The holiday season sparks a significant increase in consumer spending. This year, Black Friday alone saw consumers shell out a record US$11.8 billion. It’s the time of year when many Americans make purchases to decorate for the holidays — lights, ornaments and Christmas trees.

If you bought a Christmas tree in Denver this year, you may have noticed a pretty steep price tag. It turns out that all festive products are getting more expensive, and that includes Christmas trees, both freshly cut and artificial.

I study the psychology of consumption at the University of Denver. I’ve always been curious about how people make financial decisions under certain circumstances, including around the holidays. Christmas trees are an interesting case study.

The cost of real Christmas trees is directly impacted by a long production cycle and transportation costs, particularly for landlocked markets like Denver.

Christmas trees take 7 to 10 years to grow. Currently, supply is tight, pushing tree prices up, which is a direct and delayed consequence of reduced planting rates that followed the Great Recession – which began in late 2007. This planting deficit effectively drove up wholesale prices and doubled the average price of pre-cut trees over the past decade after adjusting for inflation.

Raising tiny tree seedlings to a marketable size is a fraught business. Growers........

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