Is going on vacation worth it? My husband and I have two young children (ages three and five). I estimate that in order to spend a nice long weekend in a warm place—factoring in airfare, hotel, car rental, meals, etc.—we’re looking at spending around $4,500. I love the idea of getting away and creating some nice family memories, but then I think about $4,500 and compounding interest and wonder if it’s really worth it. Will I be happier saving that money for retirement?
As someone who has relatively recently vacationed in warm place with children of a similar age, I urge you to first consider the reality of such a vacation, which I find generally involves a search for indoor arcades and meltdowns about the taste of the sand. (Business idea: Resort with edible, flavored sand.)
I think you are on the right track with thinking about retirement–but you haven’t gotten specific enough. I’m assuming you are around 30 or 35 years old. If you invest that $4,500, you can expect a return of maybe three times the original amount by the time you retire. So now the question is: spend $4,500 now or have $13,500 at retirement.
What are you going to do with your $13,500? If you think you will need it for the basics—a place to live and food to eat—then clearly the fiscally responsible thing is to save it. If, as I suspect is more likely, you’ll be spending at least part of it on recreation, then the question is basically whether you want a nice vacation now or a much nicer vacation later.
In fact, you don’t have to project all the way to retirement. If you saved this money now, in a decade you’d have enough for a slightly nicer vacation.
Of course, in 10 years your children will be surly teenagers who are not speaking to you and would rather “vacation” in their virtual reality headsets. I think this probably gives you your answer. You won’t have much time to enjoy your kids at this age. Spend the money and go.
Some of the most tantalizing, not to mention affordable, tourism destinations are in countries with spotty human rights records—especially on LGBT issues. (Two good example of this is are Jamaica and Indonesia.) While I may be insulated by Westerner status or the walls of all-inclusive resorts, I do worry that my dollars may end up supporting governments that oppress their people, and leaders who abuse and marginalized minority communities. Even when I myself am not part of the particular communities singled out, I still feel guilty. How can I reconcile my ethical obligations with budgetary concerns?
I am delighted, if somewhat concerned, that you would come to an economist with a question about ethics. Sadly, the basic economic framework doesn’t really put a value on your ethical obligations. But I think this is a problem we can tackle, with a bit of reframing.
In economic terms, what I hear you saying is that you put some value on the treatment and experiences of marginalized communities. You also value your vacation quality. Given your budget, you’d like to pick the vacation with the highest total utility–taking into account both of these concerns.
These goals need not necessarily be in conflict, but I understand the dilemma: If you spend your tourism dollars in a country, some of that money goes to the government, and they may use it to continue to oppress their people.
So the real question is: Is there anything you can do to get the total utility of your Jamaica vacation that would be equal to the utility you would get from a destination that’s more expensive, but has a better ethical profile?
I think the answer is yes. It probably lies in trying to offset any harm you might do with donations to organizations working to improve these issues. Go to Jamaica, understanding some of your tax dollars will be spent badly, but at the same time donate some funds to an LGBT rights nonprofit. Given the way government funds are spent, it’s likely that a very small donation would offset any harm from the misuse of your tourism dollars.
There is a deeper ethical question here about whether you should boycott such places on principle, in the hopes that others would follow your lead and this would force repressive governments to change. But in practice, I think this is impractical given that many tourists do not share your concerns. In the end, the answer is all about utility: take the vacation, and make a donation.
Emily Oster is an associate professor of economics at Brown University and the author of “Expecting Better: Why the Conventional Pregnancy Wisdom Is Wrong — and What You Really Need to Know.
Got an everyday problem that could use an economist’s point of view? Send Emily your questions at firstname.lastname@example.org.