Discover more from Monday Morning Economist
A quick look at the economics around Thanksgiving 🦃
Thanksgiving is my favorite holiday. I mean it! There’s something about it that makes it a really nice break from everything else going on. The weather is cool, but not too cold. The food is really comforting. The selection of college football and NFL football games are some of the best of the year. Plus, it’s acceptable to wear sweatpants all day!
A couple of weeks ago, I invited Josh Goodman to talk to my course about the pandemic’s impact on education. During his talk, I also learned that internet searches for sweatpants typically peak around Thanksgiving each year. The lone exception was at the start of the pandemic when people started working remotely. Below, I’ve highlighted the data from Google search trends for the past 5 years and noted the date for Thanksgiving each year. The data points are based on relative searches compared to November 2020, which had the highest search volume over that time frame:
The Thanksgiving holiday is packed full of great examples for learning economics. One of my favorite topics each year is looking at the cost of Thanksgiving dinner. The American Farm Bureau publishes a report each year on the cost of a 10-person dinner in the United States. They send out secret shoppers across the country to collect prices on things like turkey, stuffing, green beans, and rolls. This year, things are a bit more expensive, but the average price still comes in at under $6 per person, before you buy the bottle of wine:
While the price of Thanksgiving dinner is at the highest it’s ever been, that’s not true in real terms. Generally, the price of things goes up over time naturally as inflation increases the price of products. An important thing to consider, however, is the “real price” of a dinner. Prices today are known as nominal prices while prices that have been adjusted for inflation are known as real prices. The most expensive dinner, in real terms, was actually about a decade ago right after the Great Recession. Generally speaking, the price of dinner has been fairly stable since then.
It’s no surprise that the nominal cost of dinner is higher this year because inflation has been a big headline topic over the past few months. In addition to higher prices, the supply chain concerns have made it harder to find some of the items you may want on your dinner table. While grocery store shelves are about 4–11% emptier than normal, turkeys aren’t actually of much concern. The US has seen a decline in the total number of birds produced since 2000, but the weight of those birds has gotten much bigger during the same time:
The other major economic concept that pops up around Thanksgiving is demand shifts. We’ve seen demand increases for everything from pumpkins to airlines to Christmas trees. Black Friday, the biggest shopping day of the year, is also a great example of shifting demand. While that’s the story of Black Friday now, that isn’t where the term likely originated. Check out this great summary of the history of Black Friday:
The final economic topic can be considered more of a warning about a serious topic. The night before Thanksgiving is often one of the deadliest days of the year for drunk driving. While driving drunk may seem like the best way to get home after a night at the bar (it’s not), it imposes a lot of costs on other people driving on the road. Negative externalities, like texting while driving or drunk driving, occur when individuals do what they believe is in their own best interest while ignoring the impact their decisions have on other people. This often results in an overproduction of the item compared to what is socially optimal: too much drunk driving and too many people texting while driving. If you’re meeting friends and family this week, be sure that you have a backup plan for getting home or to help your friends get home.
A 14 oz. bag of cubed stuffing was the only item of the “traditional dinner” that decreased prices from 2020 to 2021 [American Farm Bureau]
About 18% of all turkeys produced in 2020 (40 million birds) were raised in Minnesota [US Department of Agriculture]
In 2020, the US produced 3.01 billion pounds of sweet potatoes [US Department of Agriculture]
More than 53.4 million people are expected to travel this Thanksgiving, the highest single-year increase since 2005 [AAA]
US consumers spent an average of $6.3 million per minute shopping online on Black Friday in 2020 [ABC News]