The Economics of Christmas Trees
By David Henderson
Tim Taylor, the Conversable Economist, has an interesting post on Christmas trees, an update of one he ran a few years ago. He carefully analyzes the environmental effects of buying a new Christmas tree every year versus buying an artificial tree and using it for many years.
I have no criticism of his methodology. If Tim does it the way he usually does things, he’s very careful.
Instead, my analysis is different and easier. Rather than single out one factor, the environment, and ignore all others, I do a cost/benefit analysis. It’s the actual analysis I did before buying our artificial tree, pictured above, about 13 years ago.
In the few years before I bought it, I was finding that the price of a new tree each year, plus tax, was approaching $100. Also, there was the hassle each year–a time cost of at least 40 minutes to drive to get the tree, choose the right one, and haul it back. Instead, I could buy a good-sized artificial tree for $400 plus tax. You might argue that the getting of the tree itself gives pleasure and so that offsets the time cost. It did for about the first 15 years. After that, it just became a chore. It didn’t take a lot of calculation to conclude that even if I used a modest value for my time of $80 an hour, the tree would pay for itself in 3 years. The next n years–10 so far and we’re still counting–would give us pure consumer surplus.
This doesn’t take account of any of the environmental effects Tim points out. But, as his analysis shows, those effects are minimal. I’m quite confident that, even taking them into account, the tree paid for itself in 4 years.