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Economics of Love and Valentine's Day

By: Cielito F. Habito, PhD
 
The one thing that Wikipedia has to say about Valentine’s Day in the Philippine setting is: “It is usually marked by a steep increase in the price of flowers, particularly red roses.” And we all know how true that is. The shoot-up in price has nothing to do with rising costs of production; it’s all about demand. The phenomenon of Valentine’s Day prices of red roses is one of the best illustrations of the Law of Supply and Demand: If nothing else changes, higher demand will raise the price of a good, while higher supply will lower it, and vice versa. Wherever market forces determine prices, this is a law that simply cannot be repealed, as a past president reportedly wanted Congress to do.
 
As the flower-savvy in or around Metro Manila would know, the area around the Dangwa bus terminal near Dimasalang Street in Manila is the place to go to find a wide variety of flowers, and cheap (especially if one settles for the rejects, which can still be quite good). Truckloads of fresh flowers are transported there daily from La Trinidad, Benguet, whose mountain slopes host a thriving cut-flower industry. What is now the Dangwa fresh flower market with dozens of shops started with a few stalls in the 1970s, relying on flowers sent through the Dangwa passenger buses plying the Baguio-Manila route. A bouquet of roses that would normally cost P300-P400 would see a fivefold hike in price on or before Valentine’s Day, to as much as P1,500-P2,000. Try buying them after dinnertime tonight, though, and you’ll probably be able to get them even below the normal price. That’s supply and demand at work.
 
To many, Valentine’s Day has become an occasion less about loving and more about spending and profits. It used to be an occasion for handmade cards and gifts; now, Valentine’s Day cards and gifts (especially flowers and chocolates) are a multibillion-dollar industry that props up whole economies. Cut-flower exporters like Colombia, Ecuador, the Netherlands and some African countries make the bulk of their export sales revenues during the Valentine season. A survey taken by GE Money among Asians years ago came up with the perhaps unsurprising result that Filipinos celebrate Valentine’s Day the most, among the eight countries surveyed. But it was the Singaporeans who appeared to be the biggest Valentine spenders, with 60 percent of those surveyed indicating that they would spend $100-$500 for the season. In Japan and Korea, women spend more for Valentine’s Day, as it is customary for them to give chocolates to men on that day. (Men return the favor on “White Day” a month later, with a gift of white chocolate or nonchocolate candy.) No doubt, the holiday creates tremendous jobs and profits where it is celebrated, but ultimately, the day is still about celebrating romantic love.
 
Read the full article at http://opinion.inquirer.net/101646/economics-love-valentines-day

2/14/2017