Think petrol panic buying was bad? Wait til you see what’s (not) in store this Christmas

It is that time of year again: ice skating, cold, clear blue skies, fairy lights decorating Oxford Street, and fears about having enough Christmas toys on the shelves.

There are two key themes to this year’s scare stories. First, supply problems could lead to a deluge of children missing out on the most popular toys. Second, even if you get your hands on what your toddler wants: get ready to pay through the nose for it.

Often the two are combined, with retailers being accused of price gouging, or of taking advantage of shortages.

There is a kernel of truth in both the price increases and shortages; there are very real challenges in the global supply chain, which are not just confined to the UK.  

But we have been here before. In fact, we are here almost every Christmas.

The prices of the most popular toys, particularly on sites such as eBay, rocket, as parents desperately try to acquire whatever has become the ne plus ultra of the moment.

Four years ago, so-called Grinch bots were accused of stealing Christmas by gobbling up stock of the most sought after toys before selling them on at inflated prices.

That year, the Fingerlings toy monkey was a favourite. Leading retailers ran out of stock completely, and the list price of £14.99 was stratospherically passed on eBay, with deals being struck for £200.

Way back in 2002, it was reported that six of the top ten most wanted toys that year were in short supply, with no prospect of further deliveries from manufacturers across Asia. That time, one piece in The Times claimed this had happened for the last seven consecutive years.

These stories praying on parents’ worst fears of being empty-handed on December 25 have become a yearly occurrence as traditional as the tree and the pudding.

Like the decorations, every year will have its own set of new features. But the regularity of the shortages must mean there is an underlying explanation.

The key feature of the Christmas toy dilemma is that demand is not primarily determined by the prices or quality of the alternatives on offer. What really matters is popularity; every child wants the toy of the moment.

In 1973, the polymath and economic Nobel Laureate Thomas Schelling developed a theoretical model on markets such as these. His paper had the splendid title, “Hockey helmets, concealed weapons and daylight saving”. It was inspired, as many of the best things are, by misadventure.

This time, a star ice hockey player had suffered serious head injuries from a flying puck. Neither he, nor his teammates were wearing helmets. When asked, in the aftermath of the accident, why none of them wore more protection, even when they knew the risks, one answered: “I don’t because the other guys don’t”.

Schelling crystallised this into a mathematical concept he called “binary choice with externalities”. The choice facing an individual is binary: either you wear a helmet or you don’t but your choice affects how other people in your peer group make their choices.  

We’ve seen this cycle repeated in the worst of the panic buying of the pandemic and petrol crisis. One person buys a little more, and another, who sees the queues at the station, does too.

In other words, there’s no need to panic about Christmas shortages. They’re a part of the festive calendar as regular as the Boxing Day hangover. No amount of complaining or regulation will ever change that. 

As published in City AM Wednesday 24th November 2021
Paul Ormerod
Image: pxhere

Share this post



t: +44 020 8878 6333

Alex O’Byrne, Associate at Volterra, is an experienced economic consultant specialising in economic, health and social impact, economic strategy, project appraisal and socio-economic planning matters.

Alex has led the socio-economic and health assessments of some of the most high profile developments across the UK, including Battersea Power Station, Olympia London, London Resort, MSG Sphere and Westfield. He has significant experience inputting to EIAs and s106 discussions as well as drafting economic statements, employment and skills strategies and affordable workspace strategies.

Alex is also experienced at economic appraisal for infrastructure. He was project manager of the economic appraisal for the City Centre to Mangere Light Rail in Auckland. He also led the economic and financial appraisals of the third tranche of the Transport Access Program for Transport for New South Wales, in which Alex developed and employed innovative methodological approaches to better capture benefits for individuals with reduced mobility.

He is interested in the limitations of current appraisal methodologies and ways of improving economic and health analysis to ensure it is accessible to as many people as possible. To this end, Alex recognises the importance of transparent and simple to understand analysis and ensuring all work is supported by a robust narrative.

Alex holds a BSc (Hons) in Economics from the University of Manchester and he was a member of the first cohort of the Mayor’s Infrastructure Young Professionals Panel.


Senior Partner

t: +44 020 8878 6333

Ellie is a partner at Volterra, specialising in the economic impact of developments and proposals, and manages many of the company’s projects on economic impact, regeneration, transport and development.

With thirteen years experience at Volterra delivering high quality projects to clients across the public and private sector, Ellie has expertise in developing methods of estimating economic impact where complex issues exist with regards to deadweight, displacement and additionality.

Ellie has significant experience in estimating the economic impact across all types of property development including residential, leisure, office and mixed use schemes.

Project management of recent high profile schemes include the luxury hotel London Peninsula, Battersea Power Station and the Nova scheme at London Victoria. Ellie has also led studies across the country estimating the economic and regeneration impact of proposed transport investments, including studies on HS2 and Crossrail.

Ellie holds a degree in Mathematics and Economics from the University of Cambridge.