The Grinch Recast as Economic Parable

Over at, Art Carden has a brilliant retelling of Dr. Seuss’s “How the Grinch Stole Christmas” (ht: Greg Mankiw). Carden recasts the story as a parable about externalities and property rights.

He starts with the Grinch’s view that Who singing is a nuisance:

He hated the shrieks of the Who girls and boys
For fifty-three years he’d put up with it now—
He had to stop Christmas from coming, somehow.
He asked and he questioned the whole thing’s legality
Then his eyes brightened: he screamed “externality!
He reached for his textbooks; he knew what to do
He’d fight them with ideas from A.C. Pigou.

As regular readers know, Pigou argued that externalities — pollution, singing Whos, etc. — could be addressed by levying taxes that reflect the harm imposed. So maybe, the Grinch might reason, he should help himself to some Who presents and roastbeast whenever they sing.

But wait, as Ronald Coase noted years ago, it takes two to tango … and to create an externality. So the Whos have a rebuttal:

“We know that we’re noisy all through Christmas Day,
But if you don’t like it, it’s you who should pay!
“For we were here first, and homesteaded the rights
To sing, to make noise, and to hang Christmas lights
“The costs of our Christmas joy helped you to save!
They were fully reflected in the price of your cave!”

I am so using this in my class in the spring.

5 thoughts on “The Grinch Recast as Economic Parable”

  1. Art Carden has a great piece on the Grinch saving Christmas,

    using Pigouvian taxes and the bargaining business.

    But it reminds us again that even Coase missed the mark,

    when it comes to things outside of Whoville’s small arc.

    So to Art’s welcome take on a Yuletide tradition,

    We humbly append a climate-change addition:

    Since Whoville Whos’ chanting affects only the Grinch,

    Bargaining is the solution that works in a pinch.

    Climate’s a problem that affects the whole planet,

    Coasian bargaining is much too small to span it.

    A price on carbon is the better path,

    all we need now is the political math.

    Failing that, to be sure, we have the EPA,

    not a first-best choice, still it may win the day.

    To save the world’s Whovilles, we need a solution

    that in the end puts a firm limit on carbon pollution.

    Cap and trade is the most certain way

    to give every Who joy on this and future Christmas Days.

  2. To see the tale of the “Grinch Who Stole Christmas” a delightful and insightful and highly imaginative story, reduced to an insipid economic parable by those devoid of their own imagination, rents my soul.

    Perhaps instead of mining the wealth of others intellectual property, the purveyors of economic propaganda could deign to position themselves in front of their favorite writing devices and plunder their own souls for a glimmer of insight and entertainment upon which to cloak their tedious dogma, that it might become palatable enough to sneak down the gullets of unsuspecting students and others of weak intellectual abilities.

    Ah dear Cindy Who, rest well in your slumbers awaiting a morning of presents and celebrations and know that economist make the Grinch’s tiny heart look like the size of the moon compared to their own miserly wizened organs.

    The irony of economists ripping of the Grinch, must make even Satan smile.

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