Christmas quiz
Our Christmas quiz covers an eclectic mix of topics, many related to economics and business, in 12 questions. The answers and a brief explanation of the factors at work are provided at the end.
1. The nineteenth century Scottish historian and philosopher Thomas Carlyle dubbed economics the “dismal science”. Generations of economists have sought to live up to that definition, perhaps no more so than Joel Waldfogel, who, in 1994 published an article titled “The Deadweight Loss of Christmas” in the American Economic Review. In it, Mr Waldfogel calculated the loss of welfare involved in giving presents at Christmas. The calculation is based on the idea that, on average, the value of a gift to the recipient is less than the cost of the gift to the purchaser. This leads as to the very dismal conclusion that money is the most efficient gift of all. Using Mr Waldfogel’s approach, how much was wasted because of gift-giving in the UK last year?
a. £0.1bn
b. £1.4bn
c. £3.0bn
d. £4.2bn
2. Gross Domestic Product (GDP) is the main measure of economic activity. Many alternative indicators have emerged that purport to give more timely information on the state of consumer spending. Which one of the following has not been used as a measure of consumer activity?
a. The lipstick index
b. The men’s underwear index
c. The tie index
d. The glove index
3. The pandemic has caused a step change in levels of homeworking in many countries. A 2022 survey of US workers by Work from Home Research found that people who worked from home saved an average of nine minutes a day on personal grooming. According to the survey, what was the most popular way of saving time on personal grooming?
a. Not brushing teeth
b. Not showering
c. Not wearing deodorant
d. Wearing dirty clothes
4. Which one of the following champagnes came top in Which? magazine’s blind taste test this year?
a. Tesco Finest Premier Cru Champagne – £23 a bottle
b. M&S Delacourt Brut Champagne – £25 a bottle
c. Lanson Le Black Label Brut – £36 a bottle
d. Moet & Chandon Brut Imperial – £39 a bottle
5. There have been more Google searches for the word ‘strike’ in the UK this year than in any comparable period since 2004. With strikes across essential public services, from the railways to the Royal Mail, industrial unrest is becoming increasingly common. How many working days were lost to strike action in September, the latest month for which official data are available?
a. 205,000
b. 3.1m
c. 1.6m
d. 11.7m
6. Energy prices have soared this year, causing governments in Europe to step up the transition to renewables. How does the cost of electricity generated by gas compare to the cost of electricity generated from new wind turbines?
a. Gas costs five times as much as wind power
b. Gas costs twice as much as wind power
c. Gas costs roughly the same as wind power
d. Gas costs are about 80% of the cost of wind power
7. Which currency has featured the North Pole, the home of Santa Claus, on one of its banknotes?
a. The Norwegian krone
b. The Canadian dollar
c. The Danish krone
d. The Finnish euro
8. The Bank of England is expected to announce a 50bp (0.5%) increase in interest rates when it meets on 15 December. How many times has the Bank raised interest rates since last November’s low of 0.15% to reach the current level of 3.0%?
a. 2
b. 4
c. 8
d. 11
9. Several UK MPs have announced that they do not intend to stand at the next election. Of the four constituencies below, two are the safest Labour and Conservative seats (by the size of the majority at the last general election in 2019 relative to total votes cast) and two are the most marginal Labour and Conservative seats. Which is which?
a. Bury North, Greater Manchester
b. South Holland and The Deepings, Lincolnshire
c. Liverpool Walton, Liverpool
d. Bedford, Bedfordshire
10. With the FIFA World Cup underway football fans are experiencing the ups and downs of following their national teams. In 2018 a paper by economists Peter Dolton and George MacKerron attempted to quantify the effects on the happiness of fans of their teams’ successes and failures. Which one of the following activities has a similar effect on people’s self-reported happiness as a football fan experiences when their team wins?
a. Watching TV or a film
b. Listening to music
c. Theatre, dance or a concert
d. Sports, running or exercise
11. The UK price of three of the four following items rose by more than 20% in the year to October. Which item has fallen in price in the last year?
a. Natural gas
b. Self-raising floure
c. Second-hand cars
d. Butter
12. The Economist Intelligence Unit’s Worldwide Cost of Living Survey gauges the cost of a representative list of goods and services in 173 cities across the world to compare the cost of living in different places. Which among the following cities was ranked as the costliest place to live in the world in this year’s survey?
