Black Friday from MHCC Resident Economist’s View

What can I, as the Resident Economist at MHCC, say about Black Friday? I was asked this Monday to write a short article for this week’s paper because someone backed out from writing some other article. So, this hastily written article is being done by a backup.

By now, every practicing economist (or so-called economist) in the country has already given you the all the approaches that you want to read, hear, or see: The TV news showed you thousands of shoppers waiting for hours for the Washington Square mall to open at midnight. You saw the fights inside Walmart for phones. You saw the protests outside Walmart for better working conditions for employees barely making minimum wage. One store employee I know said the event was like a flash mob. YouTube videos on the topic run into the thousands, as people documented their experiences. Supposedly, sales supposedly were brisk, but a bit down on Friday, yet up during Thursday and the preceding week when there were pre-Black Friday Sales. Wi-Fi was slow on Monday morning as people took advantage of “Cyber Monday.” Experts gave their opinions as to the causes of whatever happened and gave their explanations that the slow economy meant people had to buy early or not at all or that people shopped on Black Friday because they had more money to spend this year. Mike Mata from the Advocate previously wrote about Grey Thursday and deplored the loss of Thursday gatherings.

So, what is my take on Black Friday? For the first time in years, I did not stay up late or get up early for the big Black Friday sales. By the time I made the annual pilgrimage to Fred Meyer for the half-price sock sales, there was still plenty of merchandise available and there were no crowds. When I passed by OfficeMax, there was no crowd like there was five years ago, when the line ran for nearly a half mile.

As a crazy economist, I actually like to go to these sales to see what I can learn about how people behave! I rarely buy anything, but it is interesting to try to figure out what is going through the minds of the shoppers. I feel sorry for some of the people I see who know that if they don’t get their desired phone from Wal-Mart they will not be able to afford a new phone at all. I muse at the amount of stuff people buy, the rampant consumerism. Can they afford it? I wonder. Have they made careful economic decisions about what they bought? Will they really be able to pay the credit card bill when it comes in January?

It seems as though the better deal that shoppers get, the better they feel. Otherwise, why would anyone get up early in the morning to buy socks? Isn’t your time worth something? In economics, we call this opportunity cost – the time you spend buying something has a value – which should be taken into consideration when you buy something. Are Black Friday shoppers the rational consumer upon which economists base their theories?

Stores also like to make a big bang, because it is a lot of free publicity. It doesn’t matter that the publicity is bad, as the case with Walmart. Any publicity is good. If you don’t get your share of the sales, the dollars will go elsewhere and you will not make your target profits.

So, in conclusion, I think of Black Friday as a laboratory, where individual people – both buyers and sellers – make decisions, and I like to see if their behavior is consistent with economic theory. Sadly, I think it is.