The Economics of Candy Trading

Halloween candy

October 29, 2020

This Halloween will be unlike any that today’s American children have experienced. Due to the COVID-19 pandemic, door-to-door trick-or-treating will be severely limited or nonexistent. But if grocery stores are any indication, there will still be Halloween candy to be had.

And because of that, one Halloween tradition will continue: the trading of said candy. Children may not fully know what they’re doing, but financial strategies will certainly play out on the living room floor.

Economics is everywhere,” said Matthew Rousu, dean of the Sigmund Weis School of Business. “The fundamental question you’re trying to answer is, ‘What is this worth to me?”

Take the principle of diminishing marginal utility, for example. The fancy phrase really means that the more you have of something, the less valuable the next unit of that item is, said Rousu. If a child loves Snickers and has 10, he might realize there is no real loss in dealing away three to get his second favorite choice of Milk Duds, Rousu said.

As Rousu explained, his household held fast to capitalist ideals when it came to Halloween candy.

“We did not redistribute candy from one child to another – nor did we throw all the kids’ candy in one pooled bin for them to consume at their leisure,” he said. “That allowed each child to have property rights over their own candy.”

Property rights are crucial in general, Rousu said, and they serve a good purpose here.

“Without that, you might have some children upset if they trick-or-treated longer, or one who wants to enjoy their Halloween candy over six weeks but gets upset because their sibling ate it all within two weeks, or other issues,” he explained.

Even parents can get in on the fun. How? Take that Milky Way if you want it. Use it as a lesson on taxation.

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