a. New York
b. London
c. Tel Aviv
d. Damascus
Answers
1. The nineteenth century Scottish historian and philosopher Thomas Carlyle dubbed economics the “dismal science”. Generations of economists have sought to live up to that definition, perhaps no more so than Joel Waldfogel, who, in 1994 published an article titled “The Deadweight Loss of Christmas” in the American Economic Review. In it, Mr Waldfogel calculated the loss of welfare involved in giving presents at Christmas. The calculation is based on the idea that, on average, the value of a gift to the recipient is less than the cost of the gift to the purchaser. This leads as to the very dismal conclusion that money is the most efficient gift of all. Using Mr Waldfogel’s approach, how much was wasted because of gift-giving in the UK last year?
a. £0.1bn
b. £1.4bn
c. £3.0bn
d. £4.2bn
Answer: c – £3.0bn. Joel Waldfogel estimated that 10% of the value of gifts given at Christmas is wasted or, in the terminology, deadweight loss. In 2021, there were 54.5m people over-15s in the UK and the average adult spent £548 on Christmas presents. 10% x 54.5m x £548 = £3.0bn.
2. Gross Domestic Product (GDP) is the main measure of economic activity. Many alternative indicators have emerged that purport to give more timely information on the state of consumer spending. Which one of the following has not been used as a measure of consumer activity?
a. The lipstick index
b. The men’s underwear indexw
c. The tie index
d. The glove index
Answer: d – The glove index. The glove index is imagined, the other three have, at various times, been used to gauge consumer spending. The idea for the lipstick index came from Leonard Lauder, chairman of the board of Estee Lauder, in 2001, who saw lipstick as an affordable indulgence, sales of which he argued would rise in a downturn. The men’s underwear index is based on the opposite notion – that sales of men’s underwear are cyclical, falling in a downturn as men economise by deferring new purchases. The tie index came into being in the 2009 global financial crisis. Sales of ties were seen then as a measure of job insecurity, as City workers abandoned the ‘dress down’ ethos of the dotcom era for greater formality – presumably in an attempt to hang onto their jobs.
3. The pandemic has caused a step change in levels of homeworking in many countries. A 2022 survey of US workers by Work from Home Research found that people who worked from home saved an average of nine minutes a day on personal grooming. According to the survey, how did most people save time on personal grooming?
a. Not brushing their teeth
b. Not showering
c. Not wearing deodorant
d. Wearing dirty clothes
Answer: b – Not showering. 15% of people reported that they save time by not showering when working from home, 7% did not use deodorant, 6% wore dirty clothes and 5% said they did not brush their teeth.
4. Which one of the following champagnes came top in Which? magazine’s blind taste test this year?
a. Tesco Finest Premier Cru Champagne – £23 a bottle
b. M&S Delacourt Brut Champagne – £25 a bottle
c. Lanson Le Black Label Brut – £36 a bottle
d. Moet & Chandon Brut Imperial – £39 a bottle
Answer: a – Tesco Finest Premier Cru Champagne. Despite being one of the lower cost brands tested, Tesco’s champagne came out on top with Which’s experts noting that it has hints of brioche and roast apples and a nutty finish.
5. There have been more Google searches for the word ‘strike’ in the UK this year than in any comparable period since 2004. With strikes across essential public services, from the railways to the Royal Mail, industrial unrest is becoming increasingly common. How many working days were lost to strike action in September, the latest month for which official data are available?
a. 205,000
b. 3.1m
c. 1.6m
d. 11.7m
Answer: a – 205,000 total working days were lost due to strike action in the private and public sectors this September. In August 356,000 days were lost, the highest monthly tally since July 2014 when over a million public sector workers took part in strike action. However, September’s total is low by the standards of the 1930s, the 1970s and the 1980s. The worst month for strikes was September 1979, following the Winter of Discontent, with a total of 11.7m days lost. In October 1984, at the height of the miners’ strike, 3.1m working days were lost to strike action. 1.6m days were lost to strikes in March 1944. Perhaps surprisingly, strikes were more common during the war than they have been in the last two decades.
6. Energy prices have soared this year, causing governments in Europe to step up the transition to renewables. How does the cost of electricity generated by gas compare to the cost of electricity generated from new wind generation capacity?
a. Gas costs five times as much as wind power
b. Gas costs twice as much as wind power
c. Gas costs roughly the same as wind power
d. Gas costs about 80% as much as wind power
Answer: a – Gas costs five times as much as new wind power. The UK government auction recently secured a new 7GW of offshore wind capacity at a price of £44/MWh. This is one-fifth the cost of electricity generated from natural gas last week, of £216/MWh. New wind capacity is cheap at current gas prices, but wind power is less flexible and reliable than natural gas which can be turned on and off to meet demand.
