Economists Hate Presents, Joy

Poor Emma Thompson

The holidays are over. Santa’s back at the North Pole sleeping it off and we’re all arranging our newly acquired stuff into piles: what we’ll keep happily, what we’ll probably keep out of inertia / lack of gift receipts, and what we’ll return, trade, or throw away.

If find you’re particularly grumpy about your haul, you may be an economist.

Around Christmas, pure-minded economists like Mr. Snaith cringe at profligate spending untethered to expressed need or desire. They cite principles laid out by Adam Smith and scholarly studies on present-giving.
Liquid assets, they generally argue, are the most efficient gifts.

Since when does Christmas have any relationship to efficiency? Winter festivities are intended to signal bounty and abundance during a time of year when light, warmth, and food are all in short supply. Of course buying presents for other people instead of yourself, or instead of giving out cash, doesn’t make logical sense. It’s supposed to appeal to our feelings.

Try explaining that to Milton Friedman.

Economists’ arguments against presents have deep roots. Some evoke Adam Smith, who espoused rational self-interest, or Milton Friedman, who praised the efficiency of spending money on oneself. A 1993 paper, “The Deadweight Loss of Christmas,” gave the notion its first real academic ballast. The author, Joel Waldfogel, then at Yale University, calculated yuletide waste by asking 86 students to estimate the cost of presents they received. Average answer: $438.
He asked how much they would have been willing to pay for the same gifts. Average answer: $313. Recipients valued gifts at 71.5 cents on the dollar, a significant economic inefficiency. Gifts, Mr. Waldfogel wrote, “leave the recipient worse off than if she had made her own consumption choice with an equal amount of cash.”
Since then, economists have enriched the Grinch school of economics.

OK, so we would pay less for presents than they cost the giver. A fair critique. There’s a reasons those “Priceless” ads worked as well as they did for MasterCard, though. There’s a significant emotional component to any gift exchange, a way in which one party communicates to the other, “You matter to me. I take your needs and wants into consideration. It may be cold and dead outside, but I’m not cold and dead inside.”

Need further proof? Consider the recent Dear Sugar podcast episode in which a woman reconsiders an otherwise strong relationship because her fella cannot get it together to deliver a present, even though she has tried to convey to him numerous times that something as simple as a card would thrill her.

The cardinal sin committed by this article is not that most of the economists quoted seem to miss the way presents often function as extensions of one’s emotional self, a way to convey truths that sound clunky when expressed. It’s that all of the economists quoted are dudes who complain about their wives and daughters. My wife got mad because I got her a necklace, which means I never noticed she doesn’t wear necklaces. My daughters have a one-minute attention span for my lectures. On and on.

Then the piece ends like this, with an avalanche of gendered cliches:

He discusses economic theories with his daughters, but “a lot of the things he talks about I don’t really need to know right now,” says his elder, 14-year-old Spencer. “Every time he talks about it I pretend I’m listening, but I’m not listening.”
Still, she concedes the allure of Dad’s economic-inefficiency-of-presents argument.
“Sometimes I would rather have money,” she says. “I’m not complaining about getting gifts. But my dad, he’s a guy. He’s really not that great with makeup and clothes.”

Apparently the author couldn’t find even one female economist, or one male economist willing to challenge this 1950s-ish status quo. It’s 2016! I demand better, even from the Wall Street Journal.

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