the economics of unwanted gifts

Grinchonomicssource of graphic:

this post appears in this blog every year on december 1 to kick off the season of gift giving \  this year it appears before thanksgiving day – in keeping with the trend by retailers’ kicking off the shopping season earlier and earlier every year \ popular stores will be open on thanksgiving day at 6pm / after this, there’s black friday and then cyber monday – to non-u.s. folks, those days are our $brick-and-mortar$ and $digital$ shopping holidays, respectively <we typically take the day off from work or extend our lunch hour, respectively>

don’t you sometimes <not always> wish that you simply got cash as a christmas present?  / if you felt that way, you’re feeling the gift’s “deadweight loss” which happens when there is a mismatch between what you want and what you receive as a present <that’s inefficient & disappointing> \ for example, if i were gifted with gardening tools instead of a banjo

count on economists to explain gift giving, stripped of sentimentality \ “the deadweight loss of christmas” is considered to be seminal work and was published in the american economic review 20 years ago / in the paper, joel waldfogel estimated deadweight loss to “destroy” the value of a gift by 10% to as much as a third \ but of course even if stripped of sentimentality, it doesn’t always end this way / for example, receiving a present that you like but would not buy for yourself increases the value of the gift <like the keurig machine i got last christmas>  and i say there’s no deadweight loss in the gift of jewelry or experience  <such as a trip to paris! or rowing camp!>

in this season of gift giving & sentimental remembrances, all this is academic <economists also apply the concept of deadweight loss to government grants and taxation> / economic analysis is often limited by its unrealistic assumption that people always behave in a rational manner \ and so gift giving is judged solely on utility & efficiency | the thoughtfulness & sentiment of the act <the gift’s latent value> are ignored / however, this calculated view can provide insights on how we can improve our gift giving \ you wouldn’t want your gift, especially to someone you are trying to impress, to be in the deadweight zone but rather it be perceived as more valuable than the dollars & cents it cost <failing that, it can be repurposed as a white elephant gift – no dwl there>

tip:  if you think your well-thought gift will be perceived as dwl, present it in an enticing context / a couple of christmases ago, i gifted my two favorite young people then 11 and 8 with luggage \ one red, one blue kipling carry-on luggage <aussie luggage brand that comes with a monkey keychain> / if they could express it, they would have yelled “deadweight loss” at me but i told them that this is not just luggage <it is a lifetime promise of travel & adventure> \ now teenagers who enjoy foreign trips, they are expert packers and easygoing travellers, with great looking luggage


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