7. Which currency has featured the North Pole, the home of Santa Claus, on one of its banknotes?
a. The Norwegian krone
b. The Canadian dollar
c. The Danish krone
d. The Finnish euro
Answer: a – The Norwegian krone. The 1994 version of the Norwegian 200-krone note featured the North Pole, along with the aurora borealis and Birkeland currents, on the reverse. The note also featured Kristian Birkeland, a Norwegian scientist renowned for his theories of electric currents that explain the natural phenomenon of the aurora borealis.
8. The Bank of England is expected to announce a 50bp (0.5%) increase in interest rates when it meets on 15 December. How many times has the Bank raised interest rates since last November’s low of 0.15% to reach the current level of 3.0%?
a. 2
b. 4
c. 8
d. 11
Answer: c – 8. The Bank has announced eight increases in interest rates since last December comprising one 15bp move, four 25bp hikes, two 50bp hikes and one 75bp hike. The last time the Bank raised interest rates so many times in one year was in 1988. That tightening cycle, which continued through 1989, led to a recession and a crash in house prices.
9. Several UK MPs have announced that they do not intend to stand at the next election. Of the four constituencies below, two are the safest Labour and Conservative seats (by the size of the majority at the last general election in 2019 relative to total votes cast) and two are the most marginal Labour and Conservative seats. Which is which?
a. Bury North, Greater Manchester
b. South Holland and The Deepings, Lincolnshire
c. Liverpool Walton, Liverpool
d. Bedford, Bedfordshire
Answer: Liverpool (c) is the safest Labour parliamentary seat, where Labour MP Dan Carden took 85% of all votes cast at the 2019 election. South Holland and The Deepings in Lincolnshire (b) is the safest Conservative seat in the country, where Conservative incumbent John Hayes won 76% of the vote in 2019. Bury North (a) has long been a marginal seat, typically being won by the party that wins power nationally. It is currently held by Conservative MP James Daly with 46.2% of the vote against Labour’s 46.0%. Bedford is an ancient seat, its first MP, in 1295, was John Cullbere. The current MP, Mohammad Yasin, held the seat for Labour in 2019 with 43.0% of the vote against 43.0% for the Conservative candidate.
10. With the FIFA World Cup underway football fans are experiencing the ups and downs of following their national teams. In 2018 a paper by economists Peter Dolton and George MacKerron attempted to quantify the effects on the happiness of fans of their team’s successes and failures. Which one of the following activities has a similar effect on people’s self-reported happiness as a football fan experiences when their team wins?
a. Watching TV or a film
b. Listening to music
c. Theatre, dance or a concert
d. Sports, running or exercise
Answer: b – Listening to music. The authors found that football fans saw a four-point improvement in their happiness on a scale of 0–100 scale in the hour following their team’s win, the same as the uplift to happiness from listening to music. Sport is associated with a seven-point improvement in happiness and theatre and dance or a concert an eight-point gain. Fans who are in the stadium gain an even greater uplift to happiness, of ten points, when their team wins. This is second only to ‘intimacy’, which yields a 12-point improvement in happiness. Unfortunately for fans, when their team losses their happiness falls by eight points, far more than the four-point uplift from winning. This finding leads the authors to question whether following a football team is rational.
11. The UK price of three of the four following items rose by more than 20% in the year to October. Which item has fallen in price in the last year?
a. Natural gas
b. Self-raising flour
c. Second-hand cars
d. Butter
Answer: c – Second-hand cars. The price of second-hand cars fell by 2.6% in the year to October, according to the Office for National Statistics. Second-hand car prices rose sharply in 2021 due to a shortage of new cars caused by disrupted supply chains. More recently the squeeze on consumer incomes has hit spending on cars, and second-hand car prices have edged lower. In the last year the price of natural gas has risen by 80%, self-raising flour by 38% and butter by 27%.
