Undercover Economist

Burn the Christmas Card list

“Several times in my life, a tenuous connection was strengthened by the exchange of Christmas cards and letters.” So says “Marty” in his testimonial on the Hallmark Cards website, surely one of the only places in the world that you can find people singing the praises of the Christmas card list. Christmas cards are all about tenuous connections all right: prolonging them long after they should have been severed.Christmas cards are given and received in a parody of a market – one that involves interpersonal exchange but no prices. That matters because it means our cards are sent out into an informational void. Is it appropriate to send a card to one’s teacher? To one’s boss? To close colleagues? Distant ones? We can look at the cards we receive and try to extrapolate, but this only goes so far. A student does not know what cards a teacher receives because she is not a teacher; but she knows she doesn’t want to be the only student who didn’t bother.
We receive too little feedback and it arrives too late. In a conversation with a friend we quickly and continuously read each other’s moods – but was last year’s card from your former neighbours a genuine attempt to keep in touch, or a dutiful reciprocation of your card from the year before? (Always assuming you have your list from two years ago to check.) Or did it simply reflect the fact that they had sent you cards for years and were concerned that breaking off the correspondence would send an unwelcome message, even though the correspondence itself sends no message at all? One thing is certain: they will not send you a clarifying cover note.
Mutual suffering is not enough to end the process. Two families may end up locked together in a grim ritual, each sending a card because they know the other will send one, each knowing that this is the only reason the cards are sent. Both would prefer to stop, but neither is going to be the first to do so. “Exchange” is not the right word here. “Vendetta” is more accurate.
The whole result is so clumsy that a Nobel laureate in economics, Thomas Schelling, once described these symptoms in detail before advocating bankruptcy proceedings in which all Christmas card lists should be burned.
Why does the “market” for Christmas cards work so badly? Simply because there is no reason that it should work well. We are only surprised because most markets do work well. Consider the Christmas tree. The Christmas tree business is tough. Some of the Christmas trees to be sold this year were planted when Margaret Thatcher was in office, and they must compete with plastic trees, Norwegian imports of unknown number, and lazy dads who’d rather not bother.
And yet, this year as every year, there will be no shortage of Christmas trees. If London starts to run out, the price of trees will rise and someone will soon have a few truckloads travelling over from Cardiff or Birmingham. If the trees are too expensive this year, plastic will look attractive, or some families will willingly go without. (One penurious year, my parents used a Swiss cheese plant.) Information is abundant; prices provide immediate feedback; buyers and sellers are never locked into a spiral of misery. Compared with the excess supply of Christmas card correspondents, the perfect balance of the demand and supply of Christmas trees is little short of miraculous.
This Christmas, as we go through the routine of regretting the predominance of markets in our lives, we might remind ourselves that while markets may not be perfect, they sometimes beat the alternatives.