Monday, July 22, 2013

Royal Birth to Boost UK Economy by 400 Million?

Now, I have nothing but the best wishes for William and Kate and their new son, but I have to ask, does anyone find the idea that the birth of a baby, even a royal baby, boosting the economy by around $400 a bit absurd?  Granted, I do not deny that the British Royal family is a powerful marketing tool; my mother, who like many women has a predilection for all things royal, has ceremonial wedding dolls of William and Kate. Yet the idea that the economy is actually boosted by one individual, an event or some such is just too hard to take seriously.

Yes memorabilia will see an uptick in sales, however, this is a one time thing, which is even admitted by the researchers, and one thing that consistently seems to be ignored by the newspapers is the concept of 'opportunity cost'.  How much of the memorabilia, programs, events and other items that are sold actually generate a profit that is higher than the item/event that was not created/put together in order to capitalize on the royal baby frenzy?  Frankly, I don't know, and perhaps there is an actual boost to the economy, but I am of the opinion that we should ignore one time events - (short of a Katrina/2004 Indian Ocean Tsunami event).


  1. not $400.


    a royal birth boosting the national economy by four hundred dollars would actually make more sense.

  2. If Kim Kardashian can make 18 million for her wedding day, the royal baby can make 400 million, I have no doubt. That might even be an underestimate.
    We're living in a bread and circuses world, on steroids.

    1. The question isn't whether the Prince and Princess could make $ 400 million from the birth of their baby. The question is does it actually spur $ 400 million in real economic growth. You need to think of the opportunity cost here. What economic production, that actually results in sustainable long term increases to GDP, was lost for capitalization on a momentary fad.

      This idea that the royal birth is actually increasing GDP is essentially a variation on the broken window fallacy.

    2. The article doesn't suggest a "sustainable long term increase in GDP", but a "temporary, small positive boost" due to the "upgrading of prams" and such. Optimism alone can provide a "temporary small positive boost" in spending, and when the money comes from abroad, it's someone else's broken window, fallacy doesn't apply.

      Look no further than our entertainment industry for an example. Same principle, smaller scale.

    3. Most of the money being spent on the birth, weddings or anything else royal is not foreign money it is internal spending, so yes, the broken window fallacy still applies.

      And I repeat that you need to consider what is being forgone for this 'temporary small positive boost'. There is the assummption that money being spent on items related to this royal birth is money that wouldn't have been spent anyways.


Disagreements and countervailing views are welcome, however, comments will be deleted if:

-They have emoticons.
-If it is obvious that you have not read the post.
-Obvious Spam, and it takes me about a quarter second to determine if it is spam since you all write your comments the same way.

About Me

My photo
Seattle resident whose real name is Kevin Daniels. This blog covers the following topics, libertarian philosophy, realpolitik, western culture, history and the pursuit of truth from the perspective of a libertarian traditionalist.