12. The Economist Intelligence Unit’s Worldwide Cost of Living Survey gauges the cost of a representative list of goods and services in 173 cities across the world to compare the cost of living in different places. Which among the following cities was ranked as the costliest place to live in the world in this year’s survey?
a. New York
b. London
c. Tel Aviv
d. Damascus
Answer: a – New York. It tied with Singapore as the most expensive city in 2022. London was ranked in 27th place. Tel Aviv, last year’s most expensive city fell to third place in the ranking. Damascus, which is about 300km from Tel Aviv, was once ranked as the world’s cheapest city.
OUR REVIEW OF LAST WEEK’S NEWS
The UK FTSE 100 equity index ended the week up 0.9% at 7,556, its highest level since June.
Economics
- The EU approved a cap on the cost of Russian oil at $60/barrel. The agreement includes a mechanism to keep the price cap 5% below market rate and aims to cut Russia’s income from oil sales
- Consumer price inflation in the euro area fell more than expected to 10.0% in the 12 months to October
- Euro area producer price inflation, which measures the change in ‘factory gate’ prices, fell by 2.9% from September to October, adding to hopes that inflation has peaked
- Following protests in China against the government and continued COVID-19 restrictions, the Chinese government signalled a more pragmatic approach to controlling the spread of the virus, relaxing restrictions in a number of cities
- Surveys of purchasing managers that are compiled by the Chinese government suggest a further deterioration in the manufacturing and services sectors activity in November as COVID-19 restrictions continued to hamper businesses
- The US economy added a greater-than-expected 263,000 jobs in November leaving the unemployment rate unchanged at 3.7%
- The resilience of the US labour market strengthens the case for the Fed to continue raising interest rates. However, earlier in the week the head of the Fed hinted that the bank may ease up on the pace of tightening as early as this month’s rate-setting meeting
- UK house prices fell at their sharpest rate since early days of the pandemic, down 1.4% from October to November, according to figures from Nationwide. This follows a fall of 0.9% the previous month
- The UK government has recruited just 59% of its target for secondary school teachers trainee
- Over 10,000 UK ambulance workers voted to take industrial action in a dispute over pay and staffing. Separately, data showed that the percentage of patients waiting in ambulances outside hospitals for over an hour hit a record high
- UK prime minister Rishi Sunak has set up a dedicated unit to respond to strikes
- Food banks across Europe are being forced to turn away new applicants in the face of overwhelming demand, the FT reports
- The average Christmas dinner in the UK this year will be 22% more expensive than last year, the BBC reports
Business
- US chipmaker Intel is offering many of its staff in Ireland three months unpaid leave as it seeks to cut costs amid falling global demand for semiconductor chips
- UK retailer John Lewis announced a joint venture with investment manager Abrdn to build 1,000 homes for rent in a bid to diversify away from retail
- Private equity group Blackstone limited withdrawals from its $125bn real estate fund following a rise in redemption requests
- The European Commission threatened to ban Twitter unless it enforces strict content moderation rules, the FT reports
- UK economic secretary to the treasury Andrew Griffith indicated that rules on ringfencing of retail banks, introduced after the global financial crisis, would be eased. The move is seen as a bid to make the City of London a more competitive global financial centre
- Oil major Total said it would cut investment in the North Sea by a quarter in response to the UK government’s windfall tax on oil and gas profits
Global and political developments
- US president Joe Biden said that he would be willing to talk to Russian president Vladimir Putin about ending the war in Ukraine if Mr Putin expresses an interest in concluding the conflict
- The EU must change its rules on state aid to counter the competitive impact of the US’s new $369bn climate package, European Commission president Ursula von der Leyen said on Sunday
- French president Emmanuel Macron has called US president Joe Biden’s package “super-aggressive”
- South African president Cyril Ramaphosa faced calls to resign after an investigation found he may have broken anti-corruption laws following a scandal relating to the theft of $500,000 in cash that was concealed in a sofa in his house
- The UK government is set to pay around £100m to buy out a stake in a planned nuclear reactor held by China’s state-owned energy company CGN as the country aims to reduce Chinese involvement in critical infrastructure, the FT reports
- UK prime minister Rishi Sunak said that a “golden era” of UK-China relations was over but choose to describe China as a “challenge” rather than a threat
- In a parliamentary by-election in Chester, UK, the opposition Labour Party held the seat with an increased vote share. Veteran psephologist John Curtice predicted that if the swing was replicated at a national level it would deliver Labour a small majority
And finally… a monastery in Thai province of Phetchabun has been left without any monks after they were all expelled after tests showed evidence of the use of illegal drugs – bad habit