How Much We Spend For Love
Written by: Brooke Jende
February 14th is either an excitedly anticipated holiday or a highly dreaded one. Many couples and loved ones enjoy Valentines day and see it as a chance to celebrate love. On the other hand, many see it as a corporate ploy to get people to spend money on romantic gift items that they do not need. While I believe that the idea of Valentine's Day is sweet and romantic, the reality is that Valentine's Day has simply become a way for businesses and companies to get people to spend their money on overpriced goods.
Just like for Birthdays and Christmas, Valentine's day revolves around gift giving. The significant difference when it comes to Valentines gifts are that they typically fall into the realm of chocolates, flowers, and other love related items. Because these are common valentines goods, stores take advantage of the holiday and the aggregate price level of Valentines goods are increased during this time. While we economists would typically see an increase in price level result in a decrease in amount demanded, the increased holiday demand for these products is what allows companies and businesses to rack up their prices and yet still get consumers to purchase the products. This year in particular, According to the National Retail Federations latest statistics, “Consumers will spend a near-record $19.6 billion on Valentine's Day.” The large profits and high prices both confirm my belief that Valentine’s day is becoming a holiday that's all about making more money.
While I believe Valentine’s Day has become a commercialized way get people's money, there is a positive effect on the economy as a result of this holiday and it can be related to the multiplier effect. The multiplier effect states that given change in a particular input, such as Valentines Day goods, a larger change in an output will occur. In the case of Valentines Day, people are spending more of their money on Valentines items. Because of this the money they spend will directly benefit the companies, business selling the items and will then use that money and create a strong multiplier effect, which will in the end increase the Gross Domestic Product.
Works Cited
“Explaining the Multiplier Effect | tutor2u Economics.” tutor2u, www.tutor2u.net/economics/reference/multiplier-effect.
Ngabirano, Anne-Marcelle. “On Valentines Day, heres how much were willing to spend for love.” USA Today, Gannett Satellite Information Network, 14 Feb. 2017, www.usatoday.com/story/money/2017/02/13/more-expensive-year-show-your-love/97766678/.
“Valentine's Day.” National Retail Federation, 13 Dec. 2016, nrf.com/resources/consumer-research-and-data/holiday-spending/valentines-day.
I agree with your thesis about Valentine's Day becoming primarily a holiday for firms to make money off of consumers. Also, it's surprising to see how Americans spend billions of dollars on Valentines Day gifts. After the holiday season, aggregate spending slows down, but Valentines Day brings the national consumer spending up again. With spending slowing down in the beginning of the year for retailers after the holiday season, it's no surprise that retailers use Valentines Day as an opportunity to bring sales up again.
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I agree that Valentine's Day is a perfect opportunity for businesses to overcharge their items for consumers to buy. While it is only one day unlike some holiday's in December where people are buying gifts for each other for multiple days, people will still buy flowers and chocolate as that is a significant part of the holiday. Ultimately, the spending on all of these products will increase the GDP not only due to consumer spending but also because of the multiplier effect like you mentioned. Overall, while the amount of money spent on Valentine's Day surprised me, I see how it is good for our economy's GDP in the end.
ReplyDeleteI work at Target and I can confirm your article. The prices for all Valentine's Day stuff are booming right now. However, just like all the Christmas stuff, it all went on a huge sale right after Christmas was over. It's a perfect opportunity that many businesses have taken advantage of.
ReplyDeleteI agree with you that this holiday is either hated or loved and that those people who love it have to buy the overpriced chocolates and gifts because it's just what society does. The aggregate demand for these items is also very similar to what we have seen in the past for Christmas time shopping, where people don't care about the additional cost. This is also such a good source of consumer spending in GDP because there's hardly anything big that people buy in February, so Valentine's day gives February a boost in the amount of money earned for the beginning of the GDP cycle.
ReplyDeleteWhile valentine's day is very important, I would be interested to see the sales of certain goods *after* Valentine's day. Because would goods in case be considered used and not factor into GDP? Or would they still be final goods, and maybe would there be a spike in consumer spending as a result to all the unsold chocolate after Valentine's day?
ReplyDeleteI would be interested to see how the increased sales in Valentines related goods changes the demand and output of of other goods during this time. Is it possible that people spending more money on gifts for their significant others actually spend less money on other services? While one portion of the economy may be flourishing, it is highly likely that other parts of economy struggle, and therefore every company is trying to carve our their own piece of the Valentine's day pie.
ReplyDeleteWhen reading this article I couldn't help but think of a fellow Insight member who spent over $200 on his various gifts and things for his valentine. Based on these types of stories, I slightly disagree that it's the people who love the holiday that are willing to spend the extra cash but instead the people who have girlfriends/wives/boyfriends/husbands, who like to be spoiled and aren't shy about it.I for one think this hyper commercialization is ridiculous and while of course I can get behind the candy and the heart shaped pizzas the amount of money people put in is a little over the top. However, as you stated as far as the GDP is concerned it's a very positive time for the economy with this much purchasing of goods going on. While of course young people will always continue spending to much on their significant others for valentines day, I know I will never be a part of it. And at least I can rest easy at night knowing the ones that are a part of it are at least contributing to the economy.
ReplyDeleteI agree with your statement of how Valentine's Day is either loved or hated. In my opinion one holiday a year shouldn't be the time where you show your love for a significant other. Gifts should not be required to show love for someone either, therefore I think valentine's Day is not the best way to spend your money. Love should be expressed year round and the high prices are not worth the trouble. Soon people will realize that Valentine's Day is overrated and will spend less on the holiday.
