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The Economics Behind Valentine’s Day Bouquet “ Inflation”

Romance may not lend itself to logic.

 

Valentine’s Day has never been about saving money. In the U.S. alone, Americans are expected to spend close to US$19 billions on Valentine’s Day, on gifts and entertainment. If there is an occasion that exploits both the heartstring and purse strings of normal folks, it will be none other than 14 February.

The obligation for such spending can easily be explained if one sees relationship as an economy. Like the economy, relationships become “less efficient” with asymmetric information. This asymmetric information occurs when a party has little access to the quality of information of the person she is dating. With that in mind, she refuses to take on any risk until she receives more quality information about the relationship.

Nothing sends a louder signal than an arbitrarily fixed number of roses wrapped to impress. Valentine’s Day hence, presents itself as a large scale coordinated signaling opportunity for relevant parties to reveal such information with a bouquet of roses.

All these will ultimately drive the price of Valentine’s Day bouquets up.

Flower Suppliers
The “ inflation” of Valentine’s Day bouquet begins at the top of the production chain in Singapore.

Florists island wide see Valentine’s Day as a major day to increase their profit for the year. Flower wholesalers recognises that and seize the opportunity to profit from the inelasticity in demand for roses by increasing the cost price of each stalk of rose. This increase in extra 50% to 100% in cost will later be translated down to each gentleman holding a bouquet of roses for their loved ones.

Couriers and florists
For florist that provides flower delivery service on their day-to-day operation, it usually makes economical sense to recruit only a certain number of in-house couriers and florists. This number is usually just enough to cater to the usual amount of orders the florist receives. When demand for flowers surges on Valentine’s Day, there is a need to hire temporary florists and couriers to cope with the high number of deliveries.
This additional cost may also deliver a blow to your wallet for your bouquet of roses.

Late or no deliveries
The massive surge in demand island wide may leave some of the less experienced florists unprepared. With orders usually piling up the week before Valentine’s Day, florists with little experience may end up not having enough time to prepare building up to 14 February. The end result of such circumstances will be a percentage of flower deliveries that are late or worse, not delivered.

Hence, consumers might actually be paying a higher price for a bouquet of flowers to ruin their dinner surprises or the day’s plan. The success of the evening lies quite heavily on the timely delivery of the bouquet that lies entirely in the management of the florists.

With all these being said, the little economic sense to be spending exception amount of money on Valentine’s Day seems apparent. However, according to statistics however, 53% of women would end their relationship if they did not receive anything for Valentines Day. This means that you should probably go ahead with the decision that makes less economical sense, unless you are really sure that your partner belongs in the remaining 47%.

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