Donuts, an Unlikely Economic Treat?

There’s nothing like a hot coffee and 1$ Dunkin donut around Christmas time. After all, we were all once the young children who begged our parents for the pink Homer Simpson donut. Don’t take my word for it, Dunkin Donuts just announced they’ve sold 2.9 billion donuts this year. So what?

Well, it implies that people really like donuts, and that Donuts may be Adam Smith’s invisible hand responsible for making the economic world go round. Upon further research, however, the billions of dollars generated by the donut business yearly may be what’s responsible for our bolstering economic growth in the past fiscal quarter.

Importance/Relevance:

Adam Smith’s invisible hand metaphor can explain the surprising economic relevance of your local Dunkin Donuts. The invisible hand metaphor helps detail how the needs of consumers can support the greater good, hence the economy. The current Christmas season is only helping push that metaphor, often known as one of the most profitable fiscal quarters of the year with consumers spending billions of dollars on their loved ones. With over 42 donut shops in only a 3-mile radius in U.S. cities, it’s not surprising that the donut industry is currently at its peak, worth a staggering 13 billion dollars. In fact, the donut industry has grown by 5% since last year with over 1,000 new donut shops across the United States.

Therefore, the donut economic loop quickly becomes clear. The current holiday season continues to push consumers to maximize their spending power. After spending hundreds of dollars on retail shopping for family and friends, it doesn’t hurt to pick up the 1.50$ coffee and donut combo. Therefore, Donut sales skyrocket during the holiday season and continue to maximize the potential for the donut industry. In the grand economic invisible hand model, your 1.50$ purchase just supported your local donut shop or franchise and bolstered the U.S. economy. It is the circulation of money by purchasing one donut that contributed to the growth of the economy, as seen by the 5.2% economic growth in the U.S., the largest by any quarter. Your donut purchase just paid for an employee’s wage and supported your local business, hence the invisible hand behind the growth of the U.S. economy.

Now it’s going to get a little scientific. Eating a donut triggers a large dopamine response in our brains. Dopamine is the neurotransmitter that is behind our motivation and pleasure. By consuming the donut, your motivation will increase(artificially) due to the dopamine. It can be argued that donuts increase your motivation to therefore spend more money. Therefore, it’s important to consider that buying the dopamine from the donut resulted in the consumer spending more money and reaping the benefits. This is especially true during the Christmas season when consumers spend thousands of dollars. The billions of donuts sold by the donut industry may be responsible for millions of dollars of monetary circulation between businesses and people.

Pros:

Donuts may be responsible as the main driver of our positive economic trend with over 980 billion dollars spent during the Christmas season this year. It’s important to consider that donut shops aren’t only enjoyed by cops in Boston, NYC, and Los Angeles, but also prevalent and core to small towns. Many of the prevalent donut shops across the U.S. are franchises and small businesses that support families and provide jobs. By buying a donut, your purchase just supported that business, the people working in it, and the economy. After hundreds of thousands of small businesses shut their doors during the COVID-19 pandemic, the survival of small businesses became necessary to the success of the United States as they remain responsible for 17.3 million new jobs. These jobs continue to support the U.S. economy and lower the unemployment rate. It quickly becomes clear that buying a donut doesn’t just fill your taste buds but supports your local community.

Cons:

It’s important to consider that despite supporting the economy, the donut industry is still one that hangs on by a thread. As we saw in the COVID-19 pandemic, the food industry was crippled, losing billions of dollars within the span of two years. The donut industry is still viable under those same conditions and could hurt the economy if crippled once again due to external environments. However, the donut industry continues to evolve through deliveries and is expected to grow by billions of dollars by 2032. So the next time you see a donut, tell your mom/dad that you’re supporting the economy, one donut at a time!