after Thanksgiving. The economic impact of Christmas continues after the holiday. During Christmas sales and New Year's sales, stores sell off excess inventories.

More businesses and stores close on Christmas Day than any other day of the year. In the United Kingdom, the Christmas Day (Trading) Act 2004 prevents all large shops from trading on Christmas Day.

Many Christians, as well as anti-consumerists, decry the commercialization of Christmas. They accuse the Christmas season of being dominated by money and greed at the expense of the holiday's more important values. Frustrations over these issues and others can lead to a rise in Christmastime social problems. Detractors of this school of thought argue that the idea of a grand winter holiday existed in our society long before Christianity.

Christmas display in a Brazilian shopping mall

Most economists agree, however, that Christmas produces a deadweight loss under orthodox microeconomic theory, due to the surge in gift-giving. This loss is calculated as the difference between what the gift giver spent on the item and what the gift receiver would have paid for the item. It is estimated that in 2001 Christmas resulted in a $4 billion deadweight loss in the U.S. alone.[16][17] Because of complicating factors, this analysis is sometimes used to discuss possible flaws in current microeconomic theory.

In North America, film studios release many high-budget movies in the holiday season, including Christmas films, fantasy movies or high-tone dramas with rich production values. This helps the studio capture holiday crowds and position themselves for the Academy Awards. Christmas is the most lucrative season for the industry aside from summer. Christmas-specific movies generally open in late November or early December as their themes and images are not nearly as popular once the season is over. Home video release is often delayed until the following Christmas season.

NEXT: The 12 Days of Christmas

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