The Economics of New Years Resolutions

As 2016 turns its unpredictable back on us, we now turn to 2017; and with that, for many of us, comes a New Year’s resolution. A New Year’s resolution represents one’s attempt to optimise the way they live their lives in the coming year – a frequent in economics. Yet while many New Year’s resolutions may have fallen by the way side come the end of January,  their impact on the economy will have already been realised.

 

millions of us make the customary “new year, new me” pledge

It’s a well known fact that the strong assumptions made by economic models of rational behaviour do not often hold in reality – until, that is, people turn to their New Year’s resolutions, which are surprisingly predictable in nature. Businesses have become savvy to our predictability in the New Year and, as such, they latch onto our demand for self-improvement to the benefit of their bottom line. While the choice of a single person to embark upon a New Year’s resolution may seem small, the economic effects are amplified as millions of us make the customary “new year, new me” pledge.

Unsurprisingly, the industry that receives the biggest windfall from this seasonal mindset is the fitness industry. Fitness orientated businesses know how much we seek physical betterment at this time of year and have therefore constructed business models to seize upon this opportunity. January brings an increase in gym memberships of between 30% and 50%, with the second week of the month being the busiest of the entire year. This fitness fever brings big business and can dramatically increase gym revenues and profits. However, as many of us know all too well, many New Year’s resolutions are abandoned by February. Should we now feel sympathy for gym owners and fitness instructors who have banked on the continuation of this extra income? Well, not quite. A recent study by Berkeley University entitled “Paying Not to Go to the Gym” found most people who don’t come back do not get around to cancelling their monthly membership plans, convincing themselves they’re only taking a break. There are currently 9 million fitness members in Britain and, with the fitness industry already contributing £4.4 billion to the UK economy, the cumulative impact of such physical improvement resolutions can be significant. With The Gym Group, a fitness chain specialising in flexible contracts, experiencing a 14% increase in revenue from the fourth quarter of 2015 to the first quarter of 2016, clearly the snowballing impact of new year physical betterment is considerable.

But what about the mental side of the traditional New Year’s resolution improvement? The emotive aspect of the “new you” industry relies on exploiting our yearly cycle. Around 3,500 self-help books and audiobooks are released each year, generating millions in revenue; and it seems one book is never quite enough. The most likely purchaser of a self-help title is the same person who purchased one already in the last 18 months. Thus with sales of self-published e-books accounting for 22% of the digital book market in the UK, the impact of increased purchasing this time of year on the economy is clearly substantial.

With a year of slow growth behind us, 2017 brings new possibilities and unknowns. With our New Year’s Resolutions, we try to limit our personal unknowns by committing to a series of goals for the year ahead. Yet, while many of us may falter in our endeavors to reach these goals, we may inadvertently help economic policymakers to limit one of their unknowns and achieve one of their goals: economic growth.

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  • Jamey says:

    At this time it seems like Drupal is the top blogging platform available right now.
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  • Madelaine says:

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  • Hiya! I know this is kinda off topic however , I’d figured I’d ask.
    Would you be interested in trading links
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    Excellent blog by the way!

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    Aw, this was a really nice post. Taking a few minutes and actual effort to make a very good article… but what can I say… I put things off a whole lot and don’t manage to get anything done.

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