‘Tis the season of everything to excess, including, perhaps, the glitz and glamour of the season. Or so it seems. After all, stores began hawking Christmas gear before Halloween this year, so it’s easy to imagine that by December 25th, many of us will be tired of the tinsel, the trappings, and the noise. The Grinch may have been on to something on that particular score.
Don’t get me wrong. I am not against ‘selling’ the season, in the sense that gifts and giving, surprises, bright lights, colorful displays and all the rest help dispel winter gloominess (I start to feel the gloom back in June when daylight hours begin to shrink, and hours of darkness increase) until we round the corner on the winter solstice. I don’t even care that the solstice marks the beginning of winter. After December 21st days get longer; that works for me. I’m also mindful of the fact that this is primarily a religious season, and little of the market activity (much as my economist heart loves it) really matters in that context. The reason for merriment is not the main focus here.
Which brings me to the topic at hand; excess, or how good things begin to lose value when pursued too far. ‘Too far’ means different things to different people, however. That’s the reason that some of us weary of the holiday bustle before others—we don’t all value the seasonal atmosphere in the same way, or in the same measure.
In economics, we talk about the pleasure that goods and experiences bring us in terms of utility. Utility sounds precise and practical. It means something much fuzzier: happiness or satisfaction. We are all motivated by increasing our happiness, and that’s what markets most definitely help us to do. Which is why the hoopla at Christmas (insert your favorite holiday here) doesn’t trouble me. It’s supposed to be a happy time.
However—
Utility (happiness) isn’t a constant, and we can just pile it up in a stack and measure it, or even compare it very well to others’ happiness. Because it’s subjective and unmeasurable, it is also a relative state of being. More or less happy is about the best we can offer as a metric.
And—
Did you ever notice how experiencing more and more of even your favorite things begins to lose appeal after a while? This happens because the additional happiness associated with more of the same thing (raindrops on roses, silver bells, etc.) gets smaller and smaller as we consume more and more and more of it.
The economist’s term for this phenomena is diminishing marginal utility. It’s not that we’re tired of being happy, but it is true that, at the margin, the third drive through the Chick-fil-A holiday lights at Alltel adds less to our seasonal cheer than did the second trip through, and that the second trip added less to our happiness than the first. Marginal utility falls with each successive trip through this season. It can even fall to zero (no added happiness), or become negative (now, add some unhappiness).
So was the Grinch off-base when he complained about “the noise! the NOISE!! THE NOISE!!!” associated with Christmas? Well, yes, in the sense that his heart was three sizes too small (we are told). But it’s possible that the Grinch was also experiencing diminishing—even negative—marginal utility with respect to the Christmas ballyhoo.
Can we avoid diminishing marginal utility? Not really—as you acquire more and more of a good thing, everything else equal, the extra satisfaction you derive from having still more of that item (and less of something else) gets smaller and smaller. The Nutcracker is a great holiday ballet, but diminishing marginal utility is unavoidable if you attend the same performance night after night—and forego all TV news, say, as an alternative.
You can’t avoid diminishing marginal utility, but you might avoid becoming an unhappy Grinch—if you pay attention to how fast your extra satisfaction shrinks with more of one experience, and switch to something else.
And finally— never tie antlers to your dog’s head. I’m just guessing—but confident—that the marginal utility of those antlers, to the dog, is negative right from the start. Unless you are a real Grinch, your satisfaction on that one doesn’t count.