How Much Is a Princess Worth?

Is the royal family good for the British economy or a drain on it?

Britain’s Queen Elizabeth II

The wedding between dashing Prince William and darling Kate Middleton will be romantic. It will be royal. It will be oh-so-British. It will also be a consumerist orgy the likes of which we have not seen since Princess Diana dawdled down the aisle in 25 feet of fluffy taffeta. It has re-ignited a question that has bedeviled British aristocrats, socialists, and economists for generations. What is the economic value of the royal family? Or: What is a princess worth, anyway?

Let’s start by analyzing the pounds and pence of the wedding itself. Kate and Wills have reportedly taken pains to pare the ceremony and reception back, given the recessionary times—inviting fewer guests than Prince Charles did when he wed Princess Diana in 1981, for instance. Guesses as to what the wedding is costing range from six figures to several million pounds. The royal family is not saying and is paying nearly all costs privately, so British citizens—I mean “subjects”—aren’t directly on the hook for that.

Taxpayers are paying for the 5,000 police officers helping keep the peace outside of Westminster Abbey and up the Mall to Buckingham Palace, as well as throughout the city. All of them will receive overtime since the day is a national holiday. That should add up to something like £10 million.

The conventional wisdom holds that whatever is spent, Britain will make it back dozens of times over. Hundreds of thousands of tourists are flooding the country to help celebrate the nuptials. Around the world, people are spending millions on royal tchotchkes. The country will surely come out ahead, the theory goes. “The economic prowess in the south of England begins in late April 2011 with the royal wedding,” one particularly optimistic watcher writes. “When all eyes are focused on England for the next two years their pocketbooks will be too. And that should make all Britons breathe a sigh of relief as the economy tries to return to normal.”

It seems unlikely that tea towels will really turn the economy around, but it is true that there will be a breathtaking amount of spending. Companies selling royal memorabilia—paper dolls, commemorative mugs, refrigerators, what have you—already report sales increases of 40 percent, a figure expected to climb. Pricewaterhouse Coopers analyzed the impact on London alone, estimating the benefit from domestic and foreign visitors’ spending at £107 million. Retail researchers Verdict estimated a £620 million economy-wide windfall.

But the wedding will also have a big negative economic impact. Friday, normally a work day, is a national holiday, meaning a considerable output drop. How big? The Confederation of British Industry estimated in 2007 that each additional holiday costs the economy something like £6 billion. And that estimate might be low. The Kate-and-Wills special holiday happens to fall in between an official Easter holiday and the May bank holiday. The way the calendar works out, Britons can take an 11-day vacation using only three vacation days. And Pricewaterhouse Cooper estimates that as many as 6 million workers might do so. The result is an economy-wide productivity slowdown in the final two weeks of the month, cutting £5 billion or more from GDP this quarter—though the effect should quickly fade as Britons’ bosses prod them to work harder once they get back.

Still, the argument that the wedding will be a net loss for the economy seems convincing: The low estimate of productivity-related costs swamps the high estimate of consumer-spending gains. But there is another way Wills and Kate could help pay for themselves: by boosting tourism in the long term.

Broadly speaking, monarchists tend to justify the cost of the royal family by noting their positive impact on tourism—making the Windsor family the stuffy analog of, say, Australia’s kangaroos or China’s pandas. The British tourist authority estimates that the royals are responsible for £500 million of tourist spending per year. Granted, it gets to this figure through some squirrelly math. Culture and heritage sites, meaning everything “from theaters, galleries, to pubs, Premiership Football, castles and stately homes” generate about £4.6 billion in tourist spending per year and account for 100,000 jobs, the group says. It estimates that one in eight of those sites is “associated with monarchy,” resulting in the £500 million or so of royally related spending. But this does not account for the fact that many of those sites have only a distant whiff of monarchy about them. People visit the Tower of London for Henry VIII’s history, not fascination with the current royals.

Still, surely the British monarchy does help make the country an enormously popular tourist destination—look at all the people heading to London just to celebrate Kate and Wills. And the most honest accounting may come from the Queen herself. Every year, the royal household releases a detailed list of its expenses to the taxpayers. Last year, it required £38.2 million in public spending, down from an inflation-adjusted £87.3 million in 1992. That means the Queen cost taxpayers just 62 pence per person. Sounds like value for money to me.