The perfect holiday – a dream that often turns into into crowded beaches, endless queues, and one lingering question: Was that actually relaxing? If you want to escape the stress of summer vacations this year, economics might offer some inspiration. Four key principles can guide you to greater holiday happiness.
1. Opportunity Costs: What Does the Perfect Sunset Really Cost?
Let’s start early—really early. Picture this: you wake up at 5 a.m. to capture the sunrise over Santorini. Your Instagram post is sure to rack up hundreds of likes and spark green-eyed emojis in the family chat—a nice dose of digital satisfaction. But is it really worth it?
This is where opportunity costs come into play: every decision means giving up the next best alternative. Your photo expedition doesn’t just cost you sleep—it also costs you a peaceful walk along an empty beach or a relaxed espresso with an ocean view. Suddenly, it becomes clear why so many travelers return home feeling stressed. They’ve misused their most valuable holiday resource: they’ve used their time—but they haven’t enjoyed it.
So next time you plan an activity, ask yourself: “Do I really want to do this right now?” Sometimes the answer might surprise you. Sure, you can drink coffee at home. But perhaps that coffee at a cozy harbor café brings more joy than rushing through yet another landmark—especially when it’s your sixth one in a row.
2. Marginal Utility: Why the Fifth Gelato Doesn’t Make You Happy
This brings us seamlessly to the next concept: marginal utility. You’ve survived the ferry ride back to Athens, settled into your room—and now it’s off to the famous gelato stand in the old town. The first scoop? Heavenly. The second? Still fantastic. The third? A bit too sweet. The fourth? Not happiness, but a hint of nausea and regret. You’ve just experienced the concept of diminishing marginal utility.
This concept explains that with many things, each additional unit brings less joy than the one before. And it’s not just gelato—this applies to almost every activity. (Think of museums: “How many more rooms are there?”) If you want to get more out of your vacation, aim for variety—in sights, activities, or restaurants. That way, you stay in the sweet spot of high marginal utility.
3. Sunk Cost: Happiness Begins with Letting Go
Once you’ve mastered the idea of marginal utility, you’re ready for the next economic principle. Imagine this: it’s pouring rain, but you’ve already paid 48 euros for a guided city tour. So you go anyway—soaked and annoyed. A classic case of sunk costs. This concept refers to expenses that have already been incurred and can’t be recovered, no matter what you do next.
From an economic perspective, sunk costs should play no role in future decisions—yet they often keep us stuck in unpleasant situations. We wander through disappointing museums because the entry was expensive. We finish mediocre meals just because we ordered them. Good holidays often begin the moment we allow ourselves to let go of past mistakes.
4. Lucas Critique: Why You Don’t Get What You Planned For
Now to the fourth and final concept: the Lucas Critique. American Nobel laureate Robert Lucas used it to revolutionize economic policy in the 20th century. But the idea also proves surprisingly relevant on holiday—especially when it comes to so-called “hidden gems.” Imagine you’ve been tipped off about a cozy little restaurant in the old harbor—local, quiet, authentic. Perfect. The only problem? Instagram has discovered it too. Cozy? Not anymore.
Lucas argued that people adapt their behavior once they understand how a system works. In other words: when people know “the model,” they change their actions—and that changes the outcome. When enough travelers follow the same advice, the hidden gem becomes a tourist trap. Just like in politics, vacations require taking behavior changes into account.
Rational expectations ultimately mean that you can’t really plan for what makes a holiday special—because the very act of planning can make it disappear. The paradoxical consequence: the more carefully you search for the perfect trip, the less likely you are to find it. Instead, follow your gut, talk to locals, and leave room for chance. This might feel like a rebellious act in the age of hyper-availability and top-10 lists. But even rational economists know that true holiday happiness rarely comes from sticking to a plan.
This article was published in the NZZ am Sonntag on June 15, 2025.
