Christmas and economists go together like — well, like drinking and walking. Joel Waldfogel, the economist who is famous for highlighting the deadweight loss of gift-giving, has a new book out called Scroogenomics: Why You Shouldn’t Buy Presents for the Holidays. A few years ago, we argued that gift cards in particular are a bad idea. Alex Tabarrok, writing at Marginal Revolution about what he wanted for Christmas, put it this way: “The economist in me says the best gift is cash. The rest of me rebels. … [W]e want the gift giver to buy something for us that we would not have bought for ourselves. Or more precisely, one of our selves wants this — the self that is usually restrained, squashed, and limited, the wild self, the passionate self, the romantic self.”
So today’s question is: what’s an optimal gift for the economist on your shopping list?
If you qualify for the following question, you might want to answer it as well: what’s the best (or worst) gift you’ve ever been given by an economist?
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My $0.03: the optimal gift for the economist on your shopping list is something that he/she clearly wants to buy but for some reason hasn’t purchased already. My sister wants a Snuggie but refuses to buy one b/c she said that the purchasing process would make her feel silly b/c it’s an ‘as seen on TV’ type of product. Plus, it’s easier to avoid friendly ridiculy of a silly product if you say that you received it as a gift. Or if there’s something that someone wants but feels is too extravagant e.g. a gift card to that restaurant that he/she feels is too expensive, etc.
a copy of Super Freakonomics….
My economist father got me some great beer last Christmas. Can’t ask for anything better than that.
You buy an economist something they want, but won’t buy because the transaction cost of purchasing the good is to high for them, but low enough for you.
I don’t know that there is an optimal gift but I think it’s safe to say that a there is additional utility associated with a gift as opposed to cash or a gift card. The sentiment involved can raise a gift’s value far beyond that of pure cash. See last week’s 30 Rock episode for a great example…
A donation in their name to the Human Fund
I got my husband, a professor of economics, Beatles Rock Band. It was the best gift ever. That and the newest Malcolm Gladwell book.
I recently had a very similar scenario when my Mother asked me what I wanted for Christmas. I said ‘something you think I will like’. That is the point isn’t it? Waldfogel, although I admire his work, has missed some of the key benefits from gifts.
The ‘surprise element’, people value the prospect of a potentially fantastic gift. The benefit of a gift ‘signalling’ how much someone has bothered. I also agree with JC, it is a way to overcome price elasticity and perhaps make an investment that you may not have made for yourself but that would improve your life.