What Halloween Taught Me About Economics

There are few childhood memories cherished quite like those of Halloween. For one glorious, spooky night, kids around the country get to take a break from the mundane day to day and step into a world where they can become anyone they want to be. Whether dressed as a goblin, ghoul, witch, princess, kids are delighted to go door to door asking their neighbors for candy.

For my younger self, it wasn’t just the costumes, candy, or staying out way past my bedtime that made me love Halloween so much; it was also the fun that was to come afterwards. 

The Invisible Hand of Trick or Treating

I grew up in a family with five kids and at the end of every Halloween night, we would all come home and empty our loot onto the living room carpet. Giant mounds of sugary treats were formed in front of each child as we gazed at each other in wonder. Halloween isn’t the only holiday where children get goodies. In fact, every year mine and my siblings’ Christmas stockings were overflowing with treats. But something about the act of trick or treating made this candy different.

We had, in a very real sense, worked for this sugar-filled haul. They say time is money, and the hours spent walking from house to house could be quantified by the fruits of our labor, or perhaps fruit-flavored candy of our labor is a more appropriate way to say it.

Halloween is dictated by understood but unregulated, rules. No one is forced to participate in the trick-or-treating festivities. Houses that wish to take part in the fun know to turn their porch light to signal to trick-or-treaters. And if someone runs out of candy before the night is over, the porch light goes off and trick-or-treaters move on. 

It is also understood that in order to receive candy, you have to dress up. And if you don’t, it is possible that you might be turned away from a house without any candy.

If only Adam Smith were alive to see that much like the market, there is a sort of invisible hand guiding the rules of Halloween. 

Trick or Treat Transactions

Growing up in a big family was great for a lot of reasons, but especially on Halloween because more kids equals more candy. Our parents never forced us to share with each other, it was understood that each of us had dominion over our own haul. But we did love to trade with each other.

The first thing we did after dumping out our candy was to separate the goodies into different piles: the Milky Ways went with the Milky Ways and the Nerds with the Nerds and so on. Then we would all sit together in a circle and begin our trade negotiations.

Call me crazy, but I have never been a huge fan of chocolate. I am, however, a Skittles and Starburst enthusiast. My siblings on the other hand were big chocolate fans and not so big into the fruit flavored candy like I was. When our personal preferences combined forces, we were able to make trades that benefited each of us.

I traded one brother all my Three Musketeers for his Skittles, and I traded my other brother all my peanut butter cups for his Starbursts. The only chocolate I wasn’t willing to trade was Twix and Snickers, because even a non-chocolate fan like myself loves those. The exchange rate was simple, one for one. Unless, the stakes were higher.

There was always that one house that gave out king sized candy bars. If you wanted a shot at trading a sibling for that, you were going to have to be willing to trade upwards of five smaller pieces of candy. On the other hand, most of my siblings were eager to get rid of their Smarties, which was lucky for me because I loved them. One Mr. Goodbar from me would sometimes get me three-four packs of Smarties from my sister.

When all was said and done and the candy trading floor had closed, everyone was happy. We had engaged in voluntary trades based on our own personal preferences and all parties went to bed happy … as soon as the sugar rush wore off.

Examples of free market economics in action exist all around us, even when we don’t realize they are happening. And there are opportunities to show children how something like Halloween has practical economic lessons. And if parents really want to teach their children about economics this Halloween they can take 25% of the candy haul to cover their “parent tax.”