Why We Spend So Much to “Scare” Each Other: The Economics and Psychology of Halloween

Photo Credit: History.com

Introduction written by Shreyal Bhagwat 

Conclusion written by Michelle Yu

Psychology Paragraphs written by Michelle Yu 

Economics/Business Paragraphs written by Shreyal Bhagwat

Edited by Shreyal Bhagwat

You are walking through a store or scrolling online and see the exact halloween costume you’ve been wanting. However, it costs more than you expected. It’s not worth it, right? Yet somehow, people spent $11.6 billion on Halloween in 2024, from candy to decorations to elaborate costumes. Not only that, but you might have even found yourself thinking about which costume you want to get this year, even though you’ll probably only wear it once. You’re not alone in wondering why we go all out for one night. Psychology and economics have some pretty interesting answers for why Halloween pulls so much money and excitement out of us.

Mind Games: The Psychology Behind Fear

Catharsis Theory

It was a dark and stormy night, and you’re watching your favorite horror movie after trick-or-treating with your friends. Why are you watching the horror movie though? What’s so interesting about it? That’s where catharsis theory comes into play. The theory of catharsis states that by expressing or “purging” our emotions out, we are able to get a sense of relief from it. We don’t always have to be the ones to do the expressing though. Instead, we can live vicariously through characters in situations that may be somewhat similar to ours, even if it doesn’t appear that way on the surface. This way, we can express ourselves without having to deal with all of the consequences that would appear if we did it in real life. For example, say that there was a horror film about two best friends, and they get into a situation together trying to find their third member of the trio that went missing recently. Along the way, one of the members of the trio lashes out on the other out of frustration beyond just the situation. If you’re dealing with a situation like this, then you might find relief seeing this person lash out on her friend, and you can get that psychological relief without having to worry about the consequences of actually lashing out to your friend. 

Uncanny Valley 

You know those animatronics that you see in Spirit Halloween that kind of look like people, but something feels off about them? That’s the theory of the uncanny valley. The uncanny valley describes the uncomfortable sensation that people feel when they see something that looks almost human, but something seems off about them that makes you anxious. It is thought that we have this innate fear for things like the uncanny valley because of the innate need we had long ago to identify diseases or things that aren’t human, and although some people aren’t as alarmed by these entities as others, they sure scare me! Anyways, this is often found in horror movies to scare the audience, or in creepy dolls such as the Annabelle doll. This uncertainty on whether or not we can trust the beings creeps us out, making us repulsed towards those that exhibit the horrifying uncanny valley.

Sensation Seeking Personality Trait

Do you have a friend that is definitely petrified about anything even slightly related to horror, and yet another friend that seems almost completely unfazed by the jumpscares? Well, the two of your friends vary in something called your sensation seeking personality trait. This trait defines how willing you are to take risks and feel the sensation of thrill and excitement. For those with a strong sensation seeking trait, they are more likely to either be unfazed by the jumpscares or be fond of them, and might partake in more risky activities. For the friend that hates horror, then they might have a lower sensation seeking trait, leaving them to abstain more from these horrific activities. Those with a strong sensation seeking ability may take more big risks with things like financial decisions later on, yet it also leaves a bigger risk for loss and consequences. Although a balance is ideal, some people tip one way more than the other, and that’s okay! This Halloween, embrace your sensation seeking and run to or away from the scare actors, and have fun!

Candy, Costumes, and Capitalism

Seasonal Demand and Price Elasticity

Have you ever noticed how Halloween costumes and candy suddenly become more expensive as October approaches? That’s because Halloween only comes once a year, and businesses know people are willing to pay more during this short period. This is called seasonal demand, where the desire for a product spikes at a specific time. Economists also talk about price elasticity, which measures how sensitive people are to changes in price. If demand is elastic, people buy a lot less when prices rise. If demand is inelastic, people keep buying even when prices go up. Halloween products are relatively inelastic because the experience is limited and time-sensitive and missing out isn’t really an option for people.  This is because the experience is limited and time-sensitive. Missing out on Halloween is not an option for many, so we’re willing to spend extra to join in the fun. Think about it: you might grumble at the price, but you’ll probably still buy that costume you want to go trick or treating in with your friends.

Limited Supply and Scarcity Pricing

Have you ever tried to buy a popular Halloween costume only to find it sold out? That happens because some products are made in small quantities, which is called limited supply. Limited supply means there are only a certain number of items available, and businesses know this makes people want them even more. This leads to scarcity pricing, where items that are hard to get can be sold for higher prices. People are willing to pay extra for something rare because it feels special and they don’t want to miss out. Companies use this strategy a lot during Halloween, releasing certain costumes, decorations, or collectible items in small batches. The limited supply creates excitement and urgency, which encourages people to buy quickly. By controlling how much is available, businesses can drive up demand and make the Halloween season much more profitable.

Selling Experiences, Not Just Products

Halloween is not just about selling candy or costumes. Businesses make money by turning fear and excitement into a product. Haunted houses, escape rooms, and themed events all have costs to run, but companies can charge premium prices because people value the experience itself. This is part of the experience economy, where the focus is on selling memorable moments rather than physical goods. By offering limited-time, immersive experiences, businesses increase revenue and attract customers who might also spend on related items like food, merchandise, or exclusive tickets. Halloween is a way for companies to make emotions profitable.

Conclusion

On the surface, Halloween just looks like a fun opportunity to get candy, dress up, and have fun with your friends, when actually, it’s so much more than that. Today, you might like to get scared  by that rush of adrenaline or go to the store and spend money for the fun of it, but either way, we feel entertained and even nostalgic at times by engaging in Halloween. Whether you are a Halloween fanatic or plan to stay in with hot chocolate and watch a non-scary movie, we hope you think about the reasons why we celebrate Halloween like we do. Happy Halloween, curious minds!