David R. Henderson  

The Economics of Christmas Trees

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Xmas tree, 2016.jpeg

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.


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CATEGORIES: Cost-benefit Analysis




COMMENTS (17 to date)
bill writes:

My wife saw an artificial tree at a yard sale for $2. That was 20 years ago. It paid for itself the instant she told me as almost nothing could make me happier than a bargain like that!
Merry Christmas and Happy Holidays to everyone.

David R. Henderson writes:

@bill,
Great story. Merry Christmas to you too.

Robert writes:

$400 plus tax for an artificial tree!

I bought my artificial tree in the UK from John Lewis. I can't remember how much I paid as it was a few years ago, but a similar one this year costs £75, including taxes, and with free delivery.
http://www.johnlewis.com/john-lewis-6ft-fireside-christmas-tree/p1907106

Prices in the US are usually cheaper than the UK, so why are artificial Christmas trees so much more expensive?

Andrew_FL writes:

How do you get the scent?

Tracy W writes:

75 NZD for a 2 metre tree including tax. And it came with lights. And that wasn't the cheap option.

Although it did come with a 20 minute temper tantrum from Miss 3 that I didn't buy the pink one.

Merry Christmas all!

Tom West writes:

After that, it just became a chore.

Bingo. As soon as it reaches chore status, an artificial tree is a no-brainer.

However, that can take between 0 years and a lifetime.

(For the record, my parents in their 80's have a real tree, I have an artificial one.)

Mark Barbieri writes:

Merry Christmas, David.

We bought an artificial tree 18 years ago and have never looked back. I do miss the smell, but not the hassle and the mess of a real tree, not to mention the fire hazard.

When we first got the tree, the biggest hassle was carrying the large and heavy thing up into the attic in its box. After a few years of the struggle, we realized that it was much easier to carry the three pieces individually into the attic and then put it in the box. We felt stupid that it took so long to realize that, but happy to have eventually gotten there.

LD Bottorff writes:

I stubbornly held to the tradition of buying a real tree for years after it became a chore. Now I have two artificial trees, and it is a joy to put them up each year. I don't have to struggle with the tree stand, or getting the tree into and out of the house. Cleaning up is so much easier.

We have a scent plug that I put in a wall socket near the tree. We get the nice smell, and we don't have to worry about watering the tree.

Krist writes:

I've never put up a christmas tree in my life. Don't let customs dictate what you do. That's how you save money...

Christian Moon writes:

The cost of everything, and the value of nothing. Sad!

There's more to find here than this narrow, abstracted symbolism, and I invite you into a more concrete and sensual connection with the living and dying reality of the tree, and the earth, and a practice that stretches back into the ages (or at least the 19thC).

Otherwise we might just as well sketch something out on a bit of paper (but at least there's something of the tree in that).

David R. Henderson writes:

@Krist,
I've never put up a christmas tree in my life. Don't let customs dictate what you do. That's how you save money...
Some customs are nice, but rest assured that I don’t let them dictate what I do. If I did, I would probably buy a fresh tree every year.
@Christian Moon,
There's more to find here than this narrow, abstracted symbolism, and I invite you into a more concrete and sensual connection with the living and dying reality of the tree, and the earth, and a practice that stretches back into the ages (or at least the 19thC).
See my response to Krist directly above. I respectfully decline your invitation.

Hazel Meade writes:

There is one major benefit of artifical trees that often goes unmentioned:

Artificial trees don't shed needles all over your carpet that are impossible to completely remove and then become dry and stab you in the foot when you walk barefoot on them.

Kitty_T writes:

I notice the studies didn't appear to address storage space for an artificial tree. That alone dictated natural trees when we lived in NYC.

My husband's family would head for the woods on their farm each December, find a tree, name it Fred, chop it down, drag it home through the field, and then warm up with hot toddies. I guess that's the best case scenario on most fronts (enviro, cost, and enjoyment).

We actually did extensive charts comparing real v. artificial trees before we switched to a fake one. We both had a strong, irrational aesthetic & sentimental attachment to real trees, but switched 5 years ago. (We wanted something quite tall in our current house, which shifted the costs significantly, and the annoyance of stringing lights & needle clean up factored in more than we expected.) We don't regret it. I would advise, though: GET LED LIGHTS. The lights are a pain to fix or restring when they burn out.

I'm still looking for some replacement of the scent, though.

Happy Holidays to all!

Michael Crone writes:

I saw artificial trees for rent in a shopping mall this season. I had never seen that before.

JayT writes:

I don't buy the argument that a fake tree is easier to set up and take down than a real one. When I buy a real tree I go to the hardware store down the street, grab the first seven foot tree (still wrapped in the mesh to make transportation easier) I see, toss it in my trunk and take it home. Once home, I stick it in the stand and cut off the mesh. From leaving my house to having a tree it's like a half hour. When I want to get rid of it, I take it off the stand and drag it to the street corner. Maybe five minutes of work.

With an artificial tree I would have to dig through my basement to find it and then set it up, which in my experience, takes a good amount of time. When I want to take it down it's the same thing only in reverse. Then you have to add in the storage the other 11 months out of the year.

I actually have both a fake tree and a real one, and I find the real one to always be less of a hassle and always looks better. Obviously, the real tree is more expensive over time, but I think you also get better quality for that extra money. Of course, I've only been buying trees for about ten years, so maybe my tune will change five years from now.

Jon Heuch writes:

ah the cost benefit analysis; don't buy a tree at all - artificial or natural! With 0 cost who can beat my smugness of enjoying Xmas without one?

By the way, I took my natural tree on to my lawn yesterday and then, as I do every year, put a match to it. Yes, that is the best part of the natural Christmas tree - it feeds my pyromania. However it also gives me palpitations whilst it remains in the house. It's very much a case of "don't try this one at home".....unless you wish to call your local fire fighters.

David R. Henderson writes:

@Jon Heuch,
ah the cost benefit analysis; don't buy a tree at all - artificial or natural! With 0 cost who can beat my smugness of enjoying Xmas without one?
Pillar #7: The value of a good or service is subjective. Yes, I could save on cost, but then I would give up a bigger benefit.
Yes, that is the best part of the natural Christmas tree - it feeds my pyromania.
Sounds neat. I’m not sure I can do it legally where I live.

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