Economics of…Hanukkah

Perhaps the most famous Jewish economist around this time of year is Ebenezer Scrooge*. The unsympathetic antihero with his hatred of Christmas famously attempted to maximise profits by forcing his humble clerk, Bob Cratchitt, to work on the twenty-fifth. Who could blame the man? The winter of 1844 saw Hanukkah fall on the 6th December meaning that by the time his servant’s holiday arrived, his was long-gone and all he was worried about was paying back the bills from the Festival of Lights.

Christmas has always had a monopoly on the season. From around the middle of November to the end of December, the TV screens fill with relentless advertising about Coke-drinking Santas and magical snowmen. Like any monopoly, it is incredibly difficult to break up. Advertisers, governments and shopping centres all trade in one commodity: Christmas spirit. Unfortunately for other religions, Hanukkah spirit or Diwali spirit just doesn’t sound right.menorah

One way in which monopolies can be broken up is via government regulation, something which has been attempted before. In Birmingham in 1997, the Council decided to collaborate the holidays of Diwali, Chinese New Year, Christmas, Eid, Hanukkah and Halloween under the guise of Winterval. The all-inclusive holiday in one of the UK’s most diverse cities was a disaster. The media picked it up as a war on Christian values and after two years the event was abruptly cancelled.

So is there any room for Hanukkah in the season? The answer is probably not, primarily because the holiday has little prominence in the Hebrew calendar. Secondly, only 0.5% of the British population identifies with Judaism meaning, in marketing terms, there are very few people to exploit.

But is there a way to explain the miracle of Hanukkah in economics terms? The story goes that after a brutal fight against the Greeks, the victorious Jewish freedom fighters, the Maccabees, attempted to purify their temple by burning ritual oil for eight days. The miracle is that, despite having only enough oil for one day, it managed to sustain for the required period of time.

The miracle is a play on the production possibilities frontier, a graph which helps us understand the trade-off that occurs in a world of limited resources. It is used to explain, for example, that if a country wants to produce guns they could produce around 300 guns a day. If, however, they decided to produce butter as well, they would have to redirect resources (manpower, factory space etc.), decreasing the amount of guns they can produce. The result is a curve which helps explain how we can manage these trade-offs to produce the optimum quantity of each good.

So imagine we replace butter with ‘days of light’ and the guns with ‘purification of the temple’, the graph might explain that even the most efficient burning of the Menorah would be only one day. Any hopes of burning the fuel for longer would be “infeasible production”. The story, therefore, breaks one of the key theories in economics.

It is generally agreed that the only way said graph can be manipulated positively is if we have some kind of change in technology; faster machinery, harder-working labourers etc. It is unlikely that the Maccabees found any such way to burn oil more efficiently than we do today, so there is only one explanation we can accept as economists: Hanukkah spirit. That’s right. Whilst Christmas spirit is used to induce gullible consumers into buying crap we will all forget about by the New Year, Hanukkah spirit has the ability to help solve the upcoming energy crisis.

It might help explain why so many lauded economists have celebrated Hanukkah through the years. Joseph Stiglitz, Milton Friedman, Karl Marx, Paul Krugman and Alvin Roth to name but a few. Like the Maccabees, like economists, the word which sums up Hanukkah is efficiency! Happy Hanukkah, Merry Christmas and an economically saleable new year!

*Not actually a Jew, but was often presented as one in play adaptations. Ah, old school anti-Semitism.

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