ReplyDeleteSimilarly minded with Michael, I too couldn't help but think of a fellow Insight member who spent over $200 on his special Valentine. It is interesting to me how February 14th is supposed to be a special day for our loved ones, and the consensus on how we should express that love is to buy things for them. I happen to think that is a tad shallow, because if you truly loved someone, you would show it over the course of the other 364 days of the year. Valentine's Day is simply a Hallmark holiday that they invented to make money, as well are birthdays and Christmas. However as cynical as the whole fiasco it is, it is indeed good for the economy and the GDP as a whole, and cynicism is what keeps this economy going. Now, for all you love birds out there I will leave you a quote by the late, great philosopher Kanye West, "I ain't sayin' shes a gold digger, but she ain't messing with no broke men."
ReplyDeleteIn response to Carlos about valentines day just being a "Hallmark Holiday" I think that this is a demonstration of the effect holidays have on the economy. It is not hard to notice all of the spending that goes on during those special times of the year so what would the addition of more holidays do to the economy. Given the obvious spending habits I would say that it would strongly boost the economy but in order for it to be affected it would have to be something worth celebrating.
DeleteI think that during valentines day and pretty much any holiday for that matter the amount of transactions occurring and the amount of money being spent shirley increases. This is why companies increase and attempt to develop a stronger marketing approach during this time because people are looking to spend money. It can be interesting to think about how this benefits GDP and the economy as a whole. As more money is spent GDP is benefited more and more. It is just on these guaranteed times that people will automatically spend.
ReplyDeleteI found article very interesting as I never thought of Valentine's Day as a time where business can make a large profit. I usually think of Valentine's Day as a day of love. However, looking at Valentine's Day through a businesses prospective, I can see how they would take advantage of this holiday in order to make money. I personally have never had to go and purchase a Valentine's Day gift for anyone, but I know that one day I will have to. I also know a lot of my friends that purchase Valentine's Day gifts and after talking to them, I realized that these can be very pricey. I know see how businesses can take advantage of this holiday.
ReplyDeleteI agree that Valentine’s Day does help businesses make money. It is both a holiday where you can spend money on gifts for your loved one, and a holiday to increase the amount of output to the consumers. For Valentine’s Day, stores have to get holiday themed gifts for consumers to buy for their loved one. This is probably a good thing for the businesses since they will get more and more money from the products people purchase. Like you mentioned, it is a good thing for the economy too because the GDP will increase.
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ReplyDeleteValentine’s Day is either loved or hated is a great way to put it and I completely agree with that. In my opinion one holiday a year shouldn't be the time where you show your love for a significant other I think that this should happen everyday that you are with someone or at least every week to show how much you care. Gifts should not be required to show love for someone either, therefore I think valentine's Day is not the best way to spend your money. Love should be expressed year round and the high prices are not worth the trouble. Soon people will realize that Valentine's Day is overrated and will spend less on the holiday.
ReplyDeleteFrom TV commercials and magazine ads, to new products only in stock for the season, it's clear that businesses take advantage of holidays. For example, McDonald's advertises the Shamrock Shake only around the month of March. The widespread advertising of these products cause consumers to "flock" to the new trend causing spending to increase, improving our GDP.
ReplyDeleteI do agree that when it comes to Valentine’s day people will take it or leave it. However, most people take it. Most people will go out and buy gifts for their special someone. You stated in this post that companies will increase their prices on items like chocolate, flowers and other love related items around Valentine’s day. As well as Americans will spend a near-record 19.6 billions dollars on Valentine’s day this year. Well I see that as a bad thing because the big companies are taking advantage of the consumer, is it really bad over all. We live in a free market and we can pick and choose what we spend our money on. As I said above people will take or leave Valentine’s day. If people choose to participate in Valentine’s day they choose to purchases over price chocolate and flowers because that’s what they want to do. Yes, Valentine’s day has become a day where companies try to get us consumers to spend more money. However, if people wish to take place in this holiday then that’s the price they were willing to pay.
ReplyDeleteWhile reading the blog post you made about Valentines Day, I fully agree that businesses are basically manipulating people into buying gifts that are way over-priced just for a singular holiday that loved one's feel they need to be celebrating. Personally I do agree that people are either on board with the holiday or completely against it. Other than celebrating the holiday with gifts I feel that there are other ways in which people could be celebrating, you could cook dinner at home or simply go out to do something fun. Gifts are not always the way to show loved ones that you care. Businesses take advantage of the holiday and over price items that are usually sold at a reasonable cost.
ReplyDeleteTo many people this date Feb, the 14th is a very important day because it represents love, many people in relationships spend hundreds of dollars in this day weather it's in an elegant restaurants, in flowers and chocolates or the biggest bear they can find in the store. But in reality now a days as you mentioned Valentines day is used to sell the same good but way above their normal price. If you see it as a business man it makes sense because as a man of business your goal is to earn or bring as much money to the table as possible therefore the economy is being helped by Valentines day every year.
ReplyDeleteIt makes a lot of sense that the prices for Valentines related goods are increased as the businesses main goal is to make as much profit as possible. Therefore they know that people will still buy their goods if they jack thee price up a bit more than usual, as its either buy the gifts or buy none for your SO which isn't really an option on this day. This leads to your stance that this practice is commercializing Valentines Day and you would be right. Overall it is very cunning of the businesses to increases prices around Valentine's Day in order to maximize their profit Its all about the bottom line for these businesses and if they see a way to increase profits, such as this one, they'll do